Context: Industry group pushes for cash transfers, fuel tax cut to help revive demand.
More in the news:
- Confederation of Indian Industry (CII) recently asked the central government:
- An expansion of the central bank’s balance sheet to accommodate a fiscal push of 1.3% of GDP.
- To provide a ₹3-lakh crore stimulus,
- Reduction in fuel taxes,
- Reduction in excise duties on fuel,
- Some temporary GST rate cuts and
- Inclusion of Aviation Turbine Fuel (ATF) under the GST regime.
- Enhancement in cash transfers to households to revive demand,
- Policy measures for employment generation,
- Increase funding to MNREGA to help revive demand in the economy,
- Further recapitalisation of public sector banks (PSBs) to the tune of Rs 20,000 crore, in addition to the Rs 20,000 crore allocated for PSB recapitalisation in the FY22 Union Budget and
- Extension of the Emergency Credit Line Guarantee Scheme (ECLGS) for MSMEs till the end of FY22
The rationale behind the demands of CII:
- The cumulative impact of two waves of the pandemic on incomes, livelihoods and consumer sentiment, coupled with the increase in household medical expenses, are likely to impact consumer demand for some time.
- There is always a temptation to raise resources through higher taxation to fund higher spending.
- But it’s not a good idea at the time when the economy is in recession, and instead, some tax reductions could incentivise spending.
- High fuel prices are impacting businesses, especially in sectors such as aviation where ATF costs are 60% of total costs.
- The pandemic would be a setback for financial institutions which have been making progress in dealing with non-performing assets (NPAs).
Confederation of Indian Industry (CII):
- Founded in 1895, it has over 8,000 members, both from the public and private sectors.
- It is a non-profit and non-governmental organization created by advisory and consultative developers to achieve a conducive atmosphere for the growth of Industry and civil society in India.
- CII’s focused on policy issues with the Government.
- CII was a tool for progress in financial-policy reforms in India.
- During the 1991 economic liberalization, CII played a significant role in breaking down high walls of security among the Indian economy and the rest of the world.
- To recognize and encourage Industry’s participation in India’s economic growth
- Enhance the involvement of business with the society
- To offer up to date details to Government & Industry.
- Supporting Industry in its attempt to promote efficiency, the environment and consumers.
- Supporting Indian Industry’s globalization and incorporation into the international economy.
- Dealing with small businesses requires making them more effective.
Source: The Hindu, The Indian Express