New Delhi: The government should bring down its stake in state-owned banks to less than 50 per cent, with the exception of three to four large public sector banks such as State Bank of India, Bank of Baroda and Union Bank of India, the Confederation of Indian Industry (CII) said Monday.
The industry body has also sought greater incentives for firms in next year’s Union Budget to encourage job creation. The Budget, to be presented by Finance Minister Nirmala Sitharaman on 1 February, will need to announce measures to revive growth at a time the economy is expected to register a sharp contraction due to the impact of the Covid-19 pandemic.
The CII made these recommendations to Sitharaman as part of the pre-Budget discussions between industry and the government. The Budget proposals should focus on growth, and alongside that, look at fiscal management from a three-year perspective, the body’s president Uday Kotak said in a statement.
“Aggressive disinvestment and monetisation of assets can augment government revenues at a time when tax revenues have fallen sharply,” Kotak said.
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Key proposals
The CII has proposed that government expenditure should focus on infrastructure and healthcare and sustainability.
“The Budget proposals should also address two critical areas of boosting private investments and providing support for employment generation,” added Kotak, the managing director of Kotak Mahindra Bank.
The CII also advocated financial sector reforms, such as setting up government-owned, professionally managed development finance institutions for key sectors of the economy. Anticipating a rise in bad loans on account of the pandemic, the industry lobby proposed multiple bad banks.
It also sought higher incentives for job creation under Section 80JJAA of the Income Tax Act. Under this section, companies are eligible to claim a 30 per cent deduction on salaries paid to new employees, provided their salaries do not exceed Rs 25,000. The CII has sought that this cap be raised to Rs 50,000.
There are no demands for any cuts in tax rates or more exemptions, but it has sought an extension of the dispute settlement scheme — ‘Vivad se Vishwas’ — till 31 December 2021, and asked that all appeals pending as on 30 June 2021 should be considered eligible for the scheme.
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