Budget 2019: While the RBI has legroom to cut the repo rate by 100 basis points and give a boost to investments, a new taxation framework can be ushered in by the government which will act as a catalyst by linking new investment to job creation, FICCI president Sandip Somany wrote in The Indian Express. How? By giving rebate in corporate tax to companies that make investments and generate employment subsequently, he said. Under this, the companies which create employment for 250 to 499 workers by making investments should be given a rebate of 2% for the next five years and this should begin from the date of commissioning of the plant.
Similarly, those who generate employment for 500 to 749 people could be allowed a rebate of 3% and those who make jobs for 750-999 workers can be given a rebate of 4%. Above this, a 5% reduction can also be allowed to the companies who generate more than 1,000 jobs. “This will rejuvenate the investment scenario by rewarding employment-generating companies and help the government in achieving both its immediate objectives — reviving investment and creating jobs,” Sandip Somany wrote in the national daily.
Among other suggestions for Modi government, which will be facing its big test in the upcoming budget 2019, are revitalising the agriculture sector, providing a fillip to the infrastructure sector and energizing and supporting exports. In infrastructure, the government may look to announce major projects in sectors such as roads and highways, sub-urban metros and airports, which in turn, will also spur employment from large-scale infrastructure projects.
The headwinds in agriculture have been intensified by an adverse monsoon and the government must look to ramp up investments in irrigation to mitigate the risks and enhance yields, Sandip Somany wrote in the daily. Also, there is a need for strengthening the supply chains in order to reduce wastage and ensure better prices for farmers. Moreover, national warehouse grid along highways can also be launched along with a plan for major improvements in the agro-processing industry.