Giving high marks to Union Finance Minister P Chidambaram for presenting a pro-growth budget, the US India Business Council on Thursday said the government has taken some corrective steps to revitalise investor enthusiasm, spur growth, and tame its spending.
Terming India's 2013-14 Budget as fundamentally sound, USIBC lauded the government's plan to accelerate public sector divestment - a move that will stimulate greater efficiencies and productivity.
"The government of India recognises that a growth rate of 5 per cent will not run its economic engine fast enough to create the jobs necessary to put India's young population to work," the USIBC President Ron Somers said.
"The present threat of slowing growth is not dissimilar to that experienced during the financial crisis 20 years ago that prompted India's economic opening.
"This government well remembers the under-employment so rampant at that time, and in this 2013 budget, the Finance Minister has taken some corrective steps necessary to revitalise investor enthusiasm, spur growth, and tame government spending," Somers said, reflecting the views of the US corporate sector on the annual Budget.
USIBC reiterated its demand for increased liberalisation in the insurance, pension, defence, and retail sectors - actions that will attract capital and technology to India.
Rather than the government resorting to out-dated "command-control" policies or mandates to require companies to manufacture locally, USIBC continues to press for market-based incentives for India to realise manufacturing goals, the statement said.
USIBC also said it is committed to support India in its $1 trillion dollar build-out of infrastructure, which will generate jobs and opportunities for both Indian and American companies.
To mobilise the funds necessary for India to meet these mammoth targets, USIBC applauded India's important expansion of the capital markets, including increased debt limits for infra tax-free bonds and allowance of FIIs for the first time to trade in foreign exchange.
Recognising India's aspiration to achieve greater energy security, USIBC welcomed government's persistence in continuing to bring fuel prices in line with market rates.
On the tax front, USIBC said there was a clarity now emerging by India's adoption of the Shome Committee recommendations, which stipulate clear guidelines defining legitimate tax planning for domestic and foreign investors.
More broadly, USIBC emphasised that while policy direction on foreign company taxation is important, the real litmus test for investors will be how such taxes are enforced and collected in a fair, consistent manner.