New Delhi, July 10, 2014: Commenting on the Union Budget 2014-15 announced today, Mr. Sidharth Birla, President, FICCI said “Through this budget the Finance Minister has set the ground for repair of the economy. There has been a mix of both short term and long term measures geared towards boosting confidence of all key constituents”.“He presented the budget in a very difficult situation and what we have is a set of progressive announcements that will be the key building blocks for engineering a turnaround in the growth trajectory over the next two to three years”, he added.
Several of FICCI’s suggestions found a reflection in the budget.
“One of our key priorities was to see a clear course of action to end Tax Adventurism. The government has tried to address this by promising to not to change any of the tax provisions retrospectively which creates a fresh liability and committing to provide a stable and predictable taxation regime that will be investor friendly and spur growth. We strongly welcome this change in disposition”, said Mr. Birla.
“With the view to give a boost to capital formation, government has lowered the eligibility limit for investments to get the benefit of investment allowance from Rs. 100 crore to Rs. 25 crore. This will give encouragement to the SME sector that is a key contributor to employment generation. Further, the announcement to enhance the composite cap of foreign investments in defence and insurance sector will send a strong message to the global investor community”, added Mr. Birla.
The budget also contains further measures to tackle food inflation in the form of establishment of a Price Stabilisation Fund and a commitment by Centre to work closely with States to re-orient their respective APMCs to provide for establishment of private market yards / private markets. We also see a series of steps such as introduction of soil health cards, setting up of agri-tech infrastructure fund, launch of a technology driven second green revolution including ‘protein revolution’ and greater focus on irrigation. FICCI has advocated many of these measures as these are geared towards improving agri-productivity.
To enhance the capital base of the banks, the Finance Minister indicated that the same will be raised by increasing the shareholding of the people in a phased manner. This will give a boost to retail investor participation in the stock market.
The government while committing itself to MNREGA has stated that it will link it to works that are more productive, asset creating and substantially related to agriculture and allied activities.
“The budget also provides special impetus to the housing sector which is known to be a propeller of growth. Added focus is also seen on the tourism sector and the MSME sectors, both of which have a high employment intensity”, said Mr. Birla.
Several measures have been announced to boost the infrastructure sector. Prominent amongst these is the setting up of new airports, ports, industrial corridors and an institution to support mainstreaming of PPPPs. Support measures have also been announced to make available long term capital for financing such projects including setting up of Infrastructure Investment Trust (INVITS).
The measures to enhance the exemption limit for individual tax-payer from Rs. 2 lakh to Rs. 2.5 lakh and increase the investment limit under section 80 (C) from Rs. 1 lakh to Rs. 1.5 lakh will add to the purchasing power of the individuals as well as boost the overall savings level in the economy respectively.