The impetus to the rural economy and the overall agriculture sector in the Union Budget would be a force multiplier for overall growth in the coming years, the Federation of Indian Chambers of Commerce and Industry (FICCI) said on Thursday.
"The budget is very much in line with the expectations of FICCI. It will drive consumption in a big way, thus helping growth in other related sectors. Additionally, the attention to the MSMEs through better access to finance or lowering of the corporate tax rate would also help spur both employment and growth in this vital segment of the economy," said FICCI President Rashesh Shah.
Shah further said the stress on job creation in the Budget will help generate meaningful employment going ahead.
With regards to the new National Health Protection Scheme, under which an annual health insurance cover of Rs 5 lakh will be provided to nearly one third of the households, FICCI said the programme would lead to a clear increase in the demand for quality healthcare facilities and services.
"While we see a clear focus on the infrastructure sector development in the rural areas, the plans for such development in the urban areas including wider connectivity across the length and breadth of the country have also got the needed attention in the budget," said Shah.
Amid the recent structural reforms the government undertook in the last year, FICCI opined that a need to give a fillip to demand in the economy arose, particularly through infrastructure development and strengthening of the rural economy.
However, given the performance on the disinvestment front this year, FICCI said the government was expected to be more ambitious in terms of setting the target for the next year, as the current target of Rs. 80,000 crore for disinvestment receipts in FY19, is "a bit conservative."
Further, FICCI said the continuation of securities transaction tax (STT) even while re-introducing long term capital gains (LTCG) will put some additional burden on the market participants. This, however, should not impact markets in the long-term, FICCI said.
"With the markets giving a compounded return of 15-16 percent over the last 20 years, a tax impacting 1.5 percent return should not affect the domestic investor appetite for equity investment," a FICCI statement said.
The organisation also noted that while a consolidation process for the public-sector insurance companies has been indicated, a similar plan for the banking sector is awaited to be announced soon.
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