Matching the expectations, the Finance Minister Arun Jaitley delivered an excellent General Budget on Saturday with many proposals to promote growth and investments,” said Ajay S Shriram, president, CII.
“Measures to revive investment in infrastructure include greater investment by the Central Government PSEs, the creation of the National Investment and Infrastructure Fund and revival of the PPP model. An excellent suggestion is the implementation of five ultra-mega power projects on a plug-and-play mode meaning that all sovereign clearances will be given before bidding out the project to the private sector. These were recommended by CII and we are delighted that the Finance Minister has taken these on board” claimed the CII President.
The Budget attempts to kick-start the investment process by investing from public sources. This would have some impact on the path for fiscal consolidation and the Finance Minister has pushed back the year of achieving the 3.0 per cent fiscal deficit by one year.
“CII supports such a move as long as the extra money is used for capital expenditure rather than on current revenue spending. It is commendable that the Minister has been able to achieve the target of 4.1 per cent of GDP in the current year. CII is especially impressed with the Finance Minister’s focus on revenue deficit,’’ the press release said.
The reduction of corporate tax rate from 30 per cent to 25 per cent over four years will make Indian companies competitive vis-à-vis their competitors and is a big confidence booster to the industry. This, together with the phased removal of exemptions would usher in a new tax regime with lower level of litigation. Any concern on losing tax revenue is addressed by the fact that the service tax rate has been increased by 2 per cent.
Revenue will also be augmented by the abolition in wealth tax and its replacement by a 2 per cent surcharge on incomes of over Rs1 crore, according to CII.
The government has announced a roadmap on GST effective April 1, 2016. This will be a major rationalization of indirect taxation and will go a long way in spurring growth in Indian economy to double digit. On indirect taxes, the proposals include exemption of SAD on all Items and reduction of Customs duty on 22 Items to help streamline the inverted duty structure.