Finance Minister offers a huge Diwali Bonanza that will lift growth, employment, exports and make India part of the global value chains: Dr Sangita Reddy, President, FICCI

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New Delhi: Commenting on the series of measures announced by the Finance Minister today to further stimulate the economy, Dr Sangita Reddy, President, FICCI said “We saw a powerful multi-sectoral boost coming in from the government today. The clear focus on housing, infrastructure and construction shows that the government wants to leverage the huge multiplier impact these sectors have to rev up the economy that is already showing multiple signs of recovery. FICCI compliments the Finance Minister for this huge Diwali bonanza that will lift growth, employment, exports and make India part of the global value chains. Today’s package contained announcements for the stressed sectors, the sunrise sectors and other significant areas that will play a crucial role in making India strong and self-reliant.”

Of the dozen announcements that we heard today, perhaps the most significant was the one relating to the production linked incentive scheme wherein 10 new champion sectors have been added with an outlay to the tune of Rs. 1.46 lakh crore. Building manufacturing ecosystem, especially in areas where we have large dependence on imports, requires a long-term strategy. Government and industry are working in tandem towards developing that strategy and implementing it and the PLI scheme is a great example of that, added Dr Reddy.

We have also seen how the ECLGS scheme has benefitted scores of MSME units and individuals in resurrecting their businesses and coming back to life. FICCI had suggested that the scheme requires an extension of timelines as many companies are still scouting for funds. Additionally, the inclusion of the stressed sectors within the ambit of the scheme with a specific call-out to the healthcare sector is noteworthy. Sectors such as aviation, hospitality, tourism, healthcare etc. have been reeling under tremendous pressure. Given their employment potential and their role in shaping economic recovery and regional development, these sectors needed special support, which eventually came today, said Dr Reddy.

As growth recovers, we shall see employment numbers also picking up. However, even as we wait for the full normalcy to return, government has laid down a framework for promoting jobs and encouraging companies to consider re-hiring of workers who may have lost their jobs during the lockdown period. The contribution to PF on behalf of employers and employees is a good incentive mechanism. FICCI would only urge the government consider the ceiling wage level of Rs. 15000 for applicability of this as in many parts of the country the average wage levels are higher, Dr Reddy noted.

The additional outlay of Rs 18,000 crore for the PM Awas Yojana – Urban along with the income tax relief for developers and home buyers will ring in growth in the housing sector. The housing sector has linkages with over 200 sub-sectors and as we see growth improving in housing and construction, many other sectors such as steel, cement, construction machinery, paints, electrical equipment etc. will also see an improvement in demand.

FICCI would suggest the government to look at revising downwards the circle rates as in many parts of the country these have now kept pace with the prevailing market conditions.

The package announced today also contained measures to improve the ease of doing business for contractors. Relaxations announced regarding Earnest Money Deposit and Performance Security regarding Government tenders will release much needed capital for project developers. FICCI has been making this point to the government as these requirements block a lot of capital that could otherwise be used by the contractors to undertake projects.

Enhancing the outlay on fertiliser subsidy, higher allocation for EXIM bank under lines of credit to promote project exports, a small but important allocation for promoting R&D related to COVID vaccine were the other important announcements, added Dr Reddy.

 

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