New Delhi: Confederation of Indian Industry (CII), while presenting its pre-budget memorandum to the Ministry of Finance, has outlined a four point agenda to re-energize growth in the economy.
At the outset, CII stressed on the need for kick starting the investment cycle by fast tracking decision making process for approval of projects by putting in place necessary policy measures to clear 50 large projects in consultation with state governments and relevant ministries within a pre decided time frame – like 30 days ,expediting the setting up of National Investment Board, raising rate of depreciation from 15% to 25% for investment in plant & machinery in a pre-defined period of 3 years and raising Rs 50,000 crore (out of the Rs 4 lakh crore) for asset creation through facilitating the settlement of funds locked up in disputes and litigations.
The ailing real-estate sector also needs a boost in the form of measures such as allowing the sector to raise funds through ECBs, ADRs & GDRs and according infrastructure status to real estate developers engaged in low cost housing to augment demand.
On fiscal Consolidation, the second key component critical for revival of growth, CII suggested measures for augmenting revenue and curtailing non-priority expenditure. On revenue generation, CII suggested raising Rs 50,000 crore through disinvestment, monetizing surplus land available with the government, utilizing the free cash flows of PSUs (pegged at Rs 41,500 crore) and unlocking the assets locked up in chronically sick PSUs to augment revenue stream.
On measures related to expenditure control, CII stressed on the need to curtail non priority expenditure by rationalizing subsides by gradually removing the subsidy on diesel, targeting a 10% saving by using limited quantitative restriction on purchase of subsided fertilizer and consolidation of overlapping parts of central schemes.
On encouraging consumption and boosting exports, the third and fourth key ingredient pivotal for reviving growth, CII suggested adjusting the exemption limit to inflation index. Further, in order to provide a fillip to the fragile export sector, CII recommended the extension of interest subvention scheme to all sectors including automotive, pharmaceuticals, and engineering.
While presenting the recommendations CII stated that the budget should aim at facilitating convergence to the long-term objective of having a simplified and rational taxation system. In order to ensure this, CII asked for bringing more clarity, transparency & certainty in implementation of tax provisions and re-engineer tax administration by simplifying the procedures and reducing the compliance cost. In addition to these measures, CII suggested the necessity of improving the efficiency and quality of alternate dispute resolution mechanisms like mutual agreement procedure (MAPs), dispute resolution panel (DRPs) and now advance pricing agreements (APAs).
On indirect taxes, CII recommended status quo at the current rates for excise, customs duty and service tax, in order to maintain stability in taxation. The rates may be re-aligned at the time of GST implementation. While emphasizing on early implementation of GST, CII further proposed that the Finance Ministry should address the issues that lead to blockage of input credit as it leads to an inequitable situation where on the one hand taxation of services is based on the principles of GST, while on the other the system availing credit still continues in lines with the redundant positive list based taxation system.
First Published: Friday, December 14, 2012, 15:04