Business Today spoke to Harsh Pati Singhania, Vice Chairman and MD, JK Paper, on steps he expects Finance Minister Arun Jaitley to take in the Budget.
1. IMPROVE COMPETITIVENESS OF INDIAN MANUFACTURING:
One of the downsides of India's economic slowdown in the last two-three years is the sharp erosion of its competitiveness, particularly in manufacturing. This needs to be restored at the earliest by:
a) Improving 'Ease of Doing Business' (remove regulatory bottlenecks) for which there should be thrust on effective implementation of existing policies as well as policy clarity, like allocation/ auction of natural resources which are linked to manufacturing in a clear and transparent manner, relook at Land Acquisition Act, review provisions regarding contract labour and temporary industrial jobs, etc.
b) The government should review free trade agreements seriously and see that internal policy matters and factors that are rendering Indian industry uncompetitive must be corrected. Till then there must be some remedial solution to alleviate this.
c) Tree planting should made part of MGNREGA [Mahatma Gandhi Natural Rural Employment Guarantee Act], and the efforts of the private players to impart training to these people should be made part of the corporate social responsibility activities.
d) The Budget should outline a renewed thrust on the National Manufacturing Policy.
e) There is a case for some fiscal stimulus, e.g., continuing with lower excise duty for auto, relook at inverted duty structure for specific sectors like tyre, paper, cement, aluminium, steel etc. to enable it stand on an equal footing with its competitors.
2. FAST-TRACK INVESTMENTS IN INFRASTRUCTURE:
The economic slowdown led to huge under-investments in infrastructure, with most projects getting stalled either due to regulatory bottlenecks or cost escalation. This is mostly apparent in the slow progress on the work on the Dedicated Freight Corridors, which needs to be expedited. Besides there is other pending infra projects, particularly in power and road sectors that have been in the pipeline for quite some time. It is imperative for the finance minister to allocate adequate resources to revive investments in infrastructure.
3. UNDERTAKE FISCAL CONSOLIDATION RATIONALLY:
Controlling the fiscal deficit is welcome but it should not be at the expense of curtailing capital expenditure. Expenditure rationalization is more important than expenditure curbs. The finance minister urgently needs to relook at subsidies to tackle high fiscal deficit. Already, it is doing away with diesel subsidy in a phased manner and we expect a judicious mix other subsidies that is better targeted (to the poor/needy) in the Budget. Also it is advisable that the govt. meet its social sector commitments (primarily subsidies) largely out of its disinvestment proceeds rather than tax revenues which should be primarily earmarked for capital expenditure.
4. REVISIT LAND ACQUISITION ACT:
The new Land Acquisition Act is viewed as more cumbersome than its earlier guise, where the lengthy process, higher expenses and most significantly the impetus on social impact analysis making new projects unviable. It is noteworthy that since the new Act came into vogue, no major land acquisition for industrialization has taken place. The finance minister could earmark sale of huge unlocked land resources available with the government/PSUs and create land banks in strategic areas where new manufacturing clusters/ projects could come up.
5. TAX REFORMS:
This is another area where we expect some major headway in the budget.
a) Regarding the Goods & Services Tax, the Budget can get the process started by introducing some framework, to send a strong signal of government's commitment to tax reforms.
b) There should also be a pledge to review the Direct Tax Code and clarity on taxation issues. This will not only increase government's revenue mobilization and rein in the fiscal deficit but will also improve India's credibility.
c) The FM should also broaden the tax base (higher exemption limits) and reduce the tax burden (expand tax slabs) so that there is more money in the hands of the people to generate more demand for various goods and services, and boost the manufacturing and services sectors. Moreover it would result in higher collection of indirect taxes, which would help to offset the fall in income-tax collections.
- AS TOLD TO MANU KAUSHIK