The Confederation of Indian Industry (CII) has forwarded a three-pronged strategy for Union Budget 2021, centering around the key themes of growth, fiscal consolidation, and strengthening of the financial sector targeted to overcome the impact of the COVID-19 pandemic on the economy.
The CII has suggested that the budget proposals focus on growth, and alongside look at fiscal management from a three-year perspective. Disinvestment and monetisation of assets can bring in revenues at a time when tax revenues have fallen sharply, said the industry body.
The CII presented its recommendations to Finance Minister Nirmala Sitharaman on December 14.
“The government has an unenviable task of ensuring a fine balance between supporting economic recovery and growth on one hand and ensuring macro-economic stability on the other. The CII’s suggestions take this aspect into cognisance,” said Uday Kotak, President, CII.“Government expenditure should be prioritised in three areas- infrastructure, healthcare, and sustainability. The budget proposals should also address two critical areas of boosting private investments and providing support for employment generation," Kotak added.
The CII recommended that the government bring down its stake in public sector banks (PSB) to below 50 percent through the market route, over the next 12 months, except for 3-4 large PSBs such as State Bank of India, Bank of Baroda, and the Union Bank of India.
It further recommended that the government create state-owned, professionally managed Development Finance Institutions (DFIs) to finance key sectors of the economy, on the lines of KfW Germany, Brazil Development Bank (BNDES), and Korea Development Bank.
"This could be achieved by infusing equity into NABARD for financing agriculture and rural sector, SIDBI for financing MSMEs and IIFCL for financing infrastructure," the body said.
Financial Sector ReformsAchieving the vision of India being a $5 trillion economy is contingent on having a strong financial sector. To achieve the same:
Increase the expenditure in healthcare to 3 percent of GDP over 3 years.
Infrastructure for both rural and urban areas as infrastructure spend has one of the highest multiplier effects on the economy.
Focus on sustainability in order to build an environment-friendly modern economy.
Further, two most critical areas that require immediate attention – private investment and creation of jobs.
Private InvestmentThere are early signs of private investment returning. To sustain this:
Support for job creation
Section 80JJAA, provides for deduction of 30 percent on emoluments paid to new employees, for three years. This is available up to an emolument of Rs 25,000 per month. Raise the cap to Rs 50,000 per month.
Extend ‘Vivad se Vishwas’ Scheme
As the operational challenges arising out of the COVID-19 pandemic are likely to continue for some more time, extend the scheme till 31 December 2021. Appeals pending on or before June 30, 2021, could be considered eligible for the Scheme.
Set timelines for disposal of appeals by Commissioner (Appeals) on the lines of timelines set for Dispute Resolution Panel.
Restrict number of adjournments by either party to two.
Provide option of fast-tracking appeals at Commissioner and Tribunal levels on payment of a higher fee.
Allow all taxpayers, irrespective of the nature of adjustments to approach the DRP. There could be monetary thresholds, if required.
Increase monetary thresholds for Department to appeal for instance Rs 1 crore for Tribunal, Rs 2 crore for High Court and Rs 5 crore for the Supreme Court.
Increase the number of Commissioner Appeals, benches at Tribunal and tax benches at High Court for speedy resolution. If required, recover the additional expenditure by increasing the appeal filing fees.Indirect Tax Recommendations