In­dia Inc Wants Modi Budget to Fo­cus on Fisc Con­sol­i­da­tion

Hopes the new govt thinks be­yond short-term steps like tax sops

The Economic Times - - Companies - VIKAS DHOOT

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.

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