The over-spending by the government in the last five years, with borrowing of around Rs 21.5 lakh crore as against Rs 6.75 lakh crore in the previous five years, is one of the major reasons for the slowdown in the economy in my opinion. High inflation due to this and mismanagement of the economy leading to a drop in savings and consumption is another reason why Indian economy is grappling with a slowdown. An antagonistic attitude to business, leading to crony capitalism, and lack of transparency leading to reduced business confidence has also slowed down the economy.
This slowdown is largely driven by local factors and partially due to global factors. Policy paralysis is still an issue for new investments and expansion as Government has stopped taking decisions. Letters go unanswered and there is a fear of taking decisions in the bureaucracy.
In order to boost growth, government must reduce spending and stick to the fiscal deficit target of 5.3 per cent this year and 4.8 per cent next year. It should also reverse the retrospective amendment to the tax laws and restore investor confidence. Government, in order to stimulate growth, should also clear the policy logjam in power, telecom, coal, aviation, technology and other sectors.
The question that what the government should not do in this Union Budget is equally important. First, it should not increase indirect taxes. It should not overestimate revenues and harass taxpayers through perverse assessments. Also, the subsidies should be targeted only at the poor, not I-T payers and government servants.
I believe that the tax on the super-rich, as the finance minister has hinted, is justified. What I suggest is that for incomes over Rs 50 lakh government should levy a surcharge of 10 per cent which can be set off for charitable donations eligible for 80 G, so that either Government gets revenue or social sectors get donations.
Small and medium industries complain that big business has hijacked both credit and exemptions. Well, small industry gets excise duty exemption upto Rs 1 crore and gets interest benefits, so there is no case for complaint. What they need most of all is payment on time by the big industry.
This fiscal, we intend to invest less, as far as our business is concerned. Also, we are looking to expand globally and reduce new hiring.
Chairman,Manipal Global Education
The Sunday Standard