Newly-elected CII President Sanjiv Puri has suggested considering income tax relief for individuals in the lowest slab in the upcoming full Budget for 2024-25, citing high inflation levels.
In an interview with PTI, Puri also recommended creating an institutional platform to build consensus between the Centre and states for successfully implementing reforms in areas such as land, labour, power, and agriculture.
Despite potential challenges posed by coalition politics, the Confederation of Indian Industry (CII) is optimistic about the acceleration of reforms during Prime Minister Narendra Modi’s third term.
Puri believes the positive performance of the Indian economy and successful policies from Modi’s previous terms will provide a strong foundation for further reforms.
Puri outlined CII's expectations for the upcoming budget, emphasising the importance of public capital expenditure, adherence to the fiscal glide path, investment in social infrastructure, a green fund, and increased investment in the rural sector.
Wholesale inflation rose for the third consecutive month in May to 2.61 per cent, driven by higher prices of food articles, particularly vegetables, and manufactured items. This follows a 1.26 per cent rise in the previous month and a significant change from the (-) 3.61 per cent recorded in May 2023.
Earlier this month, RBI Governor Shaktikanta Das indicated that the Reserve Bank of India may consider "further policy actions" only if confident that headline inflation will remain at or below 4 per cent. Aligning the inflation rate with this target remains the central bank's core objective.
According to CII estimates, inflation is expected to be around 4.5 per cent this year, buoyed by a potentially good monsoon, which has historically helped moderate food inflation.
On the tax front, Puri advocated for continued simplification, particularly in capital gains tax, which currently varies for different instruments. He also pointed out operational difficulties with tax deducted at source (TDS) and the multiplicity of rates, urging for their simplification.
Puri proposed that customs duties should move towards a three-tier structure over time: primary goods at the lowest level, intermediates in the middle, and finished goods at moderate rates, with some exclusions as appropriate.
Under the old regime, the income tax exemption limit is applicable on income up to Rs 2.5 lakh for individuals, whereas under the new regime, the exemption limit is on income up to Rs 3 lakh.
Puri expressed optimism about the ongoing reform process and was hopeful that food prices would moderate with a good monsoon. He also shared CII's expectation that inflation would be around 4.5 per cent in the near future and anticipated that the Reserve Bank would cut the key interest rate in the second half of the current financial year, starting from October.
"We think that in the second half of the year, we should see some easing of interest rates," Puri stated.
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