The Confederation of Indian Industry (CII) recently recommended a three-pronged strategy for the next budget focused around the key themes of growth, fiscal consolidation and strengthening of the financial sector that would help overcome the impact of the COVID-19 pandemic on the economy. The suggestions were presented to finance minister Nirmala Sitharaman.
“This year’s budget comes at a time when the Indian economy is recovering from the unprecedented shock caused by COVID. The Government has an unenviable task of ensuring a fine balance between supporting economic recovery and growth on one hand and ensuring macro-economic stability on the other. CII’s suggestions take this aspect into cognizance,” CII president Uday Kotak said while presenting the suggestions.
“CII has suggested that the budget proposals should focus on growth, and alongside look at fiscal management from a three-year perspective. Aggressive disinvestment and monetisation of assets can augment government revenues at a time when tax revenues have fallen sharply,” he said.
“Government expenditure should be prioritised in three areas- infrastructure, healthcare and sustainability. The budget proposals should also address two critical areas of boosting private investments and providing support for employment generation,” he was quoted as saying by a CII press release.
Emphasising on the urgent need for financial sector reforms, Kotak said the government should bring down its stake in public sector banks to below 50 per cent through the market route over the next 12 months, except for three to four large ones like the State Bank of India, the Bank of Baroda and the Union Bank.
The government should also create, government-owned, professionally-managed development finance institutions (DFIs) to finance key sectors of the economy on the lines of KfW Germany, Brazil Development Bank (BNDES) and Korea Development Bank.
CII recommended aggressive disinvestment of both loss-making and a few profit-making public sector undertakings (PSUs), especially given the fact that the capital markets are performing well and selling or leasing surplus government land
