FICCI expects that the Union Budget 2015-16 will put forth a growth oriented agenda while keeping public finances in order.
The budget should focus on reigniting the domestic capex cycle and at the same time ensure fiscal discipline, especially by lowering revenue deficit.
The report of Expenditure Management Commission is expected to lay out a roadmap for rationalization of subsidies and curtailing non-productive expenditure. We hope that these will be earnestly taken up in the budget. This will also enable greater allocation to productive capital expenditure like infrastructure, which will have a positive effect on economic growth and development.
We look forward to greater allocation of funds in roads, highways, railways, freight corridors, inland waterways, ports and also for improvements in rural and civic infrastructure. This will facilitate acceleration of other economic activities, attract more private investments and simultaneously create large scale job opportunities.
To facilitate expansion, our banking sector needs to be supported given the existing challenge of capital requirements. FICCI hopes the union Budget will provide a direction towards capitalisation of public sector banks. The government may consider diluting its stake in Public Sector Banks upto 26% to help them raise adequate equity capital.
A key factor investor sentiment is the tax environment. While the government has announced some measures to improve the tax environment, a few critical issues still need to be addressed. FICCI hopes that the Union Budget will create a genuine non-adversarial and conducive tax environment. Revenue estimates have to be set realistically and performance appraisals of tax officials should not be based on targets.
To raise revenues, the government should consider widening the tax base by extending it to non-tax payers who otherwise have the ability to pay, and exploring alternative non-tax revenues, especially through strategically planned disinvestments.
FICCI expects the Union Budget to provide for a rational tax structure that will give a boost to demand as well as investments. Passage of GST bill, correction of inverted duty structures, reduction of basic rate of MAT, and deferment of GAAR will enhance the confidence of investors.
Additionally, some tax relief to individuals will improve disposable incomes, boost consumer sentiment, thus driving demand.