Expect GST to be in range of 20%: CII's Shriram

With the Narendra Modi government gearing up for its second Union Budget, Finance Minister Arun Jaitley on Tuesday held pre-Budget  consultation with industry and trade groups.In an interview to CNBC-TV18 CII president, Ajay Shriram said they discussed with the FM of ways to increase the revenue generation. He said the industry body is confident that government will look at disinvestment more aggressively.According to him the market is still buoyant and mood about India is largely positive across the world.Talking about the goods and services tax (GST) rate, he said it should be in the range of about 20%, lower than the state and Centre averages.

Below is the transcript of Ajay Shriram’s interview with CNBC-TV18's Shereen Bhan.Q: You met with the finance minister today. It seems that industry organisations like yours have presented a wish list which is or less similar to the one submitted earlier to the finance ministry. Does this mean that issues of interest and priority have yet to be fully addressed by this government?A: No, I don’t think so. If you compare what we did last year or rather eight months back than what we are doing today there are a couple of new additions. It is definite that in the last seven months the government has made changes across many areas and we fully support the approach of the government where they say the Budget is only a one day accounting exercise but changes and benefits to the economy or changes for economic growth can be done every day of the year. So, we support that totally.But in this year also there are some new ideas. For instance we recommended that all the NPAs which are there for infrastructure spending which are given by banks please put them into a separate corporate entity and that can then be taken care of separately like you have asset reconstruction companies and the bank’s liquidity position, bank’s ratios will be better. They can then look into the investments in the future.So there are other areas also. We have also recommended for instance saying that for infrastructure growths can one look at the government taking up the projects for implementation and then giving it to a private company for revenue sharing so the government recovers the money through the management and the maintenance of these later on. So there are new ideas which keep coming in.Q: The recent midyear review talked about challenges in meeting the fiscal deficit target for FY16. Does this mean that in the coming financial year, the government will have its hands tie when it comes to its own spending programme or supporting the industry through any kind of fiscal measures? All of you are talking about the fiscal stimulus at this point in time but can the government afford it?A: It is a bit of a challenge there is no doubt on that but our recommendations today when we met the finance minister and his team was also areas and how to increase revenue. So that is one area by which they can increase revenues. For instance the target of disinvestment inflows into the government accounts have not been based on what the Budget was. If that had happened they would have got additionally Rs 40,000-45,000 crore. We are suggesting for the next year please have a Budget of Rs 60,000 crore.Q: It doesn’t seem likely that the government will be able meet the target set for this financial year. Given that situation, I know CII has pegged an even more aggressive disinvestment target for the coming year, do you believe that is this a case of the government mismanaging the disinvestment schedule once again, we saw the previous government do it, do you believe that this government is guilty of mismanaging the disinvestment schedule as well?A: There is always a little time it takes to come to the stage of implementation. I hope and I feel it is a situation of planning for the disinvestment, the markets are still buoyant, the mood about India is positive across the world. So, I am confident that they will look at the disinvestment in the new financial year in a more aggressive manner.Q: The budget session will also see action related to Goods and Services Tax (GST). The initial feedback on the rates is that it will be significantly on the higher side. What according to CII is an ideal rate for GST that will take care of interest of corporate India, states as well as the centre?A: GST is something which we are absolutely behind and we appreciate the efforts put in by the FM and his entire team on that. Our judgement says that to have a wider base for GST, two things. One, we should virtually bring it on all products and services because that then ensure it is wider and secondly the rate should be lower than the calculations which show the state and central averages. That comes to about 26 percent plus. Our feeling is GST should be in the range of 20 percent because that will then be accepted better, adherence will be better and with a wider base within a short period of time the inflows into the government coffers will go up.