Q. Given the current challenges, what, in your opinion, would make a good budget? What measures or proposals would you like to see?
A. A budget that inspires and improves business confidence
and sentiment, supports the 12th Five Year Plan's objectives and targets, and stimulates investment and growth. A budget that reins in inflation, reduces costs and increases the speed and efficiency of doing business. That provides stability, reduces wastage/corruption and results in an efficient tax administration and wider tax collection. That reduces poverty and improves quality of life through good governance, administration, transparency and quality of services. And that does not burden the aam aadmi, who is already frustrated with diminishing purchasing power and rapidly rising costs and inflation. Q. Given the constraints the government faces in raising revenue, do you see a case to increase income tax rates on the rich? Please identify the cut-off in income beyond which you would classify the person as rich.
A. This issue has been debated in many countries and generally it has been observed that taxing the rich is not a sustainable and lasting solution. It can only result in tax avoidance, concealment and non-compliance, which will mean more tax administration and governance. The tax structure and regime should be such that people pay their tax dues honestly. The only category of rich who can perhaps be taxed (and are always taxed) are the salaried class, who cannot willingly or unwillingly escape any tax rate imposed on them by the government. And that is why it is not at all a good solution. Instead, the government tax machinery should spend their time and effort to widen the tax base.
Instead of taxing the rich, it may be better to put a consumption tax on the value of purchases beyond a certain level. All those buying expensive cars/consumer goods, expensive land/buildings/houses, club memberships, expensive articles, hotel bills, luxury items, travelling overseas, should be brought into the tax net.
During my childhood, a person with Rs 1-10 lakh was called well-to-do, 11-99 lakh was called rich, and anyone with Rs 1 crore or more was called super rich. I think since then everything has been multiplied by 100. Q. If the budget does not meet expectations, do you fear that business sentiment would once again dip?
A. Yes, keeping in view that the 2014 elections do not inspire confidence in view of the expected coalition government, which will not be very stable. Q. Specific to your sector, what could the current budget do to improve conditions?
A. Support the 12th Five Year Plan's objectives, drive infrastructure spending, remove hurdles, enable single-window clearance, ease interest/borrowing/land and environment regimes. Q. Which budget, in the recent past, do you remember as having been a good one?
A. Whenever BJP has been in power. In 1991, under Mr Narasimha Rao. And the first time Mr Chidambaram was the finance minister under Dr Manmohan Singh.