Budget 2023: Commerce Body Recommends Increasing Private Investments To Boost Economy

Enhancing private investments is one of the recommendations PHD Chamber of Commerce and Industry (PHDCCI) made to the government as the Union Budget 2023-24 is being presented at a crucial juncture of geo-political uncertainties, high inflation and slowing world economic growth.

Among the lists of recommendations, the industry body has highlighted the creation of demand or consumption, ease of doing business, reduction in cost of doing business, deployment of latest infrastructure, strengthening the MSMEs, supporting the tourism sector, bringing agriculture and rural sector at forefront and ensuring vital health infrastructure and focus on education and skill development.

While enhancing the momentum in private investments, PHDCCI said there is a need to refuel consumption, capacity utilisation, percolation of Ease of Doing Business at the factory level, rationalisation of cost of doing business, rationalisation of taxation, modern infrastructure, enhanced incomes in the agriculture sector, inclusive health infrastructure, quality education and employment creation in the economy.

PHDCCI said demand creation would have multiplier effect on enhanced production possibilities, expansion of capacities, vis-a-vis private investments and employment creation.

It said this would turn on the overall virtuous circle of growth and development of the Indian economy.

To enhance consumption in the economy, the industry body said there was a need to increase the tax rebate benefits for consumption expenditure. Tax rebate on the purchase of self-occupied house is given Rs 2 lakh only since the last many years. The industry body said this needs to be enhanced with the wider scope of consumption expenditure such as purchase of more than one house, purchase of car, along with other durables.

It recommended consumption expenditure rebate must be enhanced to Rs 5 lakh per annum. This will not only enhance the aggregate demand in the economy but also attract private investments, increased the capacity utilisation of the firms and create enormous employment opportunities in the economy.

Reduced costs of doing business and a level playing field in the country will increase the competitiveness of our industry and exporters, reduce imports of the items where India has domestic capabilities, it said.

The PHDCCI said the government should focus on reducing the cost of doing business including the costs of capital, costs of power, costs of logistics, costs of land and availability of land and costs of labour, availability of skilled labour and costs of compliance.

State-of-the-art infrastructure is one of the crucial sectors that propels the overall growth and development of the Indian economy, according to PHDCCI. The increased spending on infrastructure will give a multiplier effect to rejuvenate the aggregate demand in the economy. "Undoubtedly, the robust growth of infrastructure is the key ingredient to realise the vision to become Atmanirbhar Bharat and a developed economy by 2047," the industry body said.

At this juncture, PHDCCI said infrastructure investment in the economy must not be less than 10 per cent of GDP to achieve state of art infrastructure and to become a developed economy by 2047.

The micro, small and medium enterprises (MSMEs) sector has emerged as a highly vibrant and dynamic sector of the Indian economy over the years. The plethora of reforms for MSME sector and the amendment in the new definition of MSMEs will enhance the production possibility frontiers of the MSMEs.

PHDCCI said the current banking norms result in high primary security and collateral security demanded by banks for the MSMEs which hampers their growth prospects. It said focus of the government should therefore be on hassle-free disbursements of loans at affordable rates of interest for the businesses vis-a-vis enhanced liquidity for MSMEs.

The industry body recommended a reduction in tax on MSME firms, working as proprietorship or partnerships.

Tourism sector is a major engine of economic growth and an important source of foreign exchange earnings in many countries including India. PHDCCI said the development of tourism infrastructure is of paramount importance and should be accorded a priority to provide for a better experience, facilities, the safety to tourists and thereby enhance employment creation in the country and facilitate growth of MSMEs.

Further reforms in rural infrastructure logistics and a cold chain are required as it would help in increasing the level of food-processing industry and rural entrepreneurship, according to PHDCCI.

It also said the increase in public investments in agricultural infrastructure would attract private investments in cold storage, warehousing and supply chain of agriculture produce in order to reduce food wastages and get them to urban citizens at moderate rates. It shall also raise the returns to agriculturists.

According to the industry body, it is essential that an integrated holistic view of the agriculture value chain is taken towards providing the necessary fillip to agricultural growth. "This requires a joint participatory approach from all concerned stakeholders including the farmers, input vendors, traders, processors and the government. The Union Budget can be very effective in laying down a comprehensive policy framework and providing a tremendous thrust through appropriate fiscal benefits and closely monitor the action plans," it said.

The PHDCCI said the pandemic has brought the country's health infrastructure into sharp focus, highlighting the critical position of the public health sector and the need for increased government spending on public health.

It recommended stepping up investments in the sector for highly-skilled human resources from doctors to other medical support staff like nurses, lab technicians, pharmacists, among others that are super-trained for unforeseen events such as Covid-19 pandemic.

PHDCCI said India's labour force is also characterised by a high proportion of employment in agriculture and the informal sector with nearly half of its workforce classified as working poor. At this juncture, the industry body said there was an urgent need to create a highly skilled talent base and to ensure the formation of a strong human capital base ready to serve the nation and engage with the world from a position of strength and valour.

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