Business Today's Associate Editor K.R. Balasubramanyam spoke to V-Guard Industries Ltd's Managing Director Mithun K Chittilappilly ahead of Budget 2013 on his expectations from Finance Minister P Chidambaram. Excerpts -
Q. Given the current challenges, what, in your opinion, would make a good budget? What measures or proposals would you like to see?
A. There needs to be a comprehensive review of the power sector. We need to focus on reforming it. The government should encourage investments in power generation and transmission.
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Q. India suffers peak a power deficit of close to 15 per cent. The situation is getting worse with the weakening monsoon and less availability of fuel, primarily coal.
A. There must be incentives to shorten the huge gap in power demand and supply. And some concrete steps towards a GST (goods and services tax) regime.
Q. Given the constraints the government faces in raising revenue, do you see a case to increase income tax rates on the rich?
A. One thing the government has to realise is that extra tax on the super-rich will only drive them away to tax havens. We have seen this happen before. This may not yield positive results. Moreover it will also discourage entrepreneurship
Q. If the budget does not meet expectations, do you fear that business sentiment would once again dip?
A. We are, fortunately, in a consumer business. We have a negligible institutional business, and usually, consumer businesses are not much impacted by budgets.
Q. Specific to your sector, what could the current budget do to improve conditions?
A. Currently we face great difficulty in production, especially in Tamil Nadu, due to huge power outages. So, some kind of incentive for power production and some clarity on coal, etc, would be welcome. As an industrialist, I would also welcome some stimulus to durables, such as reduction of excise, and some boost to real estate and new housing demand.
Q. Which budget, in the recent past, do you remember as having been a good one?
A. If I am not mistaken, after the budget of 2009 when the government reduced excise duty, we saw some increase in demand. So, that was a timely intervention.