Business & Economy
Jaitley calls for increased private investment in infrastructure sector
New Delhi, January 7, 2016
Finance Minister Arun Jaitley has urged the business and trade sector to increase private sector spending, especially in the infrastructure sector.
At a pre-Budget consultative meeting with representatives of industry and trade groups here yesterday, he said the Indian economy had achieved robust growth in the first half of financial year 2015-16 despite the volatility and uncertainties in the global economy.
Mr. Jaitley said this was made possible by a slew of policy measures undertaken by the present Government, including enhanced public investment, kick starting stalled projects, improving the status of financial inclusion significantly, improving governance through systematic changes like open auction of natural resources like coal and spectrum in a transparent manner, and greater fiscal federalism and improving business environment through reforms in policies and regulation among others.
He said that the current level of growth rate of the economy and sound fiscal fundamentals presented better growth prospects for 2016-17 as well.
Mr. Jaitley said the Government would continue to expand public spending even during the next financial year despite the major financial implications of the recommendations of the 14th Finance Commission which reduced the share of the Central Government by 10% and its financial obligations due to implementation of One Rank One Pension (OROP) and 7th Pay Commission Recommendations in the coming financial year.
Various suggestions were received during the meeting, including higher investment in irrigation and rural infrastructure sector as this would increase the spending capacity of the rural people and create demand for goods and services.
Other suggestions included focus on disinvestment of public sector undertakings by the Government to raise additional revenue and to reduce Government borrowings which, in turn, will make more money available for the private sector to borrow.
Participants also called for reduction in subsidy outflows and direct payment of fertilizer subsidy to farmers.
Suggestions were made that 7th Pay Commission recommendations be implemented in staggered manner and tax collections be increased by expanding the base. It was suggested that Minimum Alternate Tax (MAT) by withdrawn in calibrated manner, tax exemptions and allowances be withdrawn while tax rate may be rationalised in order to bring transparency, certainty and less discretion to make the tax administration more transparent and efficient. Tax incentives be given for use of debit and credit card, payment of utilities be made mandatory by cheques or through e-payment, clarity of policies by CBEC and CBDT to its field offices to avoid any discrepancies and discretions in tax administration and implementation of the Goods and Service Tax (GST) at the earliest.
Other suggestions included measures be taken to revive private sector investment especially in infrastructure sector through NIIF and use of Infrastructure Finance Companies like IIFCL to rebuild the capacity of the private infrastructure sector by making it easier for them to raise funds.
They also suggested relacement of bank guarantees by ‘bid bonds’ or ‘surety bonds’ for companies which, in turn, will help them getting credit at reduced cost and removal of cess and surcharges.
Other suggestions included measures to attract youth to agriculture sector by making farming highly mechanized and improving productivity. For this ‘Agriculture Equipment Banks’ may be set-up, segments of land be made in three categories -- barren land, single crop land and multi-crop land --- and separate rules for dealing with each category may be made, they said.
The participants suggested that start-up parks for attracting young entrepreneurs be set up on the line of IT parks. Suggestions were made that in order to ‘Make in India’ and ‘Ease of doing Business’ successful, measures may be taken to reduce the cost of doing business for which there was need to improve infrastructure and reduce credit cost. To deal with the problem of non-performing assets (NPA), recapitalization of banks must be done through offering of shares to public, they said.
As regards tax matters, it was suggested that no appeal should be made where the two consecutive orders are in favour of the assesse except in rare situation and assesses may not be asked to deposit in case of first appeal and be asked to deposit only in case of second appeal.
It was suggested that measures be taken to generate demand in real estate sector which will in turn boost the steel and cement sectors which are major sectors for employment generation. Other suggestions include raise in exemption limit in case of income tax be raised from Rs. 2.00 lakh to Rs. 5.00 lakh, reduction of corporate tax to 25%, nominal rate of interest on delayed payments, rationalization of exemptions and allowances and reduction in tax rates, and extension of reduction in corporate tax to partnership firms.
It was suggested that measures be taken to uplift the power sector which is facing a challenging time.
They also said that credit to MSME sector be boosted and that the Mid-Day Meal Scheme be scrapped due to large scale seepages and non-transparency in the implementation.
Suggestions were made to boost exports, especially MSME exports. It was suggested to boost e-commerce in mobile payment to achieve the goal of cashless economy, guidelines be issued for removal of anomalies in case of taxes being imposed by different States on e-payment and e-commerce. It was suggested to reduce customs duty on set-top boxes from 10% to 5%,and media entities be included for carry forward of losses in case of merger among others.
The meeting was attended by Finance Secretary R. N. Watal, Economic Affairs Secretary Shaktikanta Das, Revenue Secretary Hasmukh Adhia, Financial Services Secretary Anjuly Chib Duggal, Industrial Policy and Promotion Secretary Amitabh Kant and Chief Economic Adviser Arvind Subramanian.
Representatives of the industry and trade included CII President Sumit Mazumder, ASSOCHAM President Sunil Kanora, FICCI President Harshavardhan Neotia, President, FICCI, NASSCOM Chief Economist R. Chandrasekhar, Mr. Ajay Piramal, Piramal Enterprises Ltd, Mr. S.C. Ralhan, President, FIEO, Mr. R Seshasayee, Vice Chairman, Ashok Leyland, Mr. Ashish Gupta, Consulting CEO, Federation of Associations in Indian Tourism & Hospitality (FAITH), Mr. P.K. Shah, Chairman, EEPC India, Mr. G. Venkatesh Babu, LANCO Anpara Power Ltd, Mr. Sangam Kurade, President, Federation of Indian Micro and Small & Medium Enterprises (FISME), Mr. Abhishek Tiwari, Federation of Indian Women Entrepreneurs (FIWE), and Mr. Girish Srivastava, Secretary General IBF.