Budget must reinvigorate demand: India Inc

New Delhi: The upcoming Budget must focus on creating demand, encouraging infrastructure spending and increasing outlays for the social sector, India Inc said in a survey released on Wednesday.

India Inc expects the government to continue with its policy focus on strengthening the manufacturing ecosystem, promoting research and development, and incentivising futuristic technologies in the upcoming Budget, the survey by Ficci and Dhruva Advisors said. With the world's largest immunisation programme currently underway in the country, time is ripe to further accelerate efforts to reinvigorate the economy, it added. "The upcoming Budget must therefore focus on creating demand, encouraging infrastructure spends and increasing outlays for the social sector. These are the top three macro-economic themes, which members of India Inc would like to see in the upcoming Budget," the survey noted. According to the survey, while the growth trajectory has turned positive and the economy is looking up, the need for continuous support from the government remains. Demand has improved in a few sectors of the economy, but there is a need to watch this trend to see if the improvement continues in a sustained manner. "There are many other sectors that still require continued government support in the recovery process. Given this, strengthening demand should be a clear priority and the tax policy should be used to meet this objective," it said.

According to the survey results, nearly 40 per cent of the participants feel that 'personal tax relief' should be the key theme of direct tax proposals in this year's budget. Further, nearly 47 per cent of the respondents have mentioned that their biggest ask from the government in respect of direct tax is 'widening of the tax slabs'. An area closely related to demand is employment, and the majority of the survey participants (nearly 75 per cent) supported employment generation for which tax incentives and exemptions should be provided by the government.

The other two areas which came up in the list of priorities for seeking tax incentives and exemptions are 'innovation' and 'exports', with 53 per cent of the surveyed companies supporting these. The survey participants were also asked to highlight their current pain points from the taxation perspective and how the government can support them.

Results show that 'timely receipt of refunds' is a key challenge faced by as many as 52 per cent respondents. This is closely followed by 'tax compliances' and 'tax litigation' with 49 per cent and 43 per cent of the respondents, respectively, reporting the same. On the issue of stable tax policy, nearly 86 per cent of the respondents highlighted that the government could promote this objective by bringing consistency at the tax administration level. Besides, an overwhelming 90 per cent of the survey participants said that enhancing economic activity through greater consumption and investment demand should be the government's focus as it thinks of strategies to boost GST revenue.