George Alexander Muthoot, Managing Director, Muthoot Finance Ltd, says the budget should address the confusion created by the regulations brought in by the RBI last year.
Given the current challenges, what, in your opinion, would make for a good budget ? What measures or proposals would you like to see?
Budget 2013/14 will be the last budget before general elections. Apparently it is going to be a popular one. The challenges before the government are:
- Reducing inflation
- Easing fiscal strains
- Rationalisation of subsidies
- Improving the investment climate
- Implementation of GST
- Maintaining the exchange rate of the Indian rupee, which will have a bearing on subsidies
- Controlling non-plan expenditure
Ideally the budget should have measures directed towards:
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.
- Increasing the rate of savings
- Maintaining reforms
- Extending subsidies only to BPL (below the poverty line) sections
- Having a stable tax regime and simple approval to improve investment
- Increasing investment in the infrastructure sector
- Attracting capital inflows, where direct investment is preferred to portfolio investment Encouraging direct investment would eventually address the challenge of maintaining the exchange rate to a certain extent
- Implementing GST (goods and services tax) with the required constitutional amendments
It is argued that increasing tax rates on the rich would reduce compliance and lead to tax evasion. However, there is a strong case to tax the super rich at a higher rate, say, income above Rs 10 crore per annum. If the budget does not meet expectations, do you fear that business sentiment would once again dip?
It would not be wise to assume that business sentiments would dip if the budget does not meet expectations, as we have proved otherwise even in the most adverse conditions. Specific to your sector, what could the current budget do to improve conditions?
Specific to the gold-loan sector, the budget should address the confusion created by the regulations brought in by the RBI (Reserve Bank of India) last year. The measures should aim at:
- Accepting the relevance of gold-loan NBFCs (non-banking financial companies) in financial inclusion, given the size and reach of the sector.
- Distinguishing organised institutions from unorganised players such as money lenders, and provide a level playing field for all the institutional agencies involved.
Which budget, in the recent past, do you remember as having been a good one?
The dream budget in the recent past was the 1997/98 budget.