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Budget 2023: Industry Bodies Pitch For Wider Tax Base, Higher Capex

The pre-Budget consultation meeting featured industry bodies, and stakeholder groups for infrastructure and climate change.

<div class="paragraphs"><p>The Finance Minister chairs the pre-Budget consultation. (Source: Ministry of Finance/Twitter)</p></div>
The Finance Minister chairs the pre-Budget consultation. (Source: Ministry of Finance/Twitter)

The Union Finance Minister Nirmala Sitharaman virtually held the first pre-Budget consultation meeting, wherein industry bodies pitched for widening the tax base, boosting private investments, consumption and employment creation.

Apart from industry bodies—such as the Confederation of Indian Industry, PHD Chamber of Commerce and Industry and the Associated Chambers of Commerce and Industry of India—the meeting on Monday involved stakeholder groups for infrastructure and climate change. 

Ahead of the upcoming Union Budget, there are fears of a recession impacting advanced and developing economies. The Finance Ministry had an additional budgetary subsidy outlay in this fiscal, owing to supply chain hurdles caused by the Russia-Ukraine crisis. 

In his presentation to the Ministry, Sanjiv Bajaj, president of CII, said, "Global uncertainties and the global growth slowdown have already started to impact our exports, after a stellar performance last fiscal."

Bajaj also recommended that the ministry increase capex spend to Rs 10 lakh crore in the coming Budget. "Global uncertainty may impact the incipient revival in private capex and hence, public capex is critical to support demand and growth," he said. 

According to Saket Dalmia, president of PHDCCI, infrastructure investment in the economy must not be less than 10% of the GDP "to achieve state of art infrastructure and to become a developed economy by 2047".

"...at this juncture, calibrated steps to enhance domestic sources of growth would be crucial to maintain the steady economic growth trajectory," he said.

Assocham President Sumant Sinha called for a "Green Budget" against the backdrop of COP27 and India‘s G20 Presidency.

Sinha recommended initiatives like Gati Shakti and Digital India Mission to be implemented at a swift pace to boost competitiveness of the economy across segments.

Bajaj of CII recommended fiscal consolidation by retaining budgeted fiscal deficit targets, with a fiscal deficit target of 6.4% of GDP for this financial year, reducing it to 6% in FY24 and 4.5% by FY26.

Bajaj suggested revenue augmentation via aggressive focus on privatisation, higher asset monetisation receipts, fulfillment of Department of Investment and Public Asset Management targets, and increasing the tax/GDP ratio to at least 16% from the current 11.7%. 

Prominent entrepreneurs including Sanjiv Goenka, chairman of the RPSG Group; Naveen Munjal, director of Hero Electric Vehicles Pvt., and BVN Rao, business chairman of the GMR Group were among the attendees.

Key Recommendations By CII

  • Announce an employment-linked incentive scheme for services sectors like tourism, logistics, retail, film, animation and gaming.

  • Expedite the DESH Bill to replace existing SEZ Act and implement Niti Aayog’s recommendations on creating coastal economic zones.

  • Institute an Urban Employment Guarantee Programme similar to MNREGA.

Key Recommendations By PHDCCI

  • Increase tax rebate benefits for consumption expenditure to Rs 5 lakh per annum from its current limit of Rs 2 lakh per annum.

  • Exports of agri and food processing products should be increased to the level of $100 billion in the next three years, from the current level of around $50 billion (2021-22).

  • Reforms in rural infrastructure logistics and cold chain are required to boost food processing industry and rural entrepreneurship.

Key Recommendations By Assocham

  • Avenues of incremental revenue, like banks taking over government receivables, could be experimented with. Such receivables include license fee, revenue share and levies payable by different concessionaires.

  • Lower tax rate under Section 115BAB (tax rate to manufacturing companies), extend the alternate tax regime to new and existing companies engaged in logistics, EVs, and healthcare, etc.

  • Sunset clause for new investment in manufacturing to be extended from March 2024 for another five years.

  • Rationalisation of taxes on green energy products—customs duty on battery energy storage systems, etc.

The Finance Ministry will be meeting various stakeholders throughout the week till Nov. 28.