Govt should reduce fiscal deficit to 4.5% of GDP by 2025-26: CII

The government should reduce the fiscal deficit target to 4.5 percent of the gross domestic product (GDP) by 2025-26, industry body Confederation of Indian Industry (CII) said.

In its pre-budget memorandum 2022-23, the industry body said the government should hasten the disinvestment process in identified public sector units such as LIC, BPCL and Shipping Corporation of India and use the proceeds to build social and physical infrastructure in rural and urban areas.

In this budget, industrialists expect the government to provide tax incentives for investment in infrastructure investment trusts (InvITs).

In August this year, government think tank NITI Aayog had suggested the government bring InvITs under the Insolvency and Bankruptcy Code to attract retail and institutional investors in a bid to achieve the investment goals of the National Monetisation Pipeline (NMP) scheme.

Finance Minister Nirmala Sitharaman announced a Rs 6 lakh crore NMP scheme on August 23 with the view to unlock value in infrastructure assets across the country.

To increase investments, the industry body expects the government to complete the delineated projects under the National Infrastructure Pipeline (NIP) and Gati Shakti Scheme on time and list out shelf-ready projects for implementation under NIP.

For the realty sector, the industry body expects the government to extend the interest subvention scheme on low-cost housing for a total housing cost of up to Rs 35 lakh as against Rs 25 lakh at present. It also hopes the government will increase the allocation under Pradhan Mantri Awas Yojana (PMAY) in the upcoming budget from Rs 27,500 crore allocated in the Union Budget 2021-22.

In the healthcare sector, the CII expects the government to raise public investment to at least 2.5-3 percent of GDP by 2025 from 1.29 percent at present.

In the upcoming budget, the government should also introduce real estate investment trusts (REITs) on healthcare to boost investments in healthcare infrastructure. The government should create a Medical Innovation Fund that would support companies with the required capital to boost digital healthcare infrastructure.

The CII memo says the Union government should accelerate exports further by constituting a task force to identify and strategise the country’s participation in global value chains in consultation with the industry.

It should also provide a sea-freight subsidy for 6-7 months to exporters who have been impacted by the high cost of containers and extend the interest equalisation scheme for pre- and post- shipment rupee export credit by another two years from September 30, 2021.