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The Centre must in the upcoming full Budget double down on infrastructure development spend and hike the Capex allocation by 30 percent over the Revised Estimate level of 2023-24, Ranjeet Mehta, Executive Director, PHDCCI has said.
The recent ₹2.11 lakh crore dividend bounty from the RBI should be primarily utilised for infrastructure development, which will help boost job creation in the country, Mehta told businessline in an interview. A portion could also be used for fiscal consolidation, he added.
He highlighted that focus on infrastructure development can help address the problem of unemployment as enhanced spend would lead to job opportunities.
- Also read: PHDCCI calls for urgent National Employment Policy and new industrial reforms in 100-day agenda
For 2023-24, the Centre had pegged the Revised estimate for Capex at ₹9.5 lakh crore. In the interim budget, the capex allocation was raised to ₹ 11.11 lakh crore, up 16 percent over the Revised estimate level.
“Budget has to be bold and more ambitious in improving overall infrastructure. The kind of economic growth we expect in times to come, the first stress always comes on infrastructure. World class infrastructure and supply chain readiness is very very important to make our economy globally competitive”, Mehta told BusinessLine in an interview.
Budget must also give push to Green economy as Sustainability will be core of economic development, he added.
Corporate tax rate
PHDCCI, whose top brass are set to meet Finance & Corporate Affairs Minister Nirmala Sitharaman for pre-budget consultations on Thursday, also wants rationalisation of Corporate tax rate in the upcoming budget.
“I can’t share a number they should look at. But government should definitely consider to rationalise it further. There is case for reducing tax rate for existing companies. For new companies, the current rate is fine”, he said. Mehta said that any reduction in corporate tax rate would boost private investment, spur overall growth.
In September 2019, the Centre had announced a cut in base corporate tax for then existing companies to 22 per cent from 30 per cent. For new manufacturing firms, incorporated after October 1, 2019, the corporate tax rate was cut to 15 per cent from 25 per cent.
On Goods and Services Tax (GST), Mehta said that PHDCCI is in favour of implementation of three rate structure. He also stressed the need to bring petroleum products within GST ambit.
MSME push
Besides giving a big push to Rural India in terms of higher allocation for agriculture, the upcoming budget must place special focus on MSMEs, which are the backbone of the Indian economy, Mehta said.
There has to be interventions in the budget to bring down the interest rates on borrowings of MSMEs, he said. All the benefits of priority sector lending should be extended to MSMEs, Mehta added.
“Micro and small enterprises need handholding and cheaper financing option will be need of hour to boost the economy. There has to be mechanism by which MSME gets loans seamlessly”, Mehta added.
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