The Confederation of Indian Industry (CII) on Tuesday said it hopes to see policy initiatives that boost private investments in the upcoming Budget.
“Considering that broad based revival of private investment is being constrained on account of weak order book situation resulting in capacity overhang, there are hopes and expectations that the forthcoming Budget would increase spending by the government, the public sector and by quasi-government bodies” said a statement by Chandrajit Banerjee, Director-General, CII.
The industry body said the National Investment and Infrastructure Fund (NIIF) needs to be activated for more avenues for infrastructure financing. It further sought speedy implementation of industrial clusters such as National Investment and Manufacturing Zones (NIMZ), Delhi-Mumbai Industrial Corridor and others.
“Higher public investment in key projects especially in infrastructure sectors such as roads, railways, power and waterways would ‘crowd in’ private investment and in turn have a cascading effect on growth,” a CII statement said.
Rural focus CII also said that the rural economy, which has taken a hit due to two consecutive years of drought, needs more focus and moves to stimulate rural demand need to be taken.
“Rural demand has to be supported not only through higher spending on rural infrastructure such as roads and irrigation, but also through measures to enhance rural purchasing power.
“Rural inflation has been consistently higher than urban inflation and measures are needed to mitigate the impact on rural incomes,” the body said, adding that allocation for schemes such as Pradhan Mantri Gram Sadak Yojana and the Pradhan Mantri Krishi Seenchayi Yojana need to be increased.
Further, CII said focus on low-cost housing was important as it “has one of the highest multiplier effects on the economy as there are over a hundred and fifty industry segments directly linked to the home construction industry.”
Recommending that deduction on interest for housing loans be set at ₹50,000, CII also said housing loan repayment may be covered separately and out of the purview of exemptions under Section 80C.
‘Push disinvestment’ “At a time when tax revenue is stressed, stepping up non-tax revenue through spectrum sales and PSU divestment becomes crucial. To raise revenue, the government should sell all its stake in the Specified Undertaking of the Unit Trust of India (SUUTI), which can yield nearly ₹50,000 crore,” CII said.
Other than this CII recommended bold steps to address non-performing assets (NPAs); a year-wise roadmap for reduction of corporate tax rate from 30 per cent to 22 per cent, along with withdrawal of incentives; and better targeting of subsidies by linking subsidies on fuel, fertilisers and electricity to direct benefit transfer.