Finance Minister Nirmala Sitharaman on Monday proposed a sharp increase in expenditure on infrastructure, doubling of healthcare spending and raising of the cap on foreign investment in insurance in her Budget for the next fiscal in a bid to pull the economy out of the trough.
“Delivering on her promise of unveiling a ‘Budget Like No Other’, the Finance Minister announced a raft of prudent measures aimed at rejuvenating government spending towards critical areas of increasing allocation on infrastructure expansion, education, housing and health as India rolls out a vaccine drive to inoculate 1.3 billion people”, said Mr Uday Kotak, President CII.
“Laying down the vision for providing further fillip to the government’s flagship Atmanirbhar Bharat Programme by spelling out the measures under the critical six pillars, the Budget ticked all the right boxes which would strengthen the path of recovery of the economy. This is a budget catering to all aspects of lives, livelihoods and growth”, Mr Kotak added.
Recognizing the need for giving infrastructure investments a renewed push, Mr Kotak said that the sector received key priority from the Government in the form of several important announcements. The announcement regarding the setting up of the Development Financial Institution (DFI) which is likely to play a critical role in channelizing investments in infrastructure and other key sectors of the economy, is in line with CII’s recommendations.
“In addition, the setting up of National Asset Monetisation Pipeline is a great initiative by the government and is likely to not only boost sentiment but will also generate additional resources for the government. This is something which CII has been very strongly advocating with the Government, highlighted Mr Kotak. Other measures such as setting up of seven Mega Investment Textile parks, giving choice to consumers to chose from more than one distribution company to buy power are in line with CII’s recommendations.
The pandemic has rightly brought back attention to the much-needed topic of improving healthcare infrastructure for the populace. In this regard, we are heartened to note a large 137% increase in health & wellbeing spending for FY22, said Mr Kotak. The launch of a new centrally funded scheme, Pradhan Mantri Swasthya Suraksha Yojana, Mission Poshan 2.0 and commitment of providing Rs 35,000 crore for COVID-19 vaccine in FY22 are all encouraging developments.
The financial sector saw the announcement of several landmark announcements, including setting up a Bad Bank in the form of Asset Reconstruction & Management Company, increasing the FDI limit in the insurance sector to 74% and the proposal to disinvest two Public Sector Banks, IPO of LIC and one General Insurance Company in FY22. All these are bold moves indeed, Mr Kotak explained, and are expected to buttress the growth recovery process apart from making our financial sector future ready.
Welcoming the move of the government to fund the pump-priming of the economy through raising of revenues by pursuing an aggressive disinvestment programme and proposing an asset monetisation program in the next fiscal said Mr Kotak. The government needs to be commended for sticking to counter-cyclical fiscal policy stance as had been recommended by the Economic Survey and this is in line with CII’s recommendation, Mr Kotak added.
CII applauds the proposal to halve the time frame for reopening of income-tax assessment cases from 6 years to 3 years. For reopening of serious tax evasion cases up to 10 years, the Government has put in a monetary limit of cases involving over Rs 50 lakh in a year. This will help reduce instances of tax harassment of income tax payers. On indirect taxes, the reduction in customs duty on certain inputs & raw materials including long products of alloy & non alloy stainless steel, copper scrap among others which have seen a sharp price increase in the last few months, is laudable as it will help to keep the prices of final products competitive, Mr Kotak commented. In addition, the review of the 400 odd exemption notifications and introduction of the simplified duty structure from October 2021 are significant ease of doing business measures which shall enhance cost competitiveness.
“We recognise that the commitment of the present government to spur growth is not limited to announcements in the budget alone. The three tranches of the Atmanirbhar Bharat ably demonstrates this intent. In this regard, I would like to mention that the Budget presentation marks an ongoing process rather than a one-off approach in making the recovery process more robust and equitable”, Mr Kotak added.