It is directionally correct, fiscally prudent and strengthens the governance fabric, said FICCI president Pankaj Patel
GN Bureau | February 1, 2017
“This budget would tremendously strengthen the economic muscle of the country. It is directionally correct, fiscally prudent and strengthens the governance fabric of the nation,” said FICCI president Pankaj Patel on Wednesday.
“I think the biggest takeaway from this budget is the reform introduced in the area of political funding. The demonetisation move of the government was an attack on the stock of black money and the measures announced in the budget on electoral funding will help attack the root cause of corruption of India. FICCI had represented to the government for bringing in such measures that will enhance transparency in line with the tenets of good governance. I give full marks to the government for this bold and pragmatic measure,” added Patel.
The reduction in the tax rate for individuals in the lowest income tax slab will leave more disposable income in the hands of the people and will enhance consumption demand in the economy which had taken evident hit due to the demonetisation move. “On the face of it, this step may not appear significant, but a 50 percent reduction in tax liability is a huge positive for the maximum number of tax payers of the country. The finance minister has gone the Keynesian way to stimulate growth in the economy through higher demand,” added Patel.
“The all-time high annual allocation for the reformed MNREGA scheme will not only help improve the income levels in the rural areas of the country but also help generate a swathe of new jobs across vast parts of the nation. This is a clear boost for generating demand on a large scale,” said Patel.
With the inclusion of the railway budget in the main budget, government has been able to focus on development of the transportation network within the country in an integrated manner. The major plans as outlined by the finance minister on infrastructure development will help improve the service quality as well as bring in greater efficiency in the operations of our railways, ports, roads and highways.
“Another plus in the infra sector is the extension of infrastructure sector status to the affordable housing segment. Housing sector is a force multiplier with its linkages to almost 200 industries across the economy. FICCI had strongly advocated for special recognition of this potential and thanks the government for having made this move,” added Patel.
Financial sector being the backbone of the economy also got the needed attention in the Budget. FICCI welcomes the abolition of Foreign Investment Promotion Board as the institution was becoming increasingly irrelevant with as much as 90 percent of the FDI inflows coming through the automatic route.
The announcement to list PSEs in the Railways sector, launch of a new Exchange Traded Fund with diversified CPSE stocks and other government holdings along with the already indicated listing of the five public sector general insurance companies indicates a new philosophy with regard to disinvestment.
“On the banking side while the finance minister did allocate Rs. 10,000 crore for capitalising public sector banks, FICCI feels that this figure will have to be increased during the course of the next fiscal given the actual requirements of the banks and the need to support growth. Additionally, as was suggested in the Economic Survey, we look forward to the government’s plan to set up a Public Sector Asset Rehabilitation Agency. Such an institution, on which FICCI has shared its own research with the finance ministry, is the need of the hour”, said Patel.