Budget 2022: Infrastructure, Health Spending And Faster Dispute Redressal On Industry Wishlist

Continued spending on infrastructure, focus on healthcare and reducing pending litigation are among the key demands by industry lobbies for Finance Minister Nirmala Sitharaman in the run-up to her annual budget presentation on Feb. 1.

The Confederation of Indian Industry, Federation of Indian Chambers of Commerce and Industry, Associated Chambers of Commerce and Industry and the PHD Chamber of Commerce and Industry have come up with pre-budget wish lists—or issues that would need greater focus.

The focus of the government should be on capex allocation of projects which are more than 80% complete, Assocham said, adding that this would help to monetise them and generate additional resources.

“Interventions are required to specially improve and diversify sources of financing in the infrastructure sector to see a multiplier impact,” TV Narendran, president of the CII, told the finance minister at a virtual pre-budget consultation on Dec. 16.

“In this context, it is suggested that government should consider developing the municipal bond market so that urban local bodies can raise funds for investing in infrastructure,” he said.

CII’s suggestions in its pre-budget memorandum include paying more attention towards developing a conducive regulatory framework, a transparent bidding process, flexible contract management and a credible dispute settlement procedure to attract private investment for the National Monetisation Pipeline.

It has also sought tax incentives for investment in infrastructure investment trusts and implement NITI Aayog’s suggestion of bringing them under the Insolvency and Bankruptcy code.

The manner in which bank guarantees are issued, extinguished and required by clients for non-fund based credit are problematic as they add to project costs impeding project completion under NIP, FICCI said.

''Typically, 20% of the project cost is locked up in bank guarantees that extend over 4-10 years. Hence, if the NIP is targeting Rs 40 trillion in FY21 and FY22, then bank guarantees of Rs 8 trillion would have to be taken by the private sector only in 2 years," it said. "It's time to go for revolving BGs or Insurance Surety Bonds."

The industry body also suggested a quarterly bidding calendar for the NIP and NMP and the establishment of National Bank for Financing and Infrastructure Development.

Amid looming threat of the Omicron variant of the coronavirus, the lobby groups sought budget provisions to strengthen surveillance, testing, vaccine research, therapeutics and healthcare infrastructure.

Pradeep Multani, president of PHDCCI, urged the government to consider materials or medical equipment needed to deal with the pandemic such as oxygen plants, concentrators, among others, at 5% GST till Dec. 31, 2022.

CII has recommended increased fund allocation in the medical sector by:

• Raising public investment in health to at least 2.5-3% of the GDP by 2025 from the current 1.29%.

• Allowing investment vehicles similar to REITs for healthcare, which would invest in healthcare infrastructure.

• Creating a medical innovation fund for supporting companies with capital to promote digital healthcare infrastructure.

Assocham has sought tax deduction for health insurance products to bring a wider section of the population under insurance cover. It also suggested that annuity income earned from pension products should be exempted from tax.

Assocham is seeking extension of schemes like “Vivad se Vishwas” for highly regulated sectors like telecom to add revenue to the government as well as boost investor sentiment.

“Several infrastructure and service sectors such as telecom, power, mining etc., which were privatized to drive investment and growth, are highly regulated/licensed," Vineet Agarwal, president of Assocham, told the finance minister at the consultation. "Hence there are many legacy court cases, often arising from interpretation of regulations/policies."

The industry body also recommended a dispute resolution scheme for customs like the one introduced in the 2019 budget for central indirect tax laws to reduce litigation and help the government unlock tax dues.

CII suggested steps to strengthen medium- and small-sized businesses by expediting schemes like the Fund of Funds, reviving credit-linked capital subsidy scheme for technology upgradation, and measures to reduce cost of doing business and instituting a green procurement policy for promoting sustainability.

PHDCCI suggested extending the current timeline of the Emergency Credit Line Guarantee Scheme till March 31, 2023, to aid small businesses.

It has also proposed that MSMEs' export income should be made tax free for three years and income of large enterprises from incremental exports be exempted from tax.