Budget 2019 India: Finance minister Nirmala Sitharaman on Tuesday started her pre-Budget stakeholder consultations for this year with a meeting on agriculture and rural development, and followed it up with another on trade and industry.
Asserting that the concerns of the agriculture sector are high on the priority of her government, Sitharaman focussed on measures to boost economic and social infrastructure of the rural sector and ways to eradicate unemployment and poverty through the development of both farm and non-farm sectors, according to an official statement. The minister will present the Budget on July 5. The Modi government faced stringent criticism from the Opposition for its handling of farm distress before the general election.
Separately, in her meeting with trade and industry leaders, Sitharaman focussed on steps taken by the government to improve the business climate, which resulted in India having improved its ranking to a record 77th position among the 190 countries last year. The minister said that since 24 % of the total work force in India is in industrial sector, therefore, in order to reap the benefits of demographic dividend, industry should be able to accommodate more work force.
In the meeting, exporters body FIEO suggested that the government establish a link between FDI and the tariff policy and that all FDI proposals relating to technology transfer in niche categories be given approval online within a period of 30 days. It has suggested that tariff protection be reduced as any such step will increase efficiency with rising competition. However, at the same time, an honest assessment has to be made as to whether the industry would be able to sustain with such reduction in tariff particularly when inverted duty structure remains a challenge , it added.
FIEO also pitched for value-chain production wherein some of the units make parts, while some others make the final product.
Such manufacturing should be preferred in a close geographical area so that the supply chain is integrated with minimal logistics cost, it said. It also sought steps to boost services exports in sectors like health and tourism.
Industry body CII, led by Vikram S Kirloskar, suggested that the dividend distribution tax be brought down to 10% from the present 20% to ease the flow of capital. It should also be not taxed at the hands of the investor. Similarly, a timeline be fixed for cutting the direct tax rate to a maximum of 18% (in addition to removing all exemptions and not doing grandfathering).
With a view to give boost to Indian economy, the representatives of industry, services and trade sectors submitted several suggestions concerning industrial sector, land reforms, special economic zones, industrial policy, investment in research and development, simplification of tax regimes, tapping potential in tourism sector, foreign direct investment (FDI), Good & Services Tax (GST), capital gains tax, corporate tax, MSME sector, e-commerce, skill development, education and healthcare sectors, start-ups, media & entertainment sector and food manufacturing industry.
The meetings were attended by farmer and industry leaders and experts, apart from senior officials of the finance and other administrative ministries.