New Delhi, Dec 19 Refuelling of consumption demand must be the theme of the Union Budget FY 2021-22 to have a multiplier effect on production possibilities, capex expansion, private investments and employment creation, said the industry body PHDCCI in its 10 pronged strategy suggested to Finance Minister Nirmala Sitharaman on Saturday during the Pre-Budget consultations.
The industry body's 10 pronged strategy revolves around the measures aimed at refuelling consumption and demand, and encouraging the private investments.
The elements of the strategy presented to the FM includes front loading of infrastructure investments, establishing DFIs to fund industrial and infrastructural investments, strengthening MSMEs, reducing the costs of doing business, ease of doing exports, increasing Tax to GDP ratio.
PHDCCI said any measure aimed at pushing up growth must keep agriculture and rural sector at the forefront and carry out effective reforms in social infrastructure.
Economy has exhibited early signs of recovery in the recent months, however, to sustain the momentum, there is a need to ensure a great support to demand creation in the economy with lower interest rates for consumers and businesses, lesser compliances for MSMEs vis-a-vis ease of doing business at the ground level and a lower tax regime to increase the personal disposable income of the people, said Sanjay Aggarwal in a press statement.
To rejuvenate the aggregate demand in the economy, infrastructure investments will give a multiplier effect. The robust growth of infrastructure is the key ingredient to realize the vision to become Atmanirbhar Bharat, said Aggarwal.
The government should consider raising investment funding for the National Infrastructure Pipeline (NIP) through borrowings from overseas markets by issuance of overseas bonds through an SPV that could act as a mega Development Financial Institution- DFI, he said.
The DFI could initially finance public sector infrastructure investments, and, as the economy picks up steam, could also finance the private sector infrastructure projects.
In the past, governments around the world have often used DFIs to fund industrial and infrastructure investments.
Financial as well as technical support extended by DFIs would help in efficient and timely infrastructural development in the country, said Aggarwal
Overseas borrowing will allow the government to bring in diversification in its borrowings along with significantly reduced dependence on the domestic market, thereby leaving room for private sector to raise capital for investments, he said
Analysing the Debt to GDP ratio of G20 economies, India is at a significantly better position in the G 20 economies.
India stands at 14th rank with total debt to GDP ratio at 127.6 per cent comprising of 55.3 per cent as private debt and 72.3 per cent as public debt. Also, we have sufficient FOREX reserves of $575 billion as on 27th November 2020, said Aggarwal.
( With inputs from IANS )
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