Budget: Time for govt to walk the talk, says India Inc

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Finance Minister Pranab Mukherjee should present a growth-oriented budget on Monday, Adi Godrej, Chairman of Godrej, said. "If we can get growth back to 8-9% in a short period of time it will create a virtual cycle. If we don't we will end up in a vicious cycle."

HP Ranina, Budget Tax Expert, is of the view that the Finance Minister can reduce tax rates provided he recovers money in some other way and that's the attempt he will try to make. "So he will, for example, restore the standard deduction for employees other benefits, high ATC for housing, etc.," he said.

Ajay Wadhwa, MD and CEO, Ambit Holdings, said the government has been given an overwhelming mandate to go out and do what is absolutely right. It was time for the finance minster to walk the talk, he said. "I hope whatever they do they do it with a five-year vision."

Also read: Budget only for 8 months but Pranab should go allout: Ex-FM

Here is a verbatim transcript of Adi Godrej, HP Ranina, and Ajay Wadhwa's interview on CNBC-TV18. Also watch the accompanying video.

Q: We know what needs to be done in this country, fuel prices, deregulations, subsidy unwinding, and reforms, tax clearance, do you really think on Monday when he presents his  budget he is going to deal with all of these and gives us yet another vision document which the Economic Survey did very beautifully or is he actually going to get down to the hard working details and everyone knows what needs to be done, I am going to tell you what we are going to do in the next six to eight months?

Godrej: The economic survey was spot on the more of those directions he is able to implement the better-off we will be, what we clearly need is growth orientation, if we can get growth back to 8-9% in a short period of time then it will create a virtual cycle and if we don't we will end up in a vicious cycle. So for example when we talk of fiscal deficit, the best way to reduce would be to get the growth up. If you tax more, you are likely to create conditions where growth doesn't come back to normal and fiscal deficit may be even higher. I agree with Mr. Sinha that the fiscal deficit is a different agreeable situation to solve in a short period of time. We have to live with a little bigger fiscal deficit for a while. Disinvestment and such other things could help in the short-term but growth orientation is what we need. So I do hope the budget will be growth oriented. Certain kind of taxes, if reduced, may lead to higher revenues and not lower, for example, personal and corporate income tax surcharges. If you do away with it you would probably get more revenue. So those are the things we must do and we will see that on Monday.

Q: We now know that we want predictability and we want certainty, if we are going to reduce it, if you are going to take away surcharges and balance that by taking away exemptions as well, the tax roadmap though various committees has been laid out in various different patterns what is it on Monday that you would want to see him do because he is going to have a very little room to be able to reduce taxes.

Godrej: He should raise the exemption limit for personal income tax that leaves a lot of money with the consumers and consumption is what we need today to create growth. He should incentivize affordable housing tremendously because that will lead not only to strong activity and GDP growth but also to higher revenues. For example, if he restores ATIB which allowed profits from affordable housing not to be taxed at the corporate level, if he increases the deduction for mortgages from income tax, it will lead to tremendous demand in affordable housing which in turn can lead to much greater consumption of steel, cement, etc. which in turn leads to greater revenue and higher GDP growth. So there are win-win solutions that needs to be brought in.

The other thing he can do is disinvestment to take care of the fiscal deficit but I will give you an example of I am familiar with, edible oils have always had import duties of 20-40%, when inflation rose considerably, it was brought to zero, right now to encourage more production of edible oil in the country, we need to restore these duties that will give about Rs 5-10,000 crore of more revenue. So some such things are revenue raising measures which are win-win for growth.

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