While innovative ideas are all in place, all expectations will be on implementation of these ideas, says Vivek Gupta, Partner, BMR.
While innovative ideas are all in place, all expectations will be on implementation of these ideas, says Vivek Gupta, Partner, BMR. “[We] don’t need more innovative ideas, but work on existing ones,” he says.
The government needs to draft rules for its new schemes - Digital India, Start-up India - and the framework needs to be embedded into the law, says Gokul Chaudhri, Leader-Direct Tax, BMR.
The government also needs to reduce lending rates to the industry, says Ravi Uppal, Partner, BMR. The core sector industries are yet to see improvement, he adds.
“RBI and government’s excessive focus on NPAs not helping economy,” Uppal says adding that the public private partnership (PPP) needs to be revived. Contribution from the private sector is missing, he adds.
The industry is hoping for reduction in corporate tax, atleast by a percent in the Budget, says Chaudhri.
Pawan Goenka, Executive Director, M&M says that more focus is needed on infrastructure and agriculture sectors.
Goenka believes that scheme initiatives, announced so far, if implemented well could change the country drastically.
“The government has lost political capital as far as agriculture is concerned,” he says adding that the focus, so far, has been on long-term plan than immediate assistance to framers.
More thrust needs to be on investment from within the country, he says adding that the focus currently is on attracting investment from outside.
Below is the transcript of Gokul Chaudhri, Ravi Uppal, Vivek Gupta, and Pawan Goenka's interview with CNBC-TV18's Shereen Bhan.
Q: How confident is corporate India feeling today as we go into the Budget of 2016?
Uppal: The mood is cautiously optimistic. One does well either the government has started a lot of new projects and schemes and hopefully they should bring some kind of stimulus to the economy. We do see some early signs of that in railway, road sector, a couple of other sectors connected with infrastructure.
Q: Are you in the camp that believes that we are perhaps likely to see a take off in that sense because a lot of these projects which have now been approved are going to hit the ground perhaps in the next two quarters?
Uppal: Well we are hoping for that. In India the commodities have sort of suffered a lot. So, let us hope that the new Budget will bring some hope for them. The most important thing we are looking forward to is kind of major demand stimulus.
Q: What is your key expectation as we go into Budget 2016 and it is going to be a tightrope walk for the Finance Minister, there is the fiscal consolidation roadmap on the one hand and there is the demand of industry on the other to try and stimulate growth even though we are growing at 7.6 percent?
Chaudhri: One of the things as when we spoke to a lot of CEOs 90 percent of them said this Budget is a very important milestone for the government to demonstrate its pro-growth agenda. They also said that they are looking forward to an agenda and a Budget which will show that the government is serious on being non-adversarial on tax agenda.
Q: Then it doesn't help that they have just sent a tax reminder to the likes of Vodafone?
Chaudhri: That is a bugbear that this government and this Finance Minister has to deal with. It has been troubling this government from the very beginning. And if they were to pursue the international arbitration and bring this chapter to close the sooner they do it the better it is.
Q: What would your big expectation really be? Is this going to be a game changer? Everyone is talking about how this could be a game changer Budget but we have heard that in the previous years as well. What should we really expect or what are you expecting?
Gupta: The most important thing is that this government came into power on a platform that promised almost ruthlessly, efficient execution. That was the core platform as to why we have the Modi government today. So, what I would be wanting to see from this Budget is policies that demonstrate this ruthlessly efficient execution.
I am not necessarily looking for new ideas. I am saying there are a bunch of 10-15 things that one has identified need to be done. This is a team of people that is perhaps the most suited to do it. So, let us go ahead and do it.
Q: How have they faired on the ruthless execution promise?
Gupta: Lots has started as Mr Uppal mentioned. Good stuff with Make in India, Start up India etc has begun to happen but we actually need to see specific translation of that on the ground.
The Budget in the way the Indian Budgets now have become are a good opportunity for the government to go ahead and execute through amendments in finance bill, through amendments in allied legislation. It seems that that is the only legislation that goes through these days. So, this opportunity should be used by the government to hammer home this whole point of ruthlessly efficient execution.
Q: And the ease of business?
Gupta: That is a part of this ruthlessly efficient execution, what I call efficient execution. The second point is there are certain sectors in the economy which are suffering and which have if not dealt with have the potential to impact other sectors.
So, I am not in the camp that says autos are suffering, therefore give sops to auto, but yes, if banking is suffering and that can impact wider cross section of sectors, can impact the economy as a whole we have to do something to set it right. We don't have to wait for the Supreme Court to do something.
Q: Specifically on the banking side and for the financial services sector on the whole what would your expectations be? Higher recapitalisation obviously as far as banks are concerned which is the expectation today but anything beyond that?
Chaudhri: One of the things is on the non-performing assets (NPAs) and how the sector is hoping for some sort of tax framework or tax deductibility framework in relation to the provisioning for NPAs. So, that is one piece of it.
We are also looking at broader from an industry perspective that the government did talk about roadmap for exemptions and deductions to be going away and the corporate tax rates to actually come down.
I think the industry will be hoping for the first definitive steps from the Finance Minister to bring down the corporate tax rate.
Q: So, 1 percent corporate tax rate cut?
Chaudhri: At least one percent cut because anything less than that will not be meaningful.
Q: The cut will also mean that certain exemptions will go away and perhaps we will see a much more definitive roadmap being articulated by the Finance Minister as far as the exemptions that will be brought to a close as well. Industry gearing up to cope with that?
Uppal: Last year the Finance Minister had announced that he is going to gradually bring down the corporate tax rate to about 25 percent over a period of next four years but he is going to do away with all the exemptions and that is a good resolve. We need to sort of act on that seriously.
Anything that you save on the corporate tax, you are basically enabling the industry to plough back the same savings into the investment. I think that is definitely a good step.
I would like to add one thing. I think you can divide our economy in two parts. You have the service sector which makes up 60 percent and you have the 40 percent comprising of industry and agriculture.
So, this 60 percent growing at 6-10 percent gives you 6 percent out of the so called 7.4 percent and the other two sectors are giving you just about 1.4 percent.
I think 7.4 can create a veneer on the overall performance of the other two sectors. So, that is what we need to consider. Within the industry I think the core sector industries have still not recovered although government is very serious, they are looking at it but we need to do more.
I am really worried that the Reserve Bank of India (RBI) in particular their excessive focus on declaring NPAs, forcing the banks to do that, I think it is not really enabling the economy.
Q: You would probably be looking very carefully as far as the excise is concerned and whether we are likely to see at least a higher excise duty as far as diesel cars are concerned but beyond that what is the expectation that you have from the Budget?
Goenka: I am not focusing so much on excise this year, that is a very small thing in the bigger scheme of things as we have been talking about. 2-3 percent here and there tinkering is not going to make any difference in the global or the macro thing that we are looking at.
Everybody is talking about how this Budget is a very important Budget and it is. Everybody is saying about agri focus and focus on infra, that is a must. I will be very surprised if we don't see that. Everybody is saying that this has to be a Budget that really establishes the credibility of what the agenda the BJP government has set up and it is very important.
In my view the scheme, initiatives that have been announced so far by the BJP government in last 18 months if all of these succeed, India will be a different country.
Therefore what I would like to see in this Budget rather than being specific is how do we get confidence that the schemes that the government of India has put in, whether it is Make in India, Digital India, Start-up India, there is a clear force behind these schemes and they will indeed be seen to become real.
(Interview transcribed by Swapnil Deshpande and Binu Panicker)