Govt must focus on infra, rural income: Experts
The industry wants the government to raise its expenditure on infra projects, elevate rural disposable incomes, address the crisis in non-banking financial companies (NBFCs), and prod banks to cut rates to put the economy back on track.
Mohit Malhotra, chief executive officer (CEO), Dabur India, said there was a liquidity crunch in rural areas. “Government spending and a stimulus package for rural areas will go a long way in reviving consumer demand,” he said.
Sumit Malhotra, managing director, Bajaj Consumer Care, said there were a few areas the government could focus its attention on. “One is it needs to loosen its purse strings and undertake strong measures to spur demand in rural areas.” The second step, he said, would be to reduce stress when it comes to tax compliance. “That is a big concern for companies, and the government can do something here.” The third would be to nudge banks to provide easy credit. “Recent challenges have made banks too cautious in providing loans to the corporate sector. Plus, there is need for a better transmission of rates.”
Prabal Banerjee, president (finance), Bajaj
Group, said investment could happen only when private investors shed their fear of non-performing assets (NPAs) and, for that, the bank debt-servicing structure had to be overhauled. “It has to be recalibrated with business cash flows rather than interest payments every month and quarterly debt servicing,” he said.
Besides, if any government company or the government is not paying its dues to a private company, the private company should be getting relaxation in their dues to banks and other statutory dues should be exempted from payment till the government company or the government pays it, Banerjee said.
According to V G Kannan, CEO of the Indian Banks’ Association, the government can move to spend big on infrastructure projects.
“Business confidence has taken a hit. We need to boost it,” said Kannan, adding, “the government will have to implement schemes in infrastructure and road sectors, and start spending, for example, to expand railways projects”.
However, bankers need the assurance that they won’t be hauled up if business decisions go wrong, he said.
Auto players want a cut in the goods and services tax (GST) rate from the peak of 28 per cent.
Rajan Wadhera, president of the Society of Indian Automobile Manufacturers, wanted the GST Council to cut the rate to 18 per cent. The date for the next Council meeting has not yet been set.
TVS Motor Company Chairman Venu Srinivasan said the GST rates for two-wheelers should be reconsidered, especially at a time when new safety norms and fuel norms were expected to increase prices. “The GST rates for twowheelers cannot be benchmarked to the GST rate for luxury goods at 28 per cent, especially given the inconsistencies with the integrated multi-modal public transport systems,” he said.
Cellular Operators Association of India Director General Rajan S Mathews said financial stress needed to be addressed. “The government should reduce the licence fees and spectrumusage charges,” he said.
Economists said the government would have to first assess whether it wanted to breach the fiscal deficit target of 3.4 per cent for the current financial year. In case it does not want to breach the target, it will have to cut revenue expenditure while raising capex, pegged at 1.6 per cent of GDP in the year, said D K Srivastava, chief policy advisor, EY.
Assocham President B K Goenka said: “There should be an accelerated depreciation system in the first year or over three years. Tax rebates can be given for profits ploughed back as investment in new projects.”