India Inc on Thursday pitched for continuation of reforms while ensuring tax and policy stability in the forthcoming Budget to prop up the economy hit hard by the COVID-19 pandemic.
In the virtual pre-Budget consultation held with Finance Minister Nirmala Sitharaman, industry chambers said that government measures will help firmly entrench the nascent signs of recovery being currently seen in private investment.
Capital expenditure by the government through enhanced infrastructure spending should in the meantime continue to support growth, CII president TV Narendran said.
"Infrastructure sector with a multiplier impact on rest of the economy requires interventions especially to improve and diversify sources of financing.
"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.
Meanwhile, Assocham suggested extending a scheme the 'Vivad Se Vishwas' for highly regulated sectors like telecom, power and mining, as also a dispute resolution scheme for issues related to customs.
"We appreciate the government for the Vivaad se Vishwas scheme which has gone a long way in reducing the long pending litigations and resulted in greater success.
"Several infrastructure and service sectors such as telecom, power, mining etc, which were privatised to drive investment and growth are highly regulated/licensed," Assocham president Vineet Agarwal said.
Hence, there are many legacy court cases, often arising from interpretation of regulations/policies, Agarwal said, adding, these cases drag on for 10-15 years.
Given the condition of imposition of penal rates of interest, penalties, and interest on penalties, by the time these cases are decided, the due amounts may become 5x to 6x of the disputed principal amount, he added.
The meeting was also attended by ministers of state for finance, Pankaj Chaudhary and Bhagwat Karad.
Finance secretary T V Somanathan; Economic Affairs secretary Ajay Seth, Department of Investment and Public Asset Management (DIPAM) secretary Tuhin Kanta Pandey and Principal Economic Adviser Sanjeev Sanyal were also present, besides other senior officials, in the meeting.
During the meeting, PHD Chamber demanded the extension of relaxation with regard to Performance Bank Guarantee (PBG) and Earnest Money Deposit (EDM) one more year.
During the pandemic, the government had relaxed the percentage of performance security from 5-10 per cent to 3 per cent and eased Earnest Money Deposit (EDM) requirement till December 31, 2021.
The initiative has significantly supported the trade and industry in the difficult times of COVID-19 as there was an acute financial crunch among many commercial entities, which in turn had affected the timely execution of the contracts and the bidding capacity of the business entities, PHD Chamber of Commerce and Industry president Pradeep Multani.
Emphasising the importance of furthering pandemic preparedness which will help to mitigate further risks to growth, Narendran said, "With the risk of Omicron variant looming large, it is critical to explore booster doses of the COVID vaccines with an adequate provisioning in the budget for continued strengthening of our surveillance, testing, vaccine research, therapeutics and healthcare infrastructure."
During the meeting with the representatives of financial sector and capital markets, the Finance Industry Development Council (FIDC) suggested to bring some element of 'flexibility' in case of retail loans given to individuals or small businesses.
Smaller loans (retail and MSME) up to Rs 2 crore may be permitted to be marked as Special Mention Account (SMA) & Non-performing Assets (NPA) as on month-end and upgradation in respect of loans up to Rs 2 crore from NPA to standard category may be allowed to continue, FIDC director Raman Aggarwal said.
SIDBI is most suited as an institution to provide a refinance facility to NBFCs for onward lending to MSMEs and other appropriate sectors, the FIDC said.
Representatives from mutual fund industries and banks were also present in the meeting.
The finance minister will meet representatives of services and trade sector in forenoon, and with experts from industry and infrastructure and on climate change in afternoon on Friday.
The two consultations with different stakeholder groups will be held virtually, the finance ministry said.
"FM Smt. @nsitharaman will be holding consultations with representatives of Services and Trade sector in forenoon; and with 2nd group of experts from Industry, Infrastructure & Climate Change in afternoon," a tweet from the Finance Ministry said.
Photograph: ANI Photo