New Delhi: The economic slowdown in India amid a turbulent global trade scenario has prompted the BJP to get feedback from stakeholders and prepare a list of over 150 suggestions to present to Finance Minister Nirmala Sitharaman ahead of the Union budget.
The budget is to be announced on 1 February.
Over the last two months, under the leadership of spokesperson Gopal Krishna Agarwal, the BJP has conducted 10 meetings with nearly 200 organisations, including industry bodies FICCI, CII and sectoral representatives, as well as one meeting with macroeconomists. The meetings had a dual purpose — to find suggestions for the 2020 budget, and for long-term policy framework to strengthen the economy.
The suggestions to come out of these meetings include removing bottlenecks in the implementation of the goods and services tax and the Insolvency and Bankruptcy Code; providing “sufficient and easy” credit to micro, small and medium enterprises as well as the real estate sector; and increasing government spending in the rural economy to create consumer demand.
“We have made presentations and reports on these suggestions, and handed them over to the Finance Minister and our working president (J.P. Nadda),” Agarwal told ThePrint.
On 9 January, Sitharaman spent four hours at the BJP headquarters with Nadda, party organisation secretary B.L. Santhosh and other general secretaries to brainstorm on these suggestions.
Focus on MSMEs, real estate and agriculture
Agarwal said one of the major suggestions to come out of the meetings was to facilitate easy credit for MSMEs, real estate and the agrarian economy.
“The government is facing the issue of credit availability today… Banks are not coming forth with easy credit. But to revive the economy, there should be more focus on the MSME sector,” he said.
Many MSME representatives also raised the issue of their definition, saying the policy for small and medium enterprises must be segregated so that there’s no confusion in policy-making and operating the business.
“Another sector which needs a turnaround is real estate,” said Agarwal. “It faces various problems like lack of credit, banks’ negative attitude, and the problem of land availability, which we have communicated to the finance minister. The real estate sector has huge employment generation capability, and the government needs to address these issues on priority,” he added.
“We have suggested that the food processing sector should be developed right at agriculture cultivation centres, which will enhance the rural economy. This sector is a major concern, because of the weak consumer demand,” another BJP leader said.
“We have also suggested modification of the procurement act, so that villagers can sell surplus agricultural products right to anybody at their doorstep. It will put surplus money in the rural economy, which will boost consumer demand,” the leader said.
“Our focus is on enhancing rural income, as well as the income of the middle-class who earn less than Rs 30,000 per month,” the leader added.
GST bottleneck and tax collections
Another important suggestion is to open up the bottlenecks in the implementation of the GST and the IBC, BJP leaders said.
Small traders are averse to filing GST returns due to the complicated process, and BJP leaders say while the government is aware of the problem, it needs to be sorted.
A leader involved in the feedback process said the government is also feeling a resource pinch in terms of revenue, while its disinvestment target has also not been met yet. Many sectoral representatives suggested that instead of depending on tax collection at this critical juncture, the finance minister should try out innovative ideas to gather revenue and resources. This includes developing a dynamic bond market, which the private sector can involve itself in.
Develop municipal bonds
Aggressively developing municipal bonds has also been suggested to the government as a way to generate revenue for infrastructure, such as roads, bridges, schools and hospitals.
Municipal bonds are a common source of funding, especially in the US and other developed economies. But in India, only eight local bodies have raised Rs 3,390 crore through municipal bonds.
“Municipal bonds have huge potential. We have big civic corporations like Mumbai, Delhi, and thousands of others. If we implement stricter financial management and governance of civic agencies at par with international standards, there will be enough resources for infra projects,” said Agarwal.