INDUSTRY body CII has urged the government to consider replacing bank guarantees with surety bonds in the infrastructure sector and also develop the municipal bond market so that urban local bodies can raise funds. In its recommendations for the forthcoming Union Budget 2022-23, the chamber also said asked the government to continue its investment focus and enhance capital expenditure in areas such as infrastructure to promote growth in the economy at a time when consumption demand has not picked up adequately.

 

“While the economy is showing strong signs of recovery, this would be the right time to focus on future challenges such as developing a competitive manufacturing sector and climate change,” said CII President T V Narendran while elaborating on the context of its suggestions. On infrastructure, CII urged the government to consider replacing bank guarantees with surety bonds and also develop the municipal bond market so that urban local bodies can raise funds for investing in infrastructure. Clarification on the tax treatment for the Hybrid Annuity Model (HAM) of construction contracts has also been sought, it said in a statement. CII has also advocated the promotion of manufacturing as one of the priorities to provide a fillip to the economy. Given the high cost of doing business, the effective rate of tax is still high, it said.