Srei Infrastructure Finance CMD Hemant Kanoria
Business Today spoke to Srei Infrastructure Finance Chairman and Managing Director Hemant Kanoria on what he expects from P Chidambaram's Budget 2013 -
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. For me, a good budget at this stage is one that can set in motion the domestic demand cycle. Given the uncertainties in a global economic recovery, we must look inwards and unleash our domestic potential.
This will be possible if the budget focuses principally on infrastructure creation
, because of its huge multiplier impact in terms of creating employment, enhancing the productive capacity of the economy, fuelling entrepreneurism and promoting inclusive growth.
I feel special emphasis must be laid on addressing the bottlenecks of two crucial sectors: power and coal. Given the fiscal position of the government, every possible measure must be taken to encourage private investment in infrastructure. Q. Given the constraints the government faces in raising revenue, do you see a case to increase income tax rates on the rich?
A. In a country of a billion plus people, when the tax-paying population is not even 35 million, I do not think any extra tax on the super-rich will have a significant impact on revenue
generation. Rather, the focus should be on simplifying tax laws and reducing the cost of collection. Q. If the budget does not meet expectations, do you fear that business sentiment would once again dip?
A. Business sentiment has been down for almost a year and a half now. It is difficult to imagine it dipping any further. Given the fact that the finance minister has initiated reform measures ever since he took over, this has definitely raised expectations
from him. We are all expecting a reform-oriented budget. In case the budget fails to meet expectations, the economic slowdown will get prolonged for sure. Q. Specific to your sector, what could the current budget do to improve conditions?
A. NBFCs (non-banking finance companies) that finance infrastructure
, namely NBFC-AFCs (asset finance companies) and NBFC-IFCs (infrastructure finance companies), are the principal conduit of credit delivery to the multitude of small and medium entrepreneurs (SMEs). They provide vital services to the infrastructure sector but are outside the purview of banks.
To set in motion infrastructure creation, the machinery that needs to be oiled is the financing vehicle of the infrastructure SMEs, i.e., the NBFC-AFCs and NBFC-IFCs. These NBFCs need a big push from the finance minister in this budget. While these NBFCs cater to the infrastructure sector and perform roles similar to banks, they do not enjoy a level playing field vis-a-vis banks in terms of tax treatment and tax breaks, access to funds and asset recovery. These loopholes need to be addressed so that these NBFCs can perform their task better. Q. Which budget, in the recent past, do you remember as having been a good one?
A. It is a difficult question to answer, as the budget announcements have been mixed bags.