Finance and Corporate Affairs Minister Nirmala Sitharaman is set to hold crucial pre-Budget discussions with prominent leaders of Indian industry this Thursday. These talks aim to understand the industry's expectations for the first comprehensive Budget of the Modi 3.0 government.
The forthcoming full-fledged Budget, likely to be presented in the second fortnight of July, is widely anticipated to outline the economic vision of the Modi-led Government for the next five years.
The meeting holds significance as it will be the first high-level interaction between the government and industry after Narendra Modi took the oath of office on 9 June as Prime Minister for the third consecutive term.
Industry leaders are expected to advocate for the continuation of the government’s public capex-led growth strategy, as observed in recent years, according to a leading media house.
Rural Focus
Indications are that the Budget will largely focus on Rural India and could serve as a political response to the weak consumption trends in rural areas, they added.
Economy watchers will be particularly interested in the 20 June meeting for industry suggestions on how the government should utilise the Rs 2.1 lakh-crore surplus transfer (dividend) from the Reserve Bank of India.
The key question on everyone’s mind is whether the Rs 2.1-lakh crore surplus should be fully utilised for fiscal consolidation, partly allocated to increase spending on social welfare schemes in light of the new coalition government or used entirely to boost capital expenditure on public infrastructure.
India Inc’s views will be closely observed for their recommendations on the stance that the Modi 3.0 government should take on disinvestment and privatisation, given the mixed outcomes on this front over the last decade.
The pre-Budget meeting is likely to be attended by industry leaders including Ficci President Anish Shah, CII President Sanjiv Puri and Assocham President Sanjay Nayar, among others, sources said.
The Finance Ministry is also expected to hold separate pre-Budget consultations with apex industry bodies this week, led by Revenue Secretary Sanjay Malhotra.
Structural Reforms
The industry is looking for some structural reforms on the taxation front. Policy inputs to help India emerge as the third largest economy in the world may also be discussed at the 20 June meeting, sources added. Besides suggestions on capital gains taxation, industry leaders are also likely to press for the signing of more free trade agreements. Corporate India, which received a corporate tax rate cut in September 2019, is unlikely to demand further rate cuts, sources said.
In September 2019, the Centre had announced a reduction in the base corporate tax for then-existing companies to 22 per cent from 30 per cent. For new manufacturing firms, incorporated after 1 October 2019, the corporate tax rate was cut to 15 per cent from 25 per cent.
