Bengaluru, March 21, 2016: Positively welcoming the Budget announcements, MrSumit Mazumder, President, Confederation of Indian Industry (CII) stated, “Budget 2016-17 is well-balanced and comprehensively addresses all aspects that industry was looking for, including revitalizing the rural economy, infrastructure build-up, relief for stressed assets, and simplification of taxes.”
The CII President especially lauded the Government for adhering to the fiscal consolidation roadmap for this year as well as 2016-17. “CII is happy that the fiscal deficit as announced by the Finance Minister in Budget 2015-16 has been maintained given current compulsions of the Seventh Pay Commission and the challenging global situation.”
Mr Mazumder commended the macroeconomic priorities and structural reforms laid out in the Budget. “We believe that the focus on macroeconomic stability, boosting domestic demand and continued economic reforms would further cement India’s position as a haven of growth in a fragile global economy.”
The nine pillars of the Budget are well-strategized with emphasis on agriculture and doubling farmer incomes, healthcare, education, infrastructure and investments, and so on. Innovative schemes have been rolled out in all the nine areas, said Mr Mazumder.
“We particularly welcome the different ways adopted by Hon’ble Finance Minister to drive employment generation,”added the CII President. Budget 2016-17 undertakes several key initiatives for job creation in the formal sector, which was taken up consistently by CII. Contribution of EPF for new employees for three years, entrepreneurship development courses, changes in the transport sector,and so on would encourage job generation, stated the CII President.
Low-cost housing will be a huge demand multiplier, and CII welcomes the many initiatives on this. CII also welcomes the measures to revive infrastructure investment such as the new credit rating system and the commitment to issue guidelines for renegotiation of PPPs. The allocations for agriculture and the rural economy are particularly noteworthy, given that two successive drought years have subdued rural demand. CII had suggested that schemes such as Pradhan Mantri Krishi Sinchai Yojanaand Pradhan Mantri Gram Sadak Yojana be allocated higher funds, which was mentioned in the Budget. The added expenditure on governance at the Gram Panchayat level would help convert these funds into substantial outcomes, while introduction of FDI into marketing of food products would increase investments in farming, said MrMazumder.
CII would have liked to see faster movement on reduction of corporate income taxes, as promised in the last Budget. However, a considered roadmap as was indicated by the Finance Minister is welcome.
On the positive side, the Budget has relaxed taxes on specific groups of companies. New manufacturing companies incorporated on or after 1.3.2016 have been given an option to be taxed at 25% + surcharge and cess. In addition to this, the corporate tax rate for the next financial year for relatively small enterprises has been lowered to 29% plus surcharge and cess. This will encourage entrepreneurship and employment creation.
The Finance Minister has further proposed to provide 100% deduction of profits for 3 out of 5 years for start-ups setup during April, 2016 to March, 2019. Further, period for getting benefit of long term capital gain regime in case of unlisted companies is proposed to be reduced from three to two years.
In line with CII recommendations, a lot of emphasis has been given in the Budget on the Dispute Resolution Mechanism. Constitution of a High Level Committee chaired by Revenue Secretary to oversee fresh cases where assessing officer applies the retrospective amendment is welcome.
In his concluding remarks, the CII President said that Budget 2016-17 has many tax and spending measures that will go a long way in promoting investment and growth. Thanking the Finance Minister, Mr Mazumder said that CII is very happy to see a large number of our suggestions finding place in the Union Budget.
During a Tele-Viewing Session organized by CII Telangana here today, MR. RAMESH DATLA, Vice Chairman, CII Southern Region & C&MD, Elico Ltd. opined that the thrust on the nine pillars which includes – Agriculture and farmer welfare; Rural sector; Social sector; Education skills and job creation; Infrastructure investment; Financial sector reforms; Governance reforms and ease of doing business; Fiscal discipline; and Tax reforms to reduce compliance burden, ensures continuity to the reform process which will strengthen industrialization process and control fiscal deficit. “Focus on farmer and rural economy will balance the rural and urban economy. However, we are hoping to get better clarity on taxation matters”, he said.
Other industry members expressed their views on the budget.
· “New focus on reducing litigations will go a long way. Also the EPF reimbursement could play an important role in manufacturing sector companies.”, MR. N NARASIMHAN, Managing Director, Tecumsech
Products Company Ltd.
· “Lot of thrust was given to infrastructure sector boosting the ports, roads, railways, and most importantly civil aviation. Budgeting unused and under-used airstrips is a good move. However, the Khelkar Report recommendations were not considered, though bringing private participation to the infrastructure sector was mentioned”, MR. SANJAY KAPOOR, General Manager, L&T Hyderabad Metro Ltd.
· “Creating e-platform to market products and e-procurement by FCI are good moves. Also the rationalization of subsidy, if successful, will lead to lot of structural changes”, MR. P GOPALAKRISHNA, Senior Vice President, Coromandel Fertilizers ltd.
· “This budget is an innovative and reformist budget. The online and e-platform initiatives in the education sector, including digital verification of certificates is an important move”, PROF. V S RAO, Vice Chancellor, BITS Pilani
· “Positioning of Clean Energy Cess is a good move, which will reduce energy cost. Also allocating budget for improving sustainable water resource management is a welcome move. Also the proposal of rural electrification by May 2017 will help the renewable energy sector to a great extent”, MR. S RAGHUPATHY, Executive Director, CII Sorabji Godrej Green Business Centre
· “Access to cheaper drugs was recognized by the budget and also emphasis on senior citizens health requirements were addressed. However R&D expenditure, which was earlier 200% exempted is now reduced
to 150% and will further be reduced to 100%, which is a matter of concern”, MR. V PARSURAM, Head, Global R&D, Dr. Reddy’s Laboratories Ltd.
· “Dispute resolution and marginal tax relief are good initiatives but MAT is still a matter of concern”, MR. JITENDER KUMAR, Partner, JBRK & Co
· “MAT and Transfer Pricing still continues to be a concern for the industry. However the Start-Up incentives are welcome, though the change in ownership laws need to be addressed”, MR. SUMAN REDDY, Managing Director, Pegasystems Inc
· “Overall it is a good budget which will strengthen the Make in India initiative”, MR. KRISHNA PRASAD, Managing Director, Linkwell Telesystems Pvt. Ltd.
· “FM presented the Budget in a Corporate Style where use of IT for efficiency was well addressed which will enhance domestic IT market. MR. SHAKTI SAGAR, Past Chairman, CII Andhra Pradesh & Former MD, ADP Ltd.
Corporate Comm India (CCI Newswire)
