All India Association of Industries (AIAI) welcomes the Union Budget 2017-18 for its balanced approach and enhanced thrust on infrastructure, promoting digitalization, rationalizing taxation and adhering to fiscal prudence. The Budget attempts to address some of the weak links in the economy by the pragmatic approach to transform, energize and clean India.
Mr. Vijay Kalantri, President AIAI said, “MSMEs reeling under heavy pressure post demonetisation would get a relief with the Government’s move to reduce the corporate tax rate for companies with annual turnover of less than Rs 50 crore to 25% (from 30%) is a welcome move as it is expected to benefit 96% of companies (MSMEs).” However, AIAI expects that there should have been an additional thrust to boost capacity enhancement to make the Make in India programme successful. Similarly the inclusion of affordable housing in infrastructure sector and capital gain relief will provide much needed boost to the struggling real estate sector. The reduction of customs duty on LNG to 2.5% would help in Government’s move towards clean environment. Although industry was expecting abolishment of MAT, Government has balanced it by allowing it to carry forward for 15 years.
On the personal income tax front, exemptions and tax reduction provided to the middle class is meager in the view of rising inflation and globalization. The government should have raised the personal income tax exemption limit to Rs 5,00,000 instead of Rs 2,50,000.
The record allocation of Rs 396,000 crore for infrastructure sector would improve the competitiveness of the economy. Especially, the government has raised the allocation for investment in the railway sector to Rs 131,000 crore and it has provided renewed focus on improving safety in the sector.
The proposed introduction of trade infrastructure export scheme would improve ease of doing business for exporters. Government’s thrust on high public expenditure will boost the struggling economy on account of lower private sector expenditure.
In the rural sector, the proposal to allocate Rs 5,000 crore for micro-irrigation projects, increasing the coverage of crop insurance scheme, increasing outlay towards Mahatma Gandhi National Rural Employment Scheme (MNREGA) underlines Government’s intentions to boost rural economy and would certainly address regional imbalance.
Continuing with the Government’s push to digitisation, the budget has promoted digital payment system with cashback and other measures are welcome steps. In this regard, the proposal to set up payment regulatory board and targeting of 2500 crore digital transactions in 2017-18 are moves in the right direction.
The budget has taken some commendable initiatives to promote women empowerment. AIAI welcomes the increased allocation of Rs 184,632 crore towards welfare of women and children under various ministries. The Government has doubled the credit deployment target under the Pradhan Mantri Mudra Yojna to Rs 2.44 lakh crore in 2017-18, which would benefit aspiring women entrepreneurs and businessmen from backward caste. The proposed allocation of Rs 500 crore to set up Mahila Shakti Kendras for skill development of rural women is a necessary step to boost women empowerment.
Among other measures, AIAI welcomes the abolition of the foreign investment promotion board (FIPB), proposals to introduce further reforms in FDI policy. These will improve ‘ease of doing business’ in India for foreign investors.
Overall the budget impetus to push reforms, affordable housing, transparency in political funding and simplification of tax laws will help to support inclusive growth.