Jamshedpur, Feb. 29: Welcoming the announcements in the Union Budget for 2016-17, Sumit Mazumder, President, Confederation of Indian Industry (CII), stated, “Budget 2016-17 is well-balanced and comprehensively addresses all aspects that industry was looking for, including revitalizing the rural economy, infrastructure build-up, relief for stressed assets, and simplification of taxes.”
The CII president especially lauded the government for adhering to the fiscal consolidation roadmap for this year as well as 2016-17. “CII is happy that the fiscal deficit as announced by the finance minister in Budget 2015-16 has been maintained given current compulsions of the Seventh Pay Commission and the challenging global situation,” a press communiqué issued by the CII stated.
Mazumder also commended the macroeconomic priorities and structural reforms laid out in the Budget. “We believe that the focus on macroeconomic stability, boosting domestic demand and continued economic reforms would further cement India’s position as a haven of growth in a fragile global economy.”
The nine pillars of the Budget are well-strategized with emphasis on agriculture and doubling farmer incomes, healthcare, education, infrastructure and investments, and so on. Innovative schemes have been rolled out in all the nine areas, said Mazumder.
“We particularly welcome the different ways adopted by the Union finance minister to drive employment generation,” added the CII president. Budget 2016-17 undertakes several key initiatives for job creation in the formal sector, which was taken up consistently by CII. Contribution of EPF for new employees for three years, entrepreneurship development courses, changes in the transport sector, and so on would encourage job generation.
Low-cost housing will be a huge demand multiplier, and CII welcomes the many initiatives on this. CII also welcomes the measures to revive infrastructure investment such as the new credit rating system and the commitment to issue guidelines for renegotiation of PPPs.
The allocations for agriculture and the rural economy are particularly noteworthy, given that two successive drought years have subdued rural demand. CII had suggested that schemes such as Pradhan Mantri Krishi Sinchai Yojanaand Pradhan Mantri Gram Sadak Yojana be allocated higher funds, which was mentioned in the Budget.
The added expenditure on governance at the Gram Panchayat level would help convert these funds into substantial outcomes, while introduction of FDI into marketing of food products would increase investments in farming, said Mazumder.
CII would have liked to see faster movement on reduction of corporate income taxes, as promised in the last Budget. However, a considered roadmap as was indicated by the finance minister is welcome.
On the positive side, the Budget has relaxed taxes on specific groups of companies. New manufacturing companies incorporated on or after 1.3.2016 have been given an option to be taxed at 25% + surcharge and cess.
In addition to this, the corporate tax rate for the next financial year for relatively small enterprises has been lowered to 29% plus surcharge and cess. This will encourage entrepreneurship and employment creation.
The Finance Minister has further proposed to provide 100% deduction of profits for 3 out of 5 years for start-ups setup during April, 2016 to March, 2019. Further, period for getting benefit of long term capital gain regime in case of unlisted companies is proposed to be reduced from three to two years.
In line with CII recommendations, a lot of emphasis has been given in the Budget on the Dispute Resolution Mechanism. Constitution of a high level committee chaired by the Union revenue secretary to oversee fresh cases where assessing officer applies the retrospective amendment is welcome.
In his concluding remarks, the CII president said that Budget 2016-17 has many tax and spending measures that will go a long way in promoting investment and growth.
Thanking the finance minister, Mazumder said that CII is very happy to see a large number of our suggestions finding place in the Union Budget.