New Delhi: The Union Budget 2023-24 is being presented at a crucial juncture of geo-political uncertainties, high inflation and slowing world economic growth. The economic growth of India’s top 10 export destinations and top 10 sources of imports is projected to decelerate in the current year 2022 and next year 2023. At this juncture, calibrated steps to enhance domestic sources of growth would be crucial to maintain the steady economic growth trajectory.
PHDCCI would like to suggest the following measures for the forthcoming Budget 2023-24.
Enhance Private Investments
To enhance the momentum in private investments, there is a need to refuel consumption, capacity utilization, percolation of Ease of Doing Business at the factory level, rationalization of cost of doing business, rationalization of taxation, state of the art infrastructure, enhanced incomes in the agriculture sector, inclusive health infrastructure, quality education and employment creation in the economy.
Demand creation/ consumption
Demand creation will have multiplier effect on enhanced production possibilities, expansion of capacities, vis-à-vis private investments and employment creation. This will turn-on the overall virtuous circle of growth and development of Indian economy. At this juncture, to enhance the consumption in the economy, there is a need to increase the tax rebate benefits for consumption expenditure. Tax rebate on purchase of self-occupied house is given Rs.2 lakh only since the last many years. This needs to be enhanced with the wider scope of consumption expenditure such as purchase of more than 1 house, purchase of car, along with other durables. Consumption expenditure rebate must be enhanced to Rs.5lacs per annum. This will not only enhance the aggregate demand in the economy but also attract private investments, increased capacity utilization of the firms and create enormous employment opportunities in the economy.
Ease of Doing business/ Cost of doing business
Although, procedural requirements have been relatively reduced and the communication between Government departments has become transparent and hassle free, however, the cost aspect still needs to be relaxed further. Cost of doing business should also not be more than three top world manufacturing countries, namely, China, United States and Japan.
Reduced costs of doing business and level playing field in the country will increase the competitiveness of our industry and exporters, reduce imports of the items where India has domestic capabilities.
The Government should focus on reducing the cost of doing business including the (1) costs of capital, (2) costs of power, (3) costs of logistics, (4) costs of land and availability of land and (5) costs of labour, availability of skilled labour (6) costs of compliances,
Strengthen the MSMEs
The Micro, Small & Medium Enterprises (MSMEs) sector has emerged as a highly vibrant and dynamic sector of the Indian economy over the years, with contribution of around 30% in GDP, more than 49% in exports and 11 crores in employment. The plethora of reforms for MSME sector and the amendment in the new definition of MSMEs will enhance the production possibility frontiers of the MSMEs.
At this juncture, continuous support to MSMEs and Startups is required to help them rejuvenate their growth after the daunting impact of pandemic COVID -19. It is suggested that the value chains of MSMEs should be further enhanced; thus, making them more structurally competent to add to their efficiency, share in manufacturing sector, employment generation and the country’s overall export growth momentum.
Access to finance is a major roadblock being faced by the MSMEs impacting their competitiveness and growth. The current banking norms result in high primary security and collateral security demanded by banks for the MSMEs which hampers their growth prospects. Focus of the government should therefore be on hassle free disbursements of loans at affordable rate of interest for the businesses vis-à-vis enhanced liquidity for MSMEs.
Reduction in Tax on MSME firms working as Proprietorship/Partnerships: Vast majority of MSMEs are either sole proprietorship or partnerships. Hence, taxes should come down on these types of businesses, going forward. For such businesses, it is suggested that the maximum tax slab be brought down to 25% this year.
Support the tourism sector
Tourism sector is a major engine of economic growth and an important source of foreign exchange earnings in many countries including India. The sector provides opportunities to skilled as well as unskilled job seekers, thereby, providing employment to all sections of the society. In India, majority of the travel and tourism industry is composed of MSMEs. In this regard, development of tourism infrastructure is of paramount importance and should be accorded a priority to provide for a better experience, facilities, safety to the tourists and thereby enhance employment creation in the country and facilitate growth of MSMEs.
Agriculture & rural sector must be at the forefront
Further reforms in rural infrastructure logistics and a cold chain are required as it would help in increasing the level of food processing industry and rural entrepreneurship. These would lead to increased participation in the global agriculture and food exports. Exports of agri and food processing products should be increased to the level of US$ 100 billion in next three years from the current level of around US$ 50 billion (2021-22).
The increase in public investments in agricultural infrastructure would attract private investments in cold storage, warehousing and supply chain of agriculture produce in order to reduce food wastages and get them to urban citizens at moderate rates. It shall also raise the returns to agriculturists.
Strengthen access to credit for long term loans to enhance growth and productivity in the sector and to enhance farm incomes.
Adoption of direct transfer of subsidies on electricity, fertilisers, etc. to the beneficiaries to ensure better delivery of subsidies to the end-users.
Minimise the wastages from the current level of more than 30% to less than 10% in next five years by augmenting storage capacities, modernizing/ upgrading the godowns.
It is essential that an integrated holistic view of the agriculture value chain is taken towards providing the necessary fillip to the agricultural growth. This requires a joint participatory approach from all concerned stakeholders including the farmers, input vendors, traders, processors and the government. The Union Budget can be very effective in laying down a comprehensive policy framework and providing a tremendous thrust through appropriate fiscal benefits and closely monitor the action plans.
Ensuring vital health infrastructure
The pandemic has brought the country’s health infrastructure into sharp focus, highlighting the critical position of the public health sector and the need for increased Government spending on public health. We sincerely urge to correct the imbalances in the availability of affordable healthcare facilities in different parts of the country in general and augment facilities for quality medical education in the under-served States in particular.
Step up investments in the sector for highly skilled human resources from doctors to other medical support staff like nurses, lab technicians, pharmacists, among others that are super trained for unforeseen events such as COVID-19 pandemic.
Focus on building well-equipped primary Healthcare Centers and Government hospitals across the country especially at the Tehsil/ Block level. Make health centers available within the radius of 1 km and Hospitals within the radius of 10 km
Ensure sufficient availability of funds for the salaries and other expenses in Government hospitals, Medical colleges and primary Healthcare Centers.
Invite proposals from the private sector for setting up medical devices manufacturing units, hospitals, medical insurance companies and skill training centres across the states to enhance the access to healthcare services in the country.
A clear strategy, collaborative approach by medical devices manufacturers, hospitals, scientific bodies, investors and key partners—facilitated by the government, will set India on a self-reliant path to becoming an export powerhouse of high-quality value-based products and services to the world.
Promote enhanced digitisation of medical records on the foundation of a robust technology infrastructure with suitable provisions for privacy and inter-operability.
Emphasis should be on Ayush system to ensure ALL Stay healthy in a natural way. Allopathy should be mainly used in Emergency Situations.
Focus on education and skill development
It is observed that India ranks 129 among 162 countries in the skill parameter with 1 in 5 workers as skilled. India’s labour force is also characterised by a high proportion of employment in agriculture and the informal sector with nearly half of its workforce classified as working poor. At this juncture, there is an urgent need to create a highly skilled talent base and to ensure the formation of a strong human capital base ready to serve the nation and engage with the world from a position of strength and valour.
Thus, on the socio-economic front, focus on twin merit goods of education with skill development and basic health with safety must continue with a longer-term vision. Focus on education as well as skill development is the need of the hour in order to reap the dividends of our demographic advantage and would hold a crucial place for supporting India in its journey towards being AatmaNirbhar.
For breaking news and live news updates, like us on Facebook or follow us on Twitter and Instagram. Read more on Latest Business News on India.com.
