The Union Budget for 2016-17 will be announced at a time when the macro-economic milieu continues to be domestically and globally challenging and the focus should be on stepping up the pace of investment expansion for achieving higher growth and job creation.
The Confederation of Indian Industry (CII) looks forward to suitable policy interventions which would rekindle business sentiment and thereby help to debottleneck the economy.
According to CII, 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. CII has also recommended speedy implementation of industrial clusters and parks such as NIMZ, DMIC & DFC projects. The National Investment and Infrastructure Fund (NIIF) needs to be activated to provide more avenues for infrastructure financing.
CII would also recommend incentivizing 'off balance sheet' investment proposals, such as NHAI projects, railways etc., where it is possible to generate adequate revenues. The idea could also extend to identifying and promoting more PPP opportunities where the viability gap funding helps facilitate a much greater economic return.
On revenue generation, CII maintains that 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 Rs.50,000 crore to be used for investment.
On expenditure control of non-productive items, CII recommends better targeting of subsidies by linking subsidies on fuel, fertilizers and electricity to direct benefit transfer. Fertilizer subsidy should be paid directly to farmers as cash transfers.
CII is of the view that the Budget should aim at restoring the strength of the rural economy, which has been adversely impacted by two consecutive droughts, by taking steps to stimulate rural demand.
Measures such as reduction in corporate tax rate will go a long way in improving the tax base. The government should announce a year-wise roadmap for reduction of corporate tax rate from 30 per cent to 22 per cent along with withdrawal of incentives, it said.