Confederation of Indian Industry (CII) President Ajay Shriram on Thursday that the maiden Budget presented by Union Finance Minister Arun Jaitley contains a comprehensive package for economic revival and creation of jobs.
"Budget 2014-15 provides an extensive roadmap for all sectors of the economy and would lay a strong and stable foundation for boosting savings and investments. We are particularly happy since a large number of suggestions of CII have found place in the Budget. This budget is directional and aimed at the medium term," said the CII President.
He noted that the Finance Minister has laid adequate emphasis on the need for fiscal consolidation and maintained the fiscal deficit target of 4.1 per cent of GDP for 2014-15 despite the challenges of an economic slowdown.
The announcement on setting up an Expenditure Management Commission, as suggested by CII, which will review the efficiency of government expenditure is welcome. Similarly, subsidy targeting to beneficiaries and overhaul of the subsidy regime has been stressed.
"Given the multiple fiscal constraints, the Finance Minister has come out with a commendable direction for growth and reforms which we hope will be rapidly translated into action on the ground," added Shriram.
The promise of maintaining a stable and predictable tax regime will be a boost for investors' confidence which had taken a hit due to issues such as the retrospective changes in tax laws. The creation of a High Level Committee by CBDT to scrutinize all cases arising out of past amendments is welcome. Other tax-related measures regarding transfer pricing, inverted duty structures, and investment allowance are in line with CII recommendations, noted Shriram.
"Investment promotion and boosting business confidence has received high attention and is greatly welcomed by industry," he added.
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A key measure has been to reassure foreign investors that India remains an attractive destination. Expanding FDI in defense and insurance to 49% and allowing FDI in e-commerce as well as liberalisation of urban development would bring in vital funds to these sectors.
Definitive steps have also been taken to revive capital markets and strengthen the financial sector which will help raise resources for investment, said Shriram. The banking sector will also be capitalised in accordance with Basel III norms by adding more public shareholdings.
The CII welcomes the move to shift to the new Indian Accounting Standards for Indian Companies which will help smoothen compliance.
Infrastructure has received high attention in the Budget. CII welcomes the setting up of 3P India to resolve issues in the PPP framework for infrastructure development.
"Banks have been permitted to raise long-term funds with lower regulatory requirements, which would infuse more funds into the infrastructure sector. Pass-through of taxation for Infrastructure and Real Estate Investment Trusts would help attract investment in these sectors," said Shriram.
Regarding the revival of manufacturing, CII had called for a reduction in the limit in the investment allowance. We are happy that the new floor has been set at Rs 25 crores. CII had also suggested re-definition of MSME as per investment in plant and machinery, which has been accepted in the Budget. In order to encourage start-ups, the Budget has provided a fund of Rs 10,000 crore.
Agriculture and its linkages with manufacturing have been addressed through multiple measures such as warehousing fund, food processing, etc. CII believes that coupled with intention to improve agricultural marketing and bring in private sector participation, this would help create a strong farm-to-fork supply chain. In addition, the price stabilisation fund would mitigate inflationary pressures.
CII welcomes the commitment to amend the Apprenticeship Act and hopes that it will be in line with industry needs. The Skill Mission to build multi-skill capacity is much needed and should be rolled out speedily.