‘Reduce corporate tax rate to 20%, remove exemptions’
The government should reduce the taxes on equities in order to spur private investment, says Vikram Kirloskar, president, Confederation of Indian Industry and vice chairman, Toyota Kirloskar Motor. In an interview with Swati Khandelwal, Kirloskar said the end of trust deficit is needed to boost gross domestic product (GDP) growth.
Tell us about the auto sector’s expectation from the Budget?
Investing in equities is getting more expensive. I would request the government that it should reduce or remove three-four taxes that are levied on equities as it will give a boost to private investment and bring aggression among people for investment. The second thing is consumption, a segment that is facing issues of liquidity and cost of liquidity. At the same time, a banker and my colleague Uday Kotak says that liquidity is available in the market. But the problem is related to the cost of liquidity and we have to find ways to reduce it. So a reduction of retail finance cost will give a boost to consumption as well.
Rural demand has weakened in the last six months.
What steps should the government take to improve it? Do you have any specific recommendations for agri-economy?
The prime minister has announced a rural insurance scheme for the farmers and I think that it will encourage people to move ahead and take risks, which will help them to earn profits. It is important that farmers take risks and get rich. This is how the economy will grow. So, the prime minister’s original idea is to double the income of farmers and every effort should be made to increase their income.
Do you think that corporate tax will be reduced in this Budget?
We asked for simplification while keeping revenues at neutral levels. Reduce the corporate tax and get rid of the exemptions.
The levels to which corporate tax should be brought down?
We are looking at 18-20% corporate tax and zero exemptions.
What can the government do to attain doubledigit growth in GDP?
You need a change in behaviour to get such kind of GDP growth. Prime Minister’s Swachh Bharat scheme that was launched during his first tenure has brought a behavioural change in terms of cleanliness. Similarly, some concept related to change the behaviour should be brought in as it creates trust between the government and the industry, the government and the society and the society and the industry. I feel the trust deficit is something that is holding it two points down because people are scared of a lot of things. So, people should also be blamed for that scare due to over-regulation. If trust comes in and regulations will come down, the ease of doing business will increase. If you have trust, you will have more foreign direct investment coming to the country. So, this is a key issue. First, let’s have a change in behaviour and remove the trust deficit.
By when do you think the economy will bounce back on track?
It has been predicted that the monsoon will remain normal this time and the return of the strong government in power will change the sentiments. So, I am optimistic that the economy will bounce back in the next twothree months.