Industry body FICCI has said in the forthcoming Budget, the Centre should prioritise measures that will boost spending on infrastructure creation to shore up local demand.
The suggestion comes in the backdrop of the cash crunch post-demonetisation leading to subdued domestic demand and a fall in investments.
“What we mainly want from the government (in the Budget) is ways to ensure greater investments in the infrastructure sector and measures to expedite the completion of ongoing projects,” FICCI President Pankaj Patel told The Hindu. “The money that came into the system following demonetisation should be used effectively for infrastructure creation, in a manner that leads to employment generation and higher demand.”
India’s infrastructure sector requires investments of over $1.5 trillion in the coming ten years. Citing the massive financing requirements for the infrastructure sector, FICCI said the government should consider setting up funds — similar to the National Investment and Infrastructure Fund — with other nations as co-investors.
“Such funds can be managed by professional fund managers and leveraged multiple times by providing equity for large projects across sectors,” it said in its pre-Budget memorandum. The Centre should encourage the States to ink ‘State Support Agreements’ for large projects to ensure commitment from them for timely implementation of infrastructure projects, the industry body said.
Referring to the ‘short-term pain’ felt especially by the heavily cash-reliant informal sector following demonetisation, Mr. Patel said the Budget should also have steps to ensure that they shift smoothly to the formal sector in a “cost-neutral” manner.
“The entry of informal sector enterprises into the formal economy needs to be incentivised. The compliance requirements should be minimised and simplified. Also, the informal sector should not be burdened with additional costs such as service charge or any form of tax as they shift their transactions to non-cash and digital modes. It should be cost-neutral,” Mr. Patel said.
The government should also expedite the implementation of the ‘Bharat Net’ project (the National Optical Fibre Network) to complete a nationwide digital architecture, he added. The Bharat Net project has been plagued by delays due to reasons including issues relating to supply of core equipment.
Mr. Patel said his priorities as the FICCI President will include suggesting measures to the government to help India Inc carry out all their transactions and payments digitally as well as provide recommendations to help India transform into an ‘innovation economy’ and increase employment that is innovation-based.