New Delhi: The Union budget presented by the finance minister is a forward-looking and growth-oriented budget that strengthens the drivers of long-term development, said Industry body Federation of Indian Chambers of Commerce and Industry (FICCI), adding that higher allocation of capital expenditure will have a multiplier effect on the economy.
In a statement sent to ETV Bharat, FICCI President Sanjiv Mehta said the budget builds on the previous one and scores high on several counts of consistency, capex led growth, transparency in numbers, energizing many of the stressed sectors, and continuing the focus on simplifying the taxation policy.
Finance Minister Nirmala Sitharaman has allocated a record Rs 7.5 lakh crore for the capital expenditure in the next year that is expected to boost the demand for raw materials such as cement and steel among other things for building roads, ports, airport, schools and hospitals. Mehta said industry leaders were looking forward to the implementation of the budget proposals by the central government in close coordination with the states.
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“The much higher allocation for capital expenditure will have a multiplier effect on the economy and help in sustaining the higher pace of growth. Higher investments in the core sectors will lead to greater demand across industries, push up the capacity utilisation rates and consequential private capex, create more jobs and through higher incomes reinforce greater consumption and demand. This is the virtuous cycle of growth we need, and the budget has clearly delivered on preparing the economy for the same,” the FICCI President noted.
The industry body had articulated the need to prime up the economy through government expenditure as both private consumption and investments remained tepid. “We appreciate the government for not being hemmed in by the neoclassical trap of fiscal conservatism and providing a very clear glide path for fiscal consolidation that is in sync with the economic realities,” Mehta added.
FICCI said another positive aspect of the budget was the support being offered to the stressed sectors of the economy. “The subsequent waves of the COVID-19 pandemic have had a debilitating impact on the MSME sector and the contact intensive industries. By extending the Emergency Credit Line Guarantee Scheme for one more year and allocating an additional Rs 50,000 crore for the hospitality sector, the government has provided the much-needed relief that was sought by industry,” FICCI said.
Also read: Revenue receipts beat budget forecast as economy recovers from Covid jolt
The industry body also welcomed the environment-friendly measures announced in the budget. It said that some of the budget’s provisions were in line with the Prime Minister’s announcement of making India net-zero by 2070. “Technology and finance are the two key requirements to help industry make the needed changes and move towards a low carbon development path,” said the industry body.
Mehta said that with a huge thrust on renewables, initiatives like a battery swapping policy and issuance of sovereign green bonds, PLI policy for solar modules, the budget takes us a step forward towards decarbonising the economy.
