Assocham president Sumant Sinha has recommended the government raise the money that can be deployed in the whole production-linked incentive (PLI) scheme and enhance coverage for more industrial sectors to drive manufacturing growth in the country.
“In a push towards a green economy, there is a need for enhancing the green hydrogen policy, expanding the PLI scheme for green hydrogen electrolysers and utility-scale batteries manufacturers, viability-gap funding for the offshore wind sector, and the allocation for solar PLI might be considered for increase as well from Rs 19,500 crore in the Budget in 2022,” he added.
The government’s PLI scheme, introduced in 2021, had an outlay of around Rs 2 trillion for 13 sectors.
In its pre-Budget recommendations, Assocham said the government should increase the exemption limit for income tax to at least Rs 5 lakh so that more disposable income is left in the hands of consumers and the economy got a consumption boost.
“Boosting consumption by leaving more money in the hands of the consumer is a low-hanging fruit for a further recovery in economic growth,” said Deepak Sood, secretary general, Assocham.
Sinha said buoyancy in both direct and indirect taxes should give enough elbow room to the government for raising the income tax exemption limit.
The Central government had committed an effective capital expenditure of Rs 10.68 trillion for 2022-23, which is about 4.1 per cent of gross domestic product (GDP).
Assocham has recommended this expenditure be increased by at least 10 per cent in the Budget next year.
“There should be alignment across all sorts of capital gains tax like between private and public companies and the corporate tax rate is already very competitive.
I don’t think there is a need to change that,” Sinha told Business Standard.
The chamber recommended the interest for paying goods and services tax (GST) late should be reduced to 12 per cent from 18 per cent, which is too high, particularly for micro, small and medium units.
Responding to the question about the recent layoffs in industry, Sinha said globally job losses were happening, mostly in the tech sector, and it might happen in the manufacturing sector eventually, part of the reason for which is that the tech sector has hired a lot more than the demand standpoint.
“In India, hiring was driven by fund-raising and now the layoff is not so much economy-driven as it is funding-driven,” he added.
Assocham has recommended the finance minister spend on the social sector such as health and education.
Sinha said robust consumer spending, the picking up of the capex cycle, the availability of ample liquidity with banks, and structural reforms like GST was creating a strong structural basis for having longer-term growth in India over the next several years.