Ficci Seeks Stimulus Package In Union Budget 2019 To Boost Indian Economy
The Indian economy faces the risk of slow growth amid a weakening global economic environment and slowdown in domestic demand.
Industry body Federation of Indian Chambers of Commerce and Industry has made a strong case for a fiscal stimulus package in the Union Budget 2019 to prop up the slowing Indian economy.
India’s gross domestic product expanded 6.6 percent in October-December 2018, the slowest in five quarters. The Central Statistics Office will be releasing the quarterly GDP estimate for January-March 2019 and provisional annual estimates for 2018-19 on Friday, May 31.
In its pre-budget memorandum to the finance ministry, Ficci said the Indian economy, among the fastest growing in the world, now faces the risk of slower growth amid a weakening global economy and slowdown in domestic demand.
India was able to wade through the global headwinds in the previous 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,” Ficci said.
Amid 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, Ficci 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 Union Budget is likely to be presented in July.
To spur growth, Ficci has sought reduction in corporate tax and abolition of Minimum Alternate Tax.
“The Union Budget 2019 should be leveraged to boost business sentiments and encourage greater investments. Corporate tax rate for all companies should be brought down to 25 percent, as had been proposed earlier,” it said.
In the 2015-16 budget, the government had announced that the corporate tax rate would be gradually lowered to 25 percent from 30 percent over the next four years and exemptions available to companies would be phased out.
In the subsequent years, the tax rate was reduced to 25 percent for companies with a turnover of up to Rs 250 crore.
A Ficci delegation had met revenue secretary Ajay Bhushan Pandey and submitted the memorandum as part of the pre-budget discussion.
On interest rate, Ficci said that while the Reserve Bank of India has reduced the key lending rate in the past two bimonthly monetary policy reviews, “the real repo rate has remained high for a long time and there is a scope of further reduction in the repo rate”. The RBI governor-headed Monetary Policy Committee is scheduled to meet on June 6.