CII Applauds Budget Capital Spending Push While Balancing Fiscal Consolidation

Responding to the budget proposals, Mr. TV Narendran, President of the CII, congratulated the Honorable Minister of Finance for recognizing the need for public investment to attract private investment and for starting the cycle virtuous of demand, investment and jobs. The proposed 35.4 percent increase in the capital expenditure allowance, on top of last year’s 34.5 percent increase, is a boost for the economy. It will stimulate primary demand and private investment and create jobs; said Mr TV Narendran. In absolute terms, budgeted capital expenditure increased from Rs 4 lakh crores in FY21 to Rs 7.5 lakh crores in FY23.

The investment surge was well balanced with fiscal consolidation, with the FY23 budget deficit set at 6.4% commendably. This is in line with the economic strategy of increasing investment spending as well as a gradual path of fiscal consolidation, as suggested by CII in its pre-budget suggestions to the government. The investment push is not just limited to Union government spending, but the budget also proposes to support state governments in their capital spending. The allocation for the “State Financial Assistance Scheme for Capital Investment” has been increased to Rs 1 lakh crores from Rs 15,000 crores spent on the scheme this year. The scheme provides fifty-year interest-free loans to states for capital expenditures.

Increased public spending will not only help accelerate infrastructure development, create demand and sustain economic growth, but will create much-needed jobs and provide the necessary impetus for our development journey. The budget proposals address several important dimensions of the Indian economy. He is advancing the push on infrastructure through Gati Shakti’s interventions, which will boost the overall competitiveness of the Indian economy and create jobs.

It advances the push on manufacturing through interventions such as Ease of Doing Business 2.0, with trust as the basis of government enterprise interface, and by extending the 15% corporate tax rate to units of manufacturing entering production by March 31, 2023, compared to the first. March 31, 2022. The budget gives a boost to startups, engines of innovation, job creation and social impact. Action against climate change and sustainability received particular attention, in line with the commitments made by the Honorable Prime Minister during COP26. The additional allocation of R19,500 crore for production-related incentive for manufacturing high-efficiency modules will help India meet the ambitious target of 280 GW of solar capacity by 2030.

The budget also extended support to MSMEs affected by the pandemic, through the extension of the ECLGS until March 2023 and an additional allocation of Rs 50,000 crore bringing the total allocation to Rs 5 lakh crore. . The fiscal proposals of the Union budget have focused on stability and predictability, which is very important to feed the incipient recovery of the private investment cycle. The higher gross GST collections for the month of January 2022 at Rs 1,40,986 crores, which is the highest since the inception of the GST, is an industry indicator that is coming on a fast track, M added. Narendran.

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