Continue capex tilt, expand PLI: Deloitte suggests to govt ahead of budget

FM had earlier stated no ‘spectacular’ measures in interim budget

Union Finance Minister Nirmala Sitharaman should continue the government’s focus on public infrastructure spending, provide further incentives to the private sector to boost investment and expand the scope of the production-linked incentive (PLI) scheme in her upcoming Budget 2024, consultancy firm Deloitte has suggested.

“Global uncertainties and modest consumer spending have kept private investors at bay. A higher capex spending by the government is expected to crowd in capital spending. That said, it will require some government incentives and a few measures in this direction,” Deloitte said in its list of budget suggestions, authored by its sectoral experts.

The 2023 Union Budget will be an interim one, with the full budget being presented after the Lok Sabha elections. Being a simple vote-on-account, the usual norm of the Finance Minister meeting with different stakeholders before the budget - including representatives from the social, agriculture, industry, services, banking and markets sectors and prominent economists, has been done away with.

“I am not going to play a spoilsport, but it is a matter of truth that the budget will be just a vote on account, because we are in an election mode,” Sitharaman had said earlier this month. She added that there will be ‘no spectacular announcements’ and that the budget would just be to “meet the expenditure of the government till a new government comes in.”

“In line with the expectations, we recommend incentives such as broadening the scope of PLI schemes to sectors such as chemicals and services that create demand for more manufacturing. The government can help provide funds for the Remission of Duties and Taxes on Exported Products (RoDTEP) and other export promotion initiatives,” the Deloitte list of suggestions said.

Among other measures, Deloitte has suggested that the cut-off date for concessional corporate tax rate of 15%, should be extended. New companies can avail the lower tax rate, currently, if they commence manufacturing operations by March 31, 2024.

It also suggested that there needs to be a resolution mechanism for tax disputes arising out of differential treaty interpretations and that exports should be boosted through tax holidays.

“An amnesty scheme for customs, along the lines of Sabka Vishwas or similar schemes, will be a welcome decision. This will help people, especially small businesses, in getting rid of their past disputes and move ahead with a clean slate,” Deloitte said.