New Delhi : Commenting on the Union Budget 2016-17, Harshavardhan Neotia, President, FICCI said “Overall the budget proposals are in line with the development priorities of the nation.
The Finance Minister has made a strong attempt to pump prime the rural economy and the infrastructure sector. This would yield dividends and we foresee a multiplier effect in the form of demand generation and employment creation over time.
The state of the agriculture sector on account of two consecutive years of monsoon failure was precarious and it deserved the attention that was needed.”
“Additionally, we see a lot of emphasis on affordable housing segment which will also result in forward and backward linkages and thus propel growth. Sticking to the fiscal framework is another major plus and should offer comfort to the international community. Attempts towards tax simplification and improving the tax litigation framework are also noteworthy”, added Neotia.
Union Budget 2016-17 presented earlier today has focused on ensuring long term sustainability of the agriculture sector of the economy as it still accounts for nearly half of the population dependent on it for its livelihood generation.
“By committing itself to doubling farmer’s income in five years, the government has ensured that all steps will be taken that would fortify the viability of the agriculture sector in the coming years,” added Neotia.
In the rural sector, we see the government enhancing allocation under MGNREGS and linking it with asset creation to address the issues of rural and farm distress.
Additionally, under the Swacch Bharat Mission, the idea to reward villages that give adequate focus on sanitation. “There is a clear link between a healthy society and higher GDP growth as outlined in the Economic Survey and we are happy to see this thought process being carried in the budget,” added Neotia.
“Another key suggestion from the Economic Survey that mirrors in the budget is the focus on creating new jobs in the formal sector. Towards this the Finance Minister has announced that contribution towards Employee Pension Scheme for the first three years will be supported by the government.
FICCI in its pre-budget consultation with the Finance Minister had suggested that contribution to PF and ESI for the first three years particularly for start-ups and SMEs should be contributed by the government and we are happy that a start has been made in this direction”, said Neotia.
On the tax proposals as laid out in the Union Budget 2016-17, some of FICCI’s suggestions find a reflection in the budget. The measures announced to support start-ups either by way of 100 percent deduction of profits for three out of five years or through exemption of tax on capital gains will go a long way in promoting start-up activity in the country that is bustling with entrepreneurial energy.
“Further, for driving innovation, FICCI had suggested a tax framework similar to the Patent Box regime as applicable in UK. We are glad to note that in this budget the Finance Minister has laid out a special patent regime with 10 percent rate of tax on income from worldwide exploitation of patents developed and registered in India,” added Neotia.
The announcement of rationalization of interest rates on indirect taxes is welcome. The reduction in the rate of interest for delayed payments from 18 percent (24 percent and 30 percent for service tax) to 15 percent is a step in the right direction. (ANI)