As the BJP-led NDA presents its second budget today, India Inc will be keeping a close eye on announcements concerning the industry that's badly beaten by the coronavirus pandemic. Despite some immediate relief measures announced by the Centre, many companies are still struggling to reach pre-Covid sale levels.
Industry representatives are hopeful that the Union Budget 2021 would play a vital role in achieving the objective of putting India on a sustained high-growth trajectory. In this year's budget, the Centre is expected to primarily focus on manufacturing, Atmanirbhar Bharat and healthcare as main themes, say reports. Agriculture and infrastructure may also receive a push.
For manufacturing, the Centre may give a further push to the Production-Linked Incentive (PLI) scheme, which has been quite a hit among companies eying investment in India. The industry body CII (Confederation of Indian Industries) has recommended a three-pronged strategy for Budget 2021, under which it has requested the Centre to focus around growth, fiscal consolidation and strengthening of the financial sector to stave off Covid-19 impact.
Also read: Budget 2021
"This year's budget comes at a time when the Indian economy is recovering from the unprecedented shock caused by Covid. The government has an unenviable task of ensuring a fine balance between supporting economic recovery and growth on one hand and ensuring macro-economic stability on the other," said Krishna Bodanapu, CII Telangana chapter chairman said.
The CII says the budget proposals should focus on growth, and alongside look at fiscal management for the next three years. "Government expenditure should be prioritised in three areas- infrastructure, healthcare and sustainability," it said.
CII's other recommendations include graded road map towards competitive import tariffs over three years; towards encouraging domestic manufacturing; and to improve the financial strength of banks. FICCI (Federation of Indian Chambers of Commerce & Industry) says the upcoming budget must prioritise growth-oriented measures over fiscal considerations. It also wants the government to launch a scheme on the lines of MGNREGA for urban poor. The Centre should also focus on increasing take-home salary for individuals, says the industry body.
"Consider making an employee's contribution to EPF voluntary (without making any change in the employer's contribution). Also, consider giving a three-year holiday for ESI contribution to both employers and employees," FICCI Telangana Council chairman T Muralidharan said.
The Centre has envisaged increasing public spend on healthcare to 2.5 per cent of GDP from around 1.3 per cent currently. FICCI wants the government to start spending an extra 0.5 per cent of GDP every year on health for the next five years.