On 16th December 2021, Finance Minister Nirmala Sitharaman interacted with industry chambers in a virtual pre-budget meeting. Talking about the same, the chambers stated that the government’s measures will establish signs of recovery that can be seen in private investment presently.
Also attended by Bhagwat Karad and Pankaj Chaudhary, Ministers of State for Finance, India Inc in this consultation suggested continuation of reforms whilst ensuring tax stability in the upcoming budget. Their goal is to revitalize the economy from the gruesome effect of the pandemic.
“Given the large impact that the infrastructure sector has on the economy, it requires interventions for developing and expanding the sources of financing. In this regard, it is proposed that the government should think about growing the municipal bond market to help urban local bodies mobilize funds for infrastructure investments,”said T. V. Narendran, the president of Confederation of Indian Industry (CII)
On the other hand, The Associated Chambers of Commerce and Industry of India (ASSOCHAM) proposed an extension for the ‘Vivad Se Vishwas’ scheme not just for the benefit of sectors like power, mining, and telecommunications but also for resolving disputes related to customs.
The president of ASSOCHAM, Vineet Agarwal appreciated the government for introducing the ‘Vivad Se Vishwas’ scheme. He pointed out that the scheme successfully reduced the litigations that were pending for a long time and brought forth great victory.
According to him, “Various service and infrastructure sectors including mining, power and telecommunications were privatized by the government to push growth and investment. As these sectors are highly licensed and regulated, interpretation of policies related to them has given a rise to several legacy court cases in the past decade.”
“Considering the imposition conditions associated with interest on penalties, penal rates of interest and penalties, the due amounts become 5 to 6 times of the principal disputed amount by the time these cases resolve.” added Agarwal.
Also present in the meeting were Economic Affairs Secretary Ajay Seth, Principal Economic Adviser Sanjeev Sanyal and Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey along with other senior officials.
The PHD Chamber at the conference also requested another year’s extension on relaxation of Earnest Money Deposit (EDM) and Performance Bank Guarantee (PBG) during the meeting.
The government had previously eased the percentage of performance security from 5-10% to 3% and relaxed the Earnest Money Deposit (EDM) requirement till 31st December 2021.
During COVID-19, there was a severe financial crunch amidst commercial entities that impacted the bidding capacity of business entities and the implementation of contracts. However, the government’s initiative greatly supported trade and industry.
Narendran stressed the significance of advancing pandemic preparedness as it will help mitigate risks associated with growth. He further stated that with the increasing risk of the Omicron variant, it has now become essential to work on the booster doses of COVID vaccines. It needs to be done with proper provisioning in the budget for ongoing surveillance strengthening, vaccine research, testing healthcare infrastructure and therapeutics.
Bringing flexibility for retail loans given to small businesses and individuals was also suggested during the conference with the representatives of the financial sector and capital markets, the Finance Industry Development Council (FIDC).
Adding to this, FIDC director Raman Aggarwal said that loans up to ₹ 2 crores may be allowed to retail and MSME and marked as Special Mention Account and Non-Performing Assets on month-end. An upgradation concerning loans up to ₹ 2 crores from NPA to the standard category may also be permitted.
As per Finance Industry Development Council (FIDC), SIDI is the best institution choice to offer refinance facilities to NBFCs for onward lending to MSMEs and other related sectors.
The Finance Minister held another meeting with representatives of the Services and Trade sector and the second group of experts from Industry, Infrastructure and Climate Change also took place after this virtual conference. She also held Pre-Budget consultations with prominent economists on 22nd December 2021 to discuss the course of the financial stability of the country.
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