Budget 2020 expectations India: Industry bodies on Tuesday asked a resource-hungry government to resort to a fiscal expansion of 50-75 basis points in relation to the deficit target and spend more on asset creation, especially rural infrastructure. They also pitched for cut in the personal income tax rates to boost sagging consumption.
In a pre-Budget meeting with finance minister Nirmala Sitharaman, CII president Vikram Kirloskar suggested that the current economic situation warrants an expansionary fiscal policy and the glide-path can be appropriately tweaked to converge with the FRBM trajectory over a two- to three-year period.
The glide path to bring down the fiscal deficit to 3% has been repeatedly revised by successive governments, with the latest deadline being FY21. For the current fiscal, the government has set the target at 3.3%, against the actual of 3.5% in FY18.
Ficci has recommended that income of only Rs. 20 lakh or above be taxed at the peak rate of 30% for individuals, against the current Rs. 10 lakh. Similarly, income up to Rs. 5 lakh be exempt from tax for all, from the current limit of Rs. 2.5 lakh (for those up to the age of 60).
CII suggested that the government (Central and state) and CPSEs must clear their dues to industry at the earliest and a portal must be set up to capture the all pending payments. The government should also announce a credit guarantee scheme under which state-run banks can extend loans to government buyers for releasing arbitral awards to private vendors. The loans can then be backed by the government. Around Rs. 1 lakh crore worth arbitral awards are still pending, according to the CII. The body also pitched for scrapping long-term capital gains tax.
In a separate meeting with the finance minister, stakeholders from the agriculture and allied sectors sought steps to boost investment in the sector and enhance market access. They also asked for a complete overhaul of the insurance system for farmers. Ajay Vir Jakhar, chairman of Bharat Krishak Samaj, said the existing Pradhan Mantri Fasal Bima Yojana can be scrapped; instead, a separate compensation scheme can be designed and a disaster relief commission can be set up for farmers. Jakhar said GST on all processed food and dairy items should be cut to 5%. He also asked for the creation of a statutory farmers’ commission, headed by a farmer and comprising an IAS officer as a full-time member and the agriculture secretary as the official member to address various critical issues relating to farmers.
The stakeholders also suggested that e-NAM can be suitably restructured to make it more effective.