FICCI lauds Union Budget’s agri & rural focus, says will boost growth prospects

The Federation of Indian Chambers of Commerce and Industry (FICCI) believes that the impetus to the rural economy and the overall agriculture sector in the Union Budget 2018 would be a force multiplier for overall growth in the coming years. 

FICCI sees the Budget, presented by Finance Minister Arun Jaitley in the Lok Sabha yesterday (February 1, 2018), in line with its expectations. According to FICCI President Rashesh Shah, “It will drive consumption in a big way, thus helping growth in other related sectors.” 

Additionally, the attention to the MSMEs through better access to finance or lowering of the corporate tax rate would also help spur both employment and growth in this vital segment of the economy. 

FICCI also believes that the stress on jobs in the Budget will help generate meaningful employment going ahead. 

Another path-breaking announcement in the Budget relates to the new National Health Protection Scheme, under which an annual health insurance cover of Rs 5 lakh will be provided to nearly one-third of the households. This is the world’s largest government funded healthcare programme and would lead to a clear increase in demand for quality healthcare facilities and services and to match this rise in demand, several measures have also been announced to improve supply of quality health services in the country. 

“While we see a clear focus on the infrastructure sector development in the rural areas, the plans for such development in the urban areas, including wider connectivity across the length and breadth of the country, have also got the needed attention in the Budget,” Shah observed. 

Given the kind of structural reforms that the Government has undertaken in the last year and the need to give a fillip to demand in the economy, particularly through infrastructure development and strengthening of the rural economy, FICCI is fully supportive of the new glide path. 

However, given the performance on the disinvestment front this year, there were hopes that the Government would be more ambitious in terms of setting the target for the next year – the Rs 80,000 crore target for disinvestment receipts in FY19 is a bit conservative in FICCI’s view. 

The continuation of STT even while re-introducing LTCG will put some additional burden on the market participants. This, however, should not impact markets in the long-term. With the markets giving a compounded return of 15-16 per cent over the last 20 years, a tax impacting 1.5 per cent return should not affect the domestic investor appetite for equity investment. 

Finally, while consolidation process for the public-sector insurance companies has been indicated, FICCI hopes that a similar plan for the banking sector as was widely anticipated ahead of the Budget will also be announced soon.