New Delhi: Continued focus on investment in infrastructure, further incentivising manufacturing and sustained efforts in ‘Ease of Doing Business’, pushing through disinvestment and leaving more money in the hands of middle and lower middle class people are amongst the major expectations of India Inc , as brought out by an ASSOCHAM pre-Budget survey.
The survey covering more than 400 people from 40 plus cities across the country pointed towards the industry being optimistic about economic recovery and embracing the ‘new normal following the Covid period, challenging geo-political situation and slowdown or recession fears in several important economies of the world.
“While more support would be needed in coming times, the industry maintains hope of continued Government support and collaboration with the private sector to realise the vision of becoming a US$5 trillion economy”.
More than two third of the respondents in the survey stated that the government should reduce the tax rates in income tax and rework the exemption limit leaving more disposable income in the hands of consumers. ”The economy needs both robust demand across different sectors. This would eventually lead to newer investment, giving a double push to growth that would be a catalyst for job creation on a large scale,” ASSOCHAM Secretary General Mr Deepak Sood said.
Despite global challenges, it is expected that the Indian economy is likely to grow by 6.8-7% in the medium term, buoyed by a revival in the capital formation cycle. This growth projection is in line with the International Monetary Fund’s forecast of 6.8% in the current fiscal year and 6.1% in the next.
Amid the continuing fear of the Covid around the world, the government should also support the healthcare sector in the Union Budget 2023-24, followed by Education, MSME & Agriculture to provide a cushion to the economy and ensure that no disruptions are caused to the supply chain across different economic and social sectors.
A growing economy demands a constant supply of skilled manpower. Vocational education and skill development programs have been a priority in last year’s budget as well to boost employment in the country. A similar priority in addressing the unemployment issue through skill upgradation should continue.
An overwhelming number of respondents also want boost to the infrastructure and housing sector as well as giving further incentives to the companies to hire more people.
The Government has taken much-needed steps to support the Indian industry and push post covid recovery of the economy. The introduction of PLI schemes is one of the important measures taken by the Government. A view emerged that the scheme is creating a lot of buzz and more and more companies are committing new investment in manufacturing, taking advantage of the scheme.
MSMEs are the backbone of the Indian economy, contributing approximately 30% of the country’s GDP (Gross Domestic Product), 45% of manufacturing output, and providing significant employment for India’s population. The Government a has been proactive to ensure to provide all benefits- the ECLGS scheme, Digitised SME loans, and duty exemptions. However, delayed payment remains the main concern for the sector. Reducing the compliance burden and access to the latest technologies at a lower cost should be the way forward for the MSMEs. There has been a demand for extension of the ECLGS.
The tax rates for individuals have not been changed since FY 2017-18, apart from the new tax regime, which is subject to onerous conditions. Accordingly, the majority of the respondents suggested reducing the effective rate of personal income tax.
The current capital gains tax structure is too complicated. Therefore,” we need to re-look at the capital gains tax structure in terms of the rates and the holding periods. There should be alignment in the rates of taxation across all asset classes and the holding period across all asset classes”.
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