• Thursday, July 25, 2024

Business

As first budget of Modi 3.0 approaches, this is what Indian industry wants

Jobs — a key issue that reportedly hurt Modi’s prospects in the general elections held this year — could be a major aspect of the upcoming budget to be presented by finance minister Nirmala Sitharaman.

Indian finance minister Nirmala Sitharaman (L) presents the 2024 interim budget in the parliament on February 1, 2024, as PM Narendra Modi listens. (PTI Photos)

By: Shubham Ghosh

THE third government of prime minister Narendra Modi is expected to unveil the country’s budget in the middle of July following an unexpected election outcome where the PM’s Bharatiya Janata Party (BJP) returned to power with support of coalition partners.

This upcoming budget, marking Modi’s first major policy statement in his third term, is anticipated to outline potential shifts in India’s economic focus over the coalition government’s projected five-year tenure.

Reuters cited government sources to indicate that Indian finance minister Nirmala Sitharaman is contemplating reducing personal tax rates for specific groups of individuals, all while adhering to the country’s fiscal deficit target for the year.

Read: Why Modi govt did not go for populism in pre-poll budget? Finance minister explains

Some key demands for various industry bodies for the upcoming budget include ,according to Reuters:

Boost in consumption

According to the Confederation of Indian Industry (CII) lobby group, the Modi government should consider slashing taxes in India’s lower-income brackets so that people have more money to spend which would boost consumption.

Despite the south Asian nation’s economy achieving a remarkable growth rate of 8.2 per cent in 2023-24, the pace of consumption growth has been significantly slower, registering only half of that figure. The CII has suggested that the government should consider raising wages under its sole rural job-guarantee scheme and augmenting cash transfers to farmers.

Lifting restrictions on far export

Following a pre-budget consultation meeting with Sitharaman, agricultural economist Ashok Gulati and multiple farm bodies have recommended that India should remove its export restrictions on key farm products such as rice, wheat, sugar, and onions to bolster farmers’ incomes, the Reuters report added.

Read: India will witness unprecedented rise in 5 years: Finance minister in budget

The Modi government started clamping down on export of such staples in 2022 to hold down consumer prices. It also reduced tariffs on pulse and vegetable oils to ensure cheaper imports.

The move has impacted rural wages that have stagnated over Modi’s rule in the last decade, with more than 45 per cent of India’s 1.4 billion people making a living from agriculture.

Employment

A survey after this year’s general election showed that the voters in India were primarily worried about jobs, plummeting incomes and growing inflation, which was reflected in the ballot boxes as Modi’s majority thinned. The CII has suggested that the government brings into play an incentive payout scheme linked to generation of jobs by private firms in labour-intensive sectors, including textile and tourism.

The Indian government should at once fill up its job vacancies and restore pension benefits from a now-scrapped scheme, a joint statement by 10 labour unions, who were part of Sitharaman’s pre-budget consultations, said.

Reforming taxes

The Federation of Indian Chambers of Commerce and Industry has said in a statement that India should simplify its capital gains tax regime into two or more broad buckets. It added that the government should also begin reforms to the country’s indirect tax regime — the Goods and Services Tax — with fewer tax slabs and inclusion of sectors so far kept outside its ambit.

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