Ahead of the Union Budget 2022-23, industry bodies advised Finance Minister Nirmala Sitharaman and top Budget makers that the government continue its thrust on public investment in infrastructure (infra) and capital expenditure (capex) to enable sustained economic recovery.
Sitharaman and her officials, including Finance Secretary T V Somanathan, Revenue Secretary Tarun Bajaj, and Economic Affairs Secretary Ajay Seth, held pre-Budget consultations with industry bodies, such as the Confederation of Indian Industry (CII) and the Associated Chambers of Commerce and Industry of India (Assocham), among others, on Thursday.
On Friday, Sitharaman and the finance ministry officials will meet representatives of the services and trade sectors, and experts from infra and climate change verticals. Additionally, Business Standard has learnt that Sitharaman will hold pre-Budget consultations with prominent economists on December 22.
At Thursday’s meeting, industry bodies suggested that the Budget continue its thrust on growth, reforms, and ensure tax and policy stability.
“Capex by the government through enhanced infra spending should continue to support growth,” CII President T V Narendran told finance ministry officials.
“Infra sector with a multiplier impact on the rest of the economy requires interventions, particularly to improve and diversify sources of financing. In this context, it is suggested that the government consider developing the municipal bond market, so that urban local bodies can raise funds for investing in infra,” he said, adding the government should also consider replacing bank guarantees with surety bonds to encourage private sector participation in the infra space.
Assocham President Vineet Agarwal suggested a scheme similar to Vivad se Vishwas for highly regulated sectors like telecommunications, power, mining, and a dispute resolution scheme for issues related to Customs.
Agarwal told Sitharaman that in the 2019-20 Budget, the government had introduced the Sabka Vishwas (Legacy Dispute Resolution) Scheme to facilitate quick closure of pending disputes under the central indirect tax laws. This scheme received good response.
“A similar scheme could be introduced for Customs to provide an opportunity to taxpayers to clear past baggage and reduce litigation. This will help the industry in considerably reducing the baggage of litigation and the government in unlocking tax dues,” he said.
The industry bodies suggested that the Centre and state governments’ capex allocation should focus on projects which are more than 80 per cent complete or near-completion, so as to benefit from multiplier effects of such projects more quickly.
The industry bodies also spoke about continued preparedness to deal with the Covid-19 pandemic. “With the risk of the Omicron variant looming large, it is critical to explore booster doses of the Covid vaccines with adequate provisioning in the Budget for continued strengthening of our surveillance, testing, vaccine research, therapeutics, and health care infrastructure,” said Narendran.
He said the forthcoming manufacturing sectors, such as electric vehicle, semiconductor, and hydrogen require special focus in the Budget.
“To help the Indian industry integrate into the global value chain, it is suggested to move to a graded road map to shift import duty slabs to a competitive level over a period of three years — lowest or nil slab for inputs or raw material, 2.5-5 per cent for intermediates and final products in the standard slab with allowance given to only a few products,” added Narendran.