Major industry bodies have pitched for fiscal stimulus to boost the slowing economic growth in their pre-Budget meetings with the ministry of finance officials, as per media reports. Business chambers such as the Confederation of Indian Industries (CII) and the Federation of Indian Chambers of Commerce and Industry (FICCI) have called for a reduction in taxes, both on personal income and corporate, as well as the expansion of farmer income support scheme, to boost demand, restart the investment cycle and revive foreign direct investment inflows. Advocating for budgetary allocation to create employment opportunities, the chambers stated that additional fiscal incentives should be provided to sectors such as textiles, leather, food processing, gems & jewellery, footwear, tourism and real estate. Industry bodies also called for higher export incentives to help Indian exporters address the cost disadvantage in global markets.
Apex industry chamber Ficci Monday made a strong case for fiscal stimulus to pump-prime the slowing economy amid global headwinds and weakening domestic demand in the next budget as the Narendra Modi government is all set to begin its second innings.
India's GDP growth slowed to five-quarter low of 6.6 per cent during October-December 2018-19. The Central Statistics Office (CSO) will be releasing the quarterly GDP estimate for the quarter January-March (Q4FY19), 2019 and provisional annual estimates for 2018-19 on May 31.
In its pre-budget memorandum to the finance ministry, Ficci said the Indian economy -- which was amongst the fastest growing economies in the world over the last few years -- now faces the risk of slow growth amidst a weakening global economic environment and slowdown in domestic demand.
India was able to wade through the global headwinds in earlier years as the growth was supported by growing domestic demand. Low inflation due to subdued food and oil prices had also contributed towards higher consumption growth.
"However, the recent signs of slowdown in the economy stem not only from slow growth in investments and subdued exports but also from weakening growth in consumption demand.
"This is a matter of serious concern and if not addressed urgently, the repercussions would be long-term," it said.
Amidst the rising uncertainties and economic challenges on both domestic and global front, there is an urgent need to re-energise the engines of growth and pump-prime the economy, the chamber said.
The upcoming Union Budget 2019-20 is an opportunity for the government to boost consumption and investments through appropriate fiscal stimulus and policies," it added.
The government had presented an Interim Budget for 2019-20 in February. A full Budget is likely to be presented in July.
To spur growth, Ficci has sought reduction in corporate tax and abolition of Minimum Alternate Tax (MAT).
"The Union Budget should be leveraged to boost business sentiments and encourage greater investments. Corporate tax rate for all companies should be brought down to 25 per cent, as had been proposed earlier," it said.