Shekar Viswanathan, Vice Chairman and Whole-time Director of Toyota Kirloskar Motor, says multi-utility vehicles are used for transportation in the rural sector and the current level of 27 per cent is way too high.
Given the current challenges, what, in your opinion, would make for a good budget? What measures or proposals would you like to see?
A good budget in the most classical sense would be a balanced one - that is an ideal that needs to wait. Given the stickiness of several items of expenditure, there is little room for the finance minister to cut plan and non-plan expenditure. One major item of expenditure is interest payments on government borrowings. What the finance minister needs to do is lower the absolute amount of borrowings compared to last year. His only option would be to raise taxes, ensure a faster pace of divestment, encourage public-private partnerships (PPP) in key sectors such as infrastructure and power, and ensure greater tax compliance. The encouragement of PPPs through suitable fiscal incentives should be the cornerstone of this budget.
Specific measures would include:
Given the constraints the government faces in raising revenue, do you see a case to increase income tax rates on the rich?
- Increasing tax rates on those with an income of Rs 15 lakh and more, up to a maximum of 40 per cent
- Taxing the rural rich
- Increasing wealth tax rates on those who own more than three properties in India
- Introduction of complete tax exemption on companies set up exclusively for generation, distribution or transmission of power as the country needs high-quality and reliable power
- Continued reduction of subsidies on kerosene, LPG (liquefied petroleum gas), and to some extent, fertilisers
- Reintroduction of inheritance tax or estate duty
- Evolving a mechanism to pass input cost increases in the electricity sector else the budget would bear this cost
- Incentives for National Manufacturing Investment Zone (NMIZ) funding
As mentioned above, there is a case to increase taxes on the rich when the government is poised to phase out subsidies in a gradual manner. Please identify the cut-off in income beyond which you would classify the person as rich.
Anyone owning three or more properties in India or an income of over Rs 15 lakh per annum should be considered rich. If the budget does not meet expectations, do you fear that business sentiment would once again dip?
The budget is just one of several events that drives business sentiment. Other drivers include oil prices, the border situation with Pakistan, the business friendly approach of both central and state governments, and general inflation levels, including food inflation. Specific to your sector, what could the current budget do to improve conditions?
We would like to see the following measures implemented in the automobile sector:
- Reduction of excise duty rates on MUVs (multi-utility vehicles), given that these vehicles are used for transportation in the rural sector. The current level of 27 per cent is way too high.
- Early implementation of the HV/EV (hybrid vehicles and electric vehicles) mobility mission plan, which will pave the way for incentives to be provided to the consumer for import and sale of these vehicles. This will facilitate the creation of market demand for environment-friendly products that will also reduce dependence on oil.