FM Sitharaman to hold pre-Budget consultations with industry leaders on June 20

Finance and Corporate Affairs Minister Nirmala Sitharaman is scheduled to hold important pre-Budget discussions with leading figures of Indian industry this Thursday. These talks aim to gauge the industry’s expectations for the first comprehensive Budget of the Modi 3.0 government.

The upcoming full-fledged Budget, likely to be presented in second fortnight of July, is widely expected to set out the economic vision of the Modi-led Government for the next five years. 

The meeting assumes significance as it would be the first such high level interaction between government and industry after Narendra Modi took oath of office on June 9 as Prime Minister for the third successive term.

Captains of industry are likely to press for continuation of government’s public capex-led growth strategy as seen in recent years, sources said. 

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Rural push

Indications are that the Budget would largely be Rural India focused and could well be a political answer to weak consumption trends in rural India, they added. 

Economy watchers will be particularly interested in the June 20 meeting for industry suggestions on how the government should utilize the ₹2.1 lakh-crore surplus transfer (dividend) from the Reserve Bank of India.

The key question on everyone’s mind is whether the ₹2.1-lakh crore surplus should be fully utilized for fiscal consolidation, partly allocated to increase spending on social welfare schemes in light of the new coalition government or used entirely to boost capital expenditure on public infrastructure.

India Inc’s views will be particularly watched for their recommendation on the likely position that Modi3.0 government must take on disinvestment and privatisation in light of the mixed outcomes on this front over the last decade. 

The pre-budget meeting is likely to be attended by industry captains including FICCI President Anish Shah, CII President Sanjiv Puri and Assocham President Sanjay Nayar among others, sources said.

The Finance Ministry is also expected to hold separate pre-Budget consultations with apex industry bodies this week, led by Revenue Secretary Sanjay Malhotra, according to sources.

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Structural reforms

Industry is looking for some structural reforms on the taxation front. Policy inputs to help India emerge as third largest economy in the world may also be discussed at the June 20 meeting, sources added. Besides suggestions on capital gains taxation, industry captains are also likely to press for signing of more free trade agreements. Corporate India, which received a corporate tax rate cut in September 2019, is unlikely to demand further rate cuts, sources said.

In September 2019, the Centre had announced a cut in base corporate tax for then existing companies to 22 per cent from 30 per cent. For new manufacturing firms, incorporated after October 1, 2019, the corporate tax rate was cut to 15 per cent from 25 per cent.