Agriculture is a priority, CII tells Indian government
IndUS News Wire
The Confederation of the Indian industry has urged the Indian government to continue its emphasis on improving agriculture, the rural economy, roads and railways and the country's power infrastructure in order to maintain high growth.
The first item on the confederation's agenda is for the government to focus strongly on the rural economy. This includes improving rural housing, developing a farm policy based on public-private partnership and offering incentives for corporate involvement in agriculture production and processing. The confederation has also recommended improving rural connectivity to help farmers market their produce effectively and get maximum returns.
The confederation also came out with its pre-budget memorandum recently, in which it has also outlined a number of agricultural reforms the government should address including boosting rural roads and rural housing.
"Rural housing loans of banks as well as housing finance companies should be counted as a part of the priority sector loans and advances," the memorandum said.
According to the memorandum, in order for the Indian economy to sustain a 7 percent or more growth over the next decade, the agricultural sector needs to increase its growth from the current rate of 3 percent.
The confederation asked the government to encourage the private sector to invest in agricultural reforms.
"Larger amounts of private investments should be mobilised for water management, storage, transportation, information technology, post-harvest mechanisation, etc., to supplement government investment," said the confederation.
"Private companies should be allowed to invest in wasteland development, so that they can plant trees for their own requirements on a sustainable basis," the confederation added.
For the railways, the confederation recommended that a 5 percent tax should be levied across-the-board on passenger fares to create a Railway Development Fund. The confederation also said that the government should give a matching grant and create an independent Railways Tariff Regulatory Authority.
For civil aviation, the confederation recommended the liberalization of foreign direct investment in air transport services and rationalization of aviation turbine fuel prices.
It also recommended fiscal reforms in the power sector.
For taxation, the confederation asked for a reduction in corporate tax rate from 35 percent to 30 percent, with the removal of the surcharge of 2.5 percent.
In indirect taxation, the confederation said that the government should continue with the reduced peak customs duty at 20 percent without any further reduction.
It also said that the duty on raw materials, intermediates and components should be reduced by 5 to 10 percentage points wherever possible so that the duty are at least 5 percent lower than the finished products.
"In general, scrap zero percent customs duties except for life saving drugs and security related items, and those agreed to through multilateral or bilateral agreements, "said the confederation. "This includes the import of capital goods under zero percent category for project imports and others."
On the small and medium enterprises, the confederation suggested the revamping of the financing system and the enactment of a small industries development bill, introduction of a limited partnership act.
The confederation's new president Sunil Kant Munjal said in a statement that government must lay special emphasis on the youth of the country.
"A mechanism must be developed to enhance the skill levels of Indian people; make them more employable," he said.