Finance Minister Nirmala Sitharaman is expected to reveal plans to fast-track economic growth through larger spending on infrastructure and healthcare when she presents the Union Budget for 2022/2023 on February 1. Corporates and industry lobby groups, which expect bigger capital expenditure as the government looks to create jobs, also seek tax breaks for industries such as automobiles, manufacturing and tourism, hit by the coronavirus pandemic.
Here is a wishlist from industry groups:
HEALTHCARE AND PHARMACEUTICALS
The domestic pharmaceutical industry expects an increase in funds allocated to it, along with a focus on policies to foster research and development.
REAL ESTATE AND INFRASTRUCTURE
With demand for residential real estate gradually bouncing back, realtors seek more consumer friendly measures from the budget. Real estate firms want a hike in the cap on deductions against interest on home loans, as also more ‘affordable’ housing in metropolitan cities.
The government now groups houses costing less than 4.5 million Indian rupees ($59,000) in such cities in the ‘affordable’ category, resulting in lower tax and loan interest rates. Builders say the figure should be extended to 10 million rupees.
Industry desires include tax cuts, along with a uniform GST rate, export incentives, a thrust on research and development efforts, a boost to domestic chip-building capabilities, and investment in infrastructure development and promotion of electric vehicle ecosystem.
The beleaguered aviation industry is vying for fiscal concessions and industry-friendly policies to recover from the massive dent caused by the still raging COVID-19 pandemic.
TOURISM AND HOSPITALITY
Another major loser from the pandemic has been the tourism and hospitality industry, which is also seeking some form of income support from the government.
The retail sector has been pushing to hasten adoption of a national retail trade policy to streamline growth of all kinds of retail trade. It also wants the status of an industry, with a reduced compliance and regulatory burden, along with financial incentives for big projects.
The industry seeks details of plans for the impending privatisation of state-run banks, as well as on the functioning and scaling up of the National Asset Reconstruction Company Ltd.
NON-BANK FINANCIAL INSTITUTIONS
As non-bank finance companies have grown to account for 25% of Indian credit exposure, rating agency ICRA expects the budget to re-examine a permanent refinance window for the sector from the central bank, or creation of a body to act as a backstop for such firms.
The government has recently set up a fintech department and launched a Payment Investment Development Fund (PIDF) to encourage growth of the industry. Several firms have sought an extension of schemes for micro, small and medium enterprises introduced during the pandemic, while some players also expect the government to increase the credit guarantee for lending and provide tax exemptions.