Parul
Enhancing private investments is one of the recommendations the PHD Chamber of Commerce and Industry (PHDCCI) made to the government as the Union Budget 2023-24 is a crucial juncture of geo-political uncertainties, high inflation and slowing world economic growth.
Among the lists of recommendations, the industry body has highlighted the creation of demand or consumption, ease of doing business, reduction in the cost of doing business, infrastructure, strengthening the MSMEs, supporting the tourism sector, bringing agriculture and the rural sector at the forefront and ensuring vital health infrastructure and focus on education and skill development.
While enhancing the momentum in private investments, PHDCCI said there is a need to refuel consumption, capacity utilisation, percolation of ease of doing business at the factory level, rationalisation of cost of doing business, rationalisation of taxation, modern infrastructure, enhanced incomes in the agriculture sector, inclusive health infrastructure, quality education and employment creation in the economy.
PHDCCI said demand creation would have multiple effects on enhanced production possibilities, expansion of capacities, vis-a-vis private investments and employment creation. It said this would turn on the overall virtuous circle of growth and development of the Indian economy. To enhance consumption in the economy, the industry body said there was a need to increase the tax rebate benefits for consumption expenditure.
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Tax rebate on the purchase of the self-occupied house is given Rs 2 lakh only for the last many years. The industry body said this needs to be enhanced with the wider scope of consumption expenditure such as the purchase of more than one house, purchase of a car, along with other durables.
It recommended consumption expenditure rebate must be enhanced to Rs 5 lakh per annum. This will not only enhance the aggregate demand in the economy but also attract private investments, increased the capacity utilisation of the firms and create enormous employment opportunities in the economy. Reduced costs of doing business and a level playing field in the country will increase the competitiveness of our industry and exporters, and reduce imports of the items where India has domestic capabilities, it said.
The PHDCCI said the government should focus on reducing the cost of doing business including the costs of capital, costs of power, costs of logistics, costs of land and availability of land and costs of labour, availability of skilled labour and costs of compliance. State-of-the-art infrastructure is one of the crucial sectors that propels the overall growth and development of the Indian economy, according to PHDCCI.
The increased spending on infrastructure will give a multiplier effect to rejuvenate the aggregate demand in the economy. “Undoubtedly, the robust growth of infrastructure is the key ingredient to realise the vision to become Atmanirbhar Bharat and a developed economy by 2047,” the industry body said.
The micro, small and medium enterprises (MSMEs) sector has emerged as a highly vibrant and dynamic sector of the Indian economy over the years. The plethora of reforms for the MSME sector and the amendment in the new definition of MSMEs will enhance the production possibility frontiers of the MSMEs.
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PHDCCI said the current banking norms result in high primary security and collateral security demanded by banks for the MSMEs which hampers their growth prospects. It said the focus of the government should therefore be on hassle-free disbursements of loans at affordable rates of interest for the businesses vis-a-vis enhanced liquidity for MSMEs.
The industry body recommended a reduction in tax on MSME firms, working as proprietorships or partnerships. The tourism sector is a major engine of economic growth and an important source of foreign exchange earnings in many countries including India.
PHDCCI said the development of tourism infrastructure is of paramount importance and should be accorded a priority to provide a better experience, facilities, the safety to tourists and thereby enhance employment creation in the country and facilitate the growth of MSMEs.
