Associated Chambers of Commerce and Industry of India (ASSOCHAM) President Sumant Sinha on Thursday said that the budget needs to focus on social sectors like health and education along with continued thrust to infrastructure and production linked incentive (PLI) scheme. Assocham also called for relief on the direct tax front, given the buoyancy witnessed in tax collection in the current financial year.
Maintaining that backdrop of the budget is good with consumer demand and consumption coming back in the economy, relatively lower inflation and slower pace of rate hikes, and tax buoyancy leading to better fiscal situation, Sinha pointed out that the immediate future of the Indian economy is good.
Outlining the steps needed in the budget, Sinha said, “There is a very positive backdrop for the budgeting process to be done. FM can be very selective about how she wants to drive growth next years and which sectors she chooses. She can adhere to the fiscal glide path and still have significantly more money to spend. The question is what choices she makes.
“I think one is really on the capital expenditure side. It will build the overall productive nature of the economy and enhance the capacity of the economy. Capex percentage to GDP can go up to 4% from the current 3% leading to a much larger creation of roads, airports, power, and ports” Sinha added.
“The second area that the FM can spend on is the social sector. We all know that health, education will drive the productive capacity of our people. Third area is to continue with the philosophy of empowerment and entitlement and do not go on the path of subsidies. I think one of the things that the FM can talk about in the budget is how to create a green economy in India,” Sinha said.
Sinha pointed out that the finance minister can also look at putting in more money on the manufacturing and PLI schemes. “This is an area that seems to be going very well. PLIs have happened in a number of areas. In my sector it has been very positive and is driving investments and that ultimately is good for job creation,” Sinha said adding that manufacturing is only 15% of the GDP and that can be taken upto 25% and PLI is a very good way of doing that.
In its pre-Budget recommendations, ASSOCHAM said the government needs to increase the exemption limit for income tax to at least ₹5 lakh so that more disposable income is left in the hands of consumers and the economy gets a consumption boost and further leg-up in the recovery. “Boosting consumption by leaving more money in the hands of the consumers, is a low hanging fruit for a further recovery in economic growth,” said Deepak Sood, Secretary General ASSOCHAM.
