Overall, the Budget proposals are in line with the development priorities of the nation and the finance minister has made a strong attempt to pump prime the rural economy and infrastructure sectors, Harshavardhan Neotia, President, FICCI, said.
“This would yield dividends and we foresee a multiplier effect in the form of demand generation and employment creation over time. The state of the agriculture sector on account of two consecutive years of monsoon failure was precarious and it deserved the attention that was needed,” Neotia said while commenting on the annual Budget.
“Additionally, we see a lot of emphasis on affordable housing which will also result in forward and backward linkages and thus propel growth. Sticking to the fiscal framework is another major plus and should offer comfort to the international community. Attempts towards tax simplification and improving the tax litigation framework are also noteworthy,” he said.
Union Budget, 2016-17 presented earlier on Monday has focused on ensuring long-term sustainability of the agriculture sector of the economy as it still accounts for nearly half of the population dependent on it for its livelihood generation.
Besides the rural economy, another area where the outlays have been significantly enhanced is infrastructure particularly in roads and highways. With private investments still on the side-lines, public expenditure is the key to keeping the growth momentum going. Industry expected a major thrust on infrastructure and the finance minister has delivered on this front as well. Additionally, the three new initiatives announced for improving the operating framework for PPPs and offering flexibility for review of the contracts under disputes are welcome.
“In the financial sector, even as we take comfort from the fact that the government stands solidly behind public sector banks and remain committed to enhancing the capital outlay if needed during the year for recapitalisation of banks, we still feel that the case for a National Asset Management Company (NAMCO) is strong enough for the government to consider. Likewise the announcement to consider taking government stake in IDBI bank to below 50% may also be looked at in case of some of the other PSBs where the capital requirements are mounting both on account of stressed assets as well the Basel III requirements,” said Neotia.
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