India Inc Wants Modi Budget to Focus on Fisc Consolidation
Hopes the new govt thinks beyond short-term steps like tax sops
India Inc is looking for a timely and decisive leadership from the new Modi regime and hopes that its first Budget would indicate a focus on fiscal consolidation instead of tax sops to stimulate somnolent industrial activity in the short-term.
Industry will reiterate its demand for an urgent rollback of the retrospective taxation policies introduced by the UPA government and a rethink on the implementation of the new Companies Act and land acquisition law. “It is sad to hear today of the number of Indian groups that want to invest outside India… that we have seen in the last five years. Everyone in government needs to take a business-like approach to find a solution,” said CII president Ajay Shriram, adding that Modi is a phenomenal hands-on manager with the decisive leadership the country needs. Industry believes that Modi has the time and the mandate to effectively govern the country with a much smaller ministerial council than the crowded 72-member council of the UPA, which made taking timely decisions extremely difficult. “Too many ministries means too much co-ordination needed. It’s a known fact that many ministries were created to accommodate many allies. With the kind of mandate that BJP has got, the potential for consolidation is there and it will be a big positive across the board,” said Shriram, adding that such a symbolic action at the outset will be critical for changing the negative sentiment about India’s red tape. With manufacturing and in- dustrial output shrinking, there was a long debate among 70-odd CEOs who attended CII’s national council meeting on Monday on the agenda for the new government. “We have never seen such expectations from a government,” said CII secretary general Chandrajit Banerjee.
“Instead of seeking excised duty cuts and stimulus packages to stir up industry, the larger consensus that emerged was to look for clarity on macro-economic problem of the fiscal deficit,” he said. “If the government is on the right path, that would give us confidence nationally as well as internationally. So, there could be short-term pains but followed by longterm gains,” said Banerjee. CEOs also unanimously agreed to red-flag three legacies of the UPA regime that need an urgent rollback or review. These include retrospective taxation and the recently notified Companies and land acquisition laws. “We want major introspection on these issues and want the Companies Act rules to be kept in abeyance till detailed discussions take place on them,” said Banerjee. On the land acquisition law, industry urges for a rethink on the timeframes and costs involved.