De­mon­eti­sa­tion im­pact won't spill over to next year

Bud­get 2017-18

FICCI Business Digest - - Special Feature -

The 2017-18 Union Bud­get charts a story that is con­sis­tent with the poli­cies of Govern­ment in the last cou­ple of years, is pre­dictable in its ap­proach and is shorn of un­nec­es­sary sur­prises for the in­dus­try and so­ci­ety, said Ashok Lavasa, Fi­nance and Ex­pen­di­ture Sec­re­tary, Min­istry of Fi­nance, while ad­dress­ing the Na­tional Ex­ec­u­tive Com­mit­tee Meet­ing of the Fed­er­a­tion of In­dian Cham­bers of Com­merce and In­dus­try (FICCI), in New Delhi on Fe­bru­ary 4, 2017.

Lavasa's ob­ser­va­tions were cor­rob­o­rated by Shak­tikanta Das, Sec­re­tary, De­part­ment of Eco­nomic Af­fairs, Min­istry of Fi­nance, who said that the Bud­get main­tains the Govern­ment's com­mit­ment with re­gard to re­forms and tax­a­tion pol­icy.

The Fi­nance Sec­re­tary said that the Bud­get demon­strates that gov­er­nance re­forms were fun­da­men­tal to trans­form­ing the econ­omy and en­er­gis­ing the peo­ple. Clean­ing the sys­tem was an­other key com­po­nent of the Fi­nance Min­is­ter's pro­pos­als which is attempted through a se­ries of steps such as Aad­har linked de­vo­lu­tion of govern­ment sup­port and sub­si­dies to the tar­geted ben­e­fi­cia­ries, ex­pen­di­ture re­forms and the pro­posed re­vamp­ing of the Gen­eral Fi­nan­cial Rules to mon­i­tor how the various de­part­ments were ex­pend­ing the al­lo­cated funds.

Lavasa said that gov­er­nance was be­ing made more trans­par­ent and ef­fi­cient through mea­sures such as govern­ment pro­cure­ment through the e-mar­ket­place, ra­tion­al­i­sa­tion of Cen­tral sec­tor schemes and re­duc­tion in Cen­trally-spon­sored schemes.

He said that tech­nol­ogy was be­ing in­creas­ingly em­ployed to im­part ef­fi­ciency in ex­pend­ing fund and space tech­nol­ogy was be­ing de­ployed to geo-map the cre­ation of as­sets on the ground. This, he said, would help in fram­ing an out­come bud­get. Once, ev­ery two years of the du­ra­tion of a govern­ment scheme, an eval­u­a­tion would be done on the way funds were be­ing spent.

Lavasa de­scribed the Bud­get as

Gov­er­nance is be­ing made more trans­par­ent and ef­fi­cient through mea­sures such as govern­ment pro­cure­ment through the e-mar­ket­place, ra­tion­al­i­sa­tion of Cen­tral sec­tor schemes and re­duc­tion in Cen­trally-spon­sored schemes.

pro­gres­sive with­out be­ing high sound­ing; prag­matic with­out be­ing con­ser­va­tive and peo­ple­ori­ented with­out be­ing pop­ulist.

Shak­tikanta Das main­tained the im­pact on de­mon­e­ti­za­tion on growth would be very tran­sient and that it would not spill over to the next year which would see a growth of 7% plus and the econ­omy would con­tinue to do well there­after. In spite of the govern­ment was to in­crease the share of per­sonal in­come tax in GDP, which at present was abysmally low. He said that per­sonal in­come tax has a share of a mere two per cent, which needs to be raised sub­stan­tially. Also, the pro­file of per­sonal in­come tax does not match with the con­sump­tion pro­file of the coun­try, which needs to be looked at.

Speak­ing on the is­sue of In­dia's cor­po­rate in­come tax not be­ing glob­ally com­pet­i­tive, Ad­hia said that the govern­ment had lim­ited re­sources and there­fore stronger global head­winds, In­dia re­mained buoy­ant, he em­pha­sized.

In his elu­ci­da­tion on the Bud­get pro­pos­als, Das said that the Govern­ment had stuck to its com­mit­ment with a pro­gres­sive out­look. This is seen by avoid­ance of ret­ro­spec­tiv­ity in tax­a­tion, tar­get­ing of govern­ment sup­port through Aad­har, re­forms in agri­cul­ture, es­pe­cially the model mod­er­a­tion in cor­po­rate in­come tax rate has to be seen in the con­text of a con­comi­tant ex­pan­sion of the tax net. On GST, he said that it was well on track with the Cen­tre and State Gov­ern­ments on board and it is hoped that on July 1, 2017, GST will be­come a re­al­ity.

Sushil Chan­dra, Chair­man, Cen­tral Board of Di­rect Taxes, Min­istry of Fi­nance and S Ramesh, Mem­ber, Cen­tral Ex­cise, Ser­vice Tax & IT, Min­istry of Fi­nance, ex­plained and clar­i­fied the pro­vi­sions of the Fi­nance Act and re­it­er­ated that the govern­ment law on con­tract fram­ing, UGC re­forms, pro­posed amend­ments to the Air­ports Author­ity Act, metro devel­op­ment to har­ness pri­vate in­vest­ment and skills and in­te­gra­tion of spot and de­riv­a­tive mar­kets to pro­vide re­mu­ner­a­tive prices to farm­ers.

Has­mukh Ad­hia, Sec­re­tary, De­part­ment of Rev­enue, Min­istry of Fi­nance, said that the most chal­leng­ing task for the was sim­pli­fy­ing the tax regime to the ex­tent pos­si­ble for in­dus­try and in­di­vid­ual tax­pay­ers. The govern­ment was em­ploy­ing tech­nol­ogy to make tax as­sess­ment face­less.

Ear­lier, Di­nesh Kan­abar, Chair, FICCI Com­mit­tee on Tax­a­tion & CEO, Dhruva Ad­vi­sors LLP, gave snap­shots of the plusses and mi­nuses of the Bud­get pro­pos­als with re­gard to di­rect tax­a­tion and Ma­hesh Jais­ing, Part­ner, BMR Ad­vi­sors LLP, made a pre­sen­ta­tion on the in­di­rect tax pro­pos­als.

L to R: Rashesh Shah, Se­nior Vice Pres­i­dent, FICCI; Ashok Lavasa, Fi­nance and Ex­pen­di­ture Sec­re­tary, Min­istry of Fi­nance; Pankaj Pa­tel, Pres­i­dent, FICCI; Shak­tikanta Das, Sec­re­tary, De­part­ment of Eco­nomic Af­fairs, Min­istry of Fi­nance and Dr A Di­dar Singh, Se­cre­tray Gen­eral, FICCI.

L to R: S Ramesh, Mem­ber, Cen­tral Ex­cise, Ser­vice Tax & IT, Min­istry of Fi­nance; Rashesh Shah, Se­nior Vice Pres­i­dent, FICCI; Sushil Chan­dra, Chair­man, Cen­tral Board of Di­rect Taxes, Min­istry of Fi­nance; Pankaj Pa­tel, Pres­i­dent, FICCI and Has­mukh Ad­hia, Sec­re­tary, De­part­ment of Rev­enue, Min­istry of Fi­nance.

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