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Union Budget 2017: Confidence-Boosting Measures Needed
Impressive steps have been taken by the cement industry in enhancing its environment friendliness and India has amongst the lowest carbon footprints in the world. The government would do well to encourage this process
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All eyes are on the Budget 2017, and we are hopeful that the Government will factor in interests of all communities involved in fueling growth of the economy. Cement is one of the most essential commodities for all infrastructure and construction activities and a great barometer for the health of the economy. To improve growth of this sector Government should announce concrete plans of execution for the development of infrastructure, affordable housing, creation of smart cities, industrial corridors, and port developments, inter alia, would certainly increase cement consumption and hence demand. There have been some welcome steps in this direction, but more is required.
The Real Estate Sector is a key driver for cement demand and the stakeholders are demanding that central government gives relaxation in income tax rate, provide clarity on GST, raise House Rent Allowance (HRA) deduction and announce policies to standardize construction materials in order to uplift the real estate industry. All this combined together will directly give a boost to the growth of real estate sector and also increase cement consumption.
It is also imperative that the government introduces some confidence-boosting measures, which will put more money in people's hands. The passage of Goods & Services Tax (GST) Bill last year was a welcome move and now it will remain to be seen how it unfolds in the interest of the poorest of the poor. Reforming the tax structure with the help of this bill will provide some relaxation to the workers and salaried class.
While we are optimistic about the good work the current government has done, we are yet to see several of these novel initiatives gain critical mass; 'Make in India' being one of them. The 'Make in India' vision of the government falls short when it comes to the cement sector. Ironically while our neighbouring countries impose duties on cement exports from India, we allow free imports. Moreover, to compound matters, duties are charged on raw material imports. We trust this disparity would be addressed by the Finance Minister.
Impressive steps have been taken by the cement industry in enhancing its environment friendliness and India has amongst the lowest carbon footprints in the world. The Government would do well to encourage this process by incentivizing such moves and also by giving preference for such eco-friendly products in its projects.
We are hopeful that the situation for core sectors, including cement, will stabilize and bounce back to break out of the subdued 3% growth by 4QFY17. Corporate tax reductions can contribute significantly to boosting growth. 2017 will then be a year of transformation for us and most other industries.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.