New Delhi, December 19
Industry chamber PHDCCI on Saturday suggested a 10-pronged strategy in pre-budget consultations with Finance Minister Nirmala Sitharaman with focus on refueling consumption and demand and encouraging private investments to attain higher economic growth.
“At this juncture, we suggest capping the Personal Income Tax rates at 25 per cent with no exemptions. This will increase the level of compliance and willingly get more tax-payers in the tax base,” PHDCCI president Sanjay Aggarwal said in a statement.
The other aspects of the ten-pronged strategy proposed for the Budget in the virtual meeting include front loading of infrastructure investments, strengthening MSMEs, reducing the costs of doing business, ease of doing exports, increasing Tax-to-GDP ratio, focus on agriculture & rural sector and effective reforms in social infrastructure.
Refuelling of consumption demand must be the theme of the Union Budget 2021-22 to have a multiplier effect on production possibilities, capex expansion, private investments and employment creation, said the industry body.
It argued that enhanced consumption expenditure will ramp up capital expenditure, attract private investments and create employment for the youth.
Economy has exhibited early signs of recovery in the recent months, however, to sustain the momentum, there is a need to ensure a great support to demand creation with lower interest rates for consumers and businesses, lesser compliances for MSMEs vis-à-vis ease of doing business at the ground level and a lower tax regime to increase the personal disposable income, said Aggarwal.
To rejuvenate the aggregate demand in the economy, infrastructure investments will give a multiplier effect. The robust growth of infrastructure is the key ingredient to realise the vision to become Aatmanirbhar Bharat, he added.
The chamber has also suggested that government should consider raising investment funding for the National Infrastructure Pipeline through overseas market borrowings by issuance of overseas bonds through an SPV that could act as a mega Development Financial Institution.
‘The DFI could initially finance public sector infrastructure investments, and, as the economy picks up steam, could also finance the private sector infrastructure projects,” Aggarwal said.
He suggested that 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, labour cost, availability of skilled labour and costs of compliances.
To enhance the export growth trajectory, export income should be made tax free for MSMEs for three years and income of large enterprises from incremental exports (Y-o-Y) be made tax free.
This will help in partly compensating the additional cost of logistics and other bottlenecks faced by the exporters, said the chamber.
The Budget 2021-22 is likely to be unveiled on February 1 next year. PTI