Business Today's Dearton Thomas Hector spoke to Fortis Healthcare Executive Chairman Malvinder Singh on what he expects from Finance Minister P Chidambaram's Union Budget 2013. Excerpts -
Q. Given the current challenges, what, in your opinion, would make for a good budget? What measures or proposals would you like to see?
A. This year's Union budget is the last one before the general elections in 2014. The government can take advantage of India's unique position in the global economy to push through a series of reforms that will improve liquidity, enhance capital inflows and bring in more direct investment, driving the economy on a higher growth path.
Infrastructure development projects must be given a boost. The lowering of interest rates, debt restructuring options and expedited clearances for important highway and road projects would help accelerate development, build momentum and generate optimism in the country.
PSUs, particularly those with cash surpluses, must be encouraged to increase investment to enhance capacity. There is also a need to generate funds for an economy in growth mode and the government must press through with its divestment agenda for identified PSUs.
On the expenditure side, there is a need for fiscal prudence and cutting wasteful expenditure. Subsidies must be carefully targeted where they are essential and progressively weaned away. The deficit needs to be reined in below 4.5 per cent of GDP (gross domestic product) to ensure the long-term growth trajectory of the country.
Q. Given the constraints the government faces in raising revenue, do you see a case to increase income tax rates on the rich?
A. Raising revenue by widening the base of taxpayers and ensuring compliance is a sustainable and much better option. The need of the hour is to improve liquidity and attract more investment. The government must therefore synergise its efforts and focus its policies to create a conducive environment for growth. Investors always value the merit of a stable tax regime and it is thus important that they see continuity in government thinking and action.
Q. If the budget does not meet expectations, do you fear that business sentiment would once again dip?
A. The budget is one of the many things that the government does during the course of the year to ensure that the economy remains on track. Today, there is much greater predictability in the process and the budget itself has become a part of the journey and not the end. In that sense, I do not see the budget having much of an impact on long-term business sentiment.
Q. Specific to your sector, what could the current budget do to improve conditions?
A. A vibrant health sector is key to the well-being of the nation and the government must step up its allocations to achieve the targets set for the 12th Five Year Plan.
Health care spending by the government has been low, averaging 0.9 per cent of GDP in the last five years. This must be progressively scaled up to 2.5 per cent of GDP by 2017.
Additionally, the government must take definitive steps to: expedite the grant of infrastructure status to the health care sector; expand physical infrastructure for medical education; ease norms for creation of new colleges and centres of excellence for higher medical learning; expand the scale and scope of the Rashtriya Swasthya Bima Yojana; expand preventive health programmes; ease norms for medical visas so we attract more medical tourism.