Budget 2024: CII says Union Budget should stick to 5.9% fiscal target, aim at 5.4% for FY25

The interim Union Budget to be presented in the Parliament on February 1 and the full Budget post general elections should stick to this year's fiscal target of 5.9% and aim for consolidating this to around 5.4% for FY25, apex industry chamber CII (Confederation of Indian Industry) has stated.

In its pre-budget memorandum, the industry chamber said that to achieve this target, the government needs to create space for growth, through specific measures to augment revenue and rationalise expenditure. 

For revenue augmentation, CII proposed further simplification and rationalisation of taxes and implementation of the next set of GST reforms by reducing the tax slabs to three and subsuming petroleum, electricity and real estate. "This should be accompanied by an aggressive focus on meeting the disinvestment targets by bringing in an element of demand side considerations and creating a three-year schedule for disinvestment”, the industry body said.

According to Chandrajit Banerjee, Director General, CII, a key suggestion to simplify taxes is to lay down a roadmap for simplifying the TDS rates by having only two or three categories of payments and a small negative list of payments which will not be liable to TDS. Currently, there are 31 sections dealing with different types of payments to residents where the TDS rates vary from 0.1% to 30% leading to complex provisions.

On the expenditure front, the food and fertiliser subsidies which constitute the bulk of the subsidies, should be rationalised without impacting the deserving beneficiaries, by better targeting and efficient utilisation, CII said. Currently the food subsidy program is based on data available from the 'Household Consumer Expenditure Survey 2011-12'. With economic growth and declining poverty, it is important to use more current data for better targeting. On the fertiliser subsidy, CII has recommended moving towards dispensing fertilizer subsidy directly as cash transfer to farmers. 

These measures if implemented could open up space for government to support sustainable growth by increasing the capex by 20% to ₹12 lakh crores, CII points out, adding that while this will be a moderation from growth in the last two years, it compares well with 12% growth in the pre-pandemic period (2015-16 to 2019-20).

On the investment side, CII has suggested setting up of a full-fledged Ministry of Investment that would become the single point of contact for facilitating the opportunities for investment in India as well as opportunities for Indian investors to invest abroad. This should be accompanied by the promotion of low-cost and affordable housing through continued focus on Pradhan Mantri Awas Yojna - Grameen (PMAY - G) and Pradhan Mantri Awas Yojna – Urban (PMAY-U).