Union Budget Needs To Prioritize Growth Over Fiscal Considerations : FICCI

Commenting on the Economic Survey 2020-21 tabled in the Parliament by the Finance Minister earlier today, Mr Uday Shankar, President, FICCI said, "Several key points made in the survey are in tune with the current requirements of the economy and we hope to see a reflection of these in the upcoming Union Budget. To bring the improving growth trajectory on a firm footing and extend it to many more sectors, continuous support from the government is needed through the year 2021. We need a Keynesian type of demand stimulation and the budget must inject a heavy dose of fiscal stimulus to prop up both consumption and investment. FICCI has been strongly advocating the need to prioritize growth over fiscal considerations and the Economic Survey reiterates the point on having a counter-cyclical fiscal policy. This is not the time to be hemmed in by potential impact of an expansionary fiscal policy on sovereign ratings but walk the extra mile to meet the national requirements."

"As the government expands its balance sheet, there will be a need to augment revenues. There are several avenues that can be looked at including strategic sale and privatization of public sector enterprises. Indications are that the Government is actively looking at this route and we would see some major announcements in the budget. Given the state of the stock market, it is the right time to make good use of the valuations and garner additional resources," added Mr Shankar.

With the economic trajectory retracing its path and showing signs of improvement, the banking sector will increasingly come into focus as it will have to support this growth. As mentioned in the Economic Survey, going ahead, it will be important for the government to review the quality of the assets of the banking sector and come out with a recapitalisation plan. In this context, FICCI would urge the government to consider setting up of a National Asset Management Company (Bad Bank) that could help clean up the balance sheets of the banks.

"The Economic Survey has also reiterated the need for greater role to be played by the private sector and for the government to lessen the burden of regulations on industry. Different arms of the government led by DPIIT are already working in this area and FICCI has had several rounds of consultations with the government on how to reduce the regulatory and compliance burden on industry across sectors. Our objective should be to make regulatory frameworks in India a source of competitiveness rather than an inhibiting factor the Indian industry," said Mr Shankar.

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