Q: You don’t think that an actionable plan will show up on Monday for this, for instance, there is a whole section that is devoted to tax reforms and it does strike all the right notes that the tax fraternity has been looking for, right? So you take away double taxation in many cases, take away fringe benefit tax (FBT), securities transaction tax (STT), review customs duty exemptions, etc. bring in that new direct tax code that everyone has been waiting for many months now. Do you think this will become actionable points on Monday or do you stand by the fact that all of this continues to be the ongoing vision for the next five years?

Dalal: Some of it would be put to action. Of course, the direct tax code is something which I suspect will be put out for public comments and public views as opposed to being legislated. So in that sense it is a very tangible step and it is action. I am expecting it to be brought into action. With regard to the removal of FBT or STT, it is possible that one or two of these items may go away and one hopes that they will and there is double taxation there. In addition, of course, to the fact that there is a serious amount of a manpower involved in even administering this law both on the part of the government itself as well as on the part of the taxpayer. So, some part of it will be brought into action but one cannot expect that everything that has been said will be put into action there.

Q: What are you expecting on Monday? In terms of what this document lays out and what do you think Pranab Mukherjee, Finance Minister of India, will put down as defined points of action over the next year?

Subbarao: There is a grand vision and grand intent but the government must pluck the low hanging fruits which are immediately possible to implement such as the direct taxes code, it is almost ready which it can rollout and scrapping-off all those surcharges which are meant for a particular purpose and all these charges outlive that purpose.

Q: The Kelkar Committee Report, scrapped the surcharge and take away the exemptions as well. So everything goes then you just come back with a flat rate of tax which gives you predictability and certainty.

Rao: That makes life simple. For example, on the bottomline if a particular percentage of the tax on the reported profit is alleviated, the life becomes extremely simple; all the litigations goes-off. The national productivity will improve significantly.

Q: For instance, our growth target for this year is 7%, is that something that is doable then this document also talks about the fact that we need to continue to be in a fiscally expansionary mode but yet we need fiscal discipline. Are they indicating that this stimulus or the stimuli measures that one taken earlier on will be continued within this budget? What are you hoping for?

Rao: I think 7% growth is easily achievable. It all depends upon how we generate the kind of investment to achieve the 7% growth, there is money. The wealth that is available in the world has not been destroyed. How we promote that investment to come to the shores of this country is what the government has to do. So the reforms process will generate the kind of adequate investment. The world has been looking at India, a lot of investments have been coming in and everybody is looking for the budget. So if the budget provides the right impetus, right framework of the policy, there would be adequate investment that would be available for promoting that kind of growth.

Q: There are very aggressive noises on disinvestment, lay-out on an annual target of Rs 25,000 crore, very aggressive noises on opening up FDI as well in multi-brand retail formats?

Dalal: Yes, in terms of FDI, there are four specific sectors that have been mentioned one is the multi-format retail but that has a lot of caveats there. Other are defense, banking and insurance. Coming to multi-format retail, it seems to indicate a calibrated opening-up, it is talking of to start with food retailing are the actual words used and that also subject to setting up certain logistical facilities, but clearly, I think the shadow of the Left are no longer looming over the government.

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