In the pre-Budget consultation meeting with Ms. Nirmala Sitharaman, Honorable Finance Minister, the Confederation of Indian Industry (CII) articulated 10 big reform ideas which have the potential to leap-frog growth. “A simplified taxation regime is pivotal for improving the revenue flows and help government stick to fiscal prudence without crowding-out private investments. For this to fructify, a timeline for a Taxation regime (Direct Tax) needs to be announced where the highest rate should be 18%, in addition to removing all exemptions and not doing grandfathering”, stated Mr Vikram S Kirloskar, President, Confederation of Indian Industry (CII) at the meeting. In addition, a 3-year roadmap for reducing the Income Tax Act document to 4-5 pages also needs to be stated.
Further, in order to bring down the high tax rates on capital which at present is a major deterrent for flow of capital, CII President suggested bringing down the Dividend distribution tax to 10% from the present 20%. It should also be not taxed at the hands of the investor. “Stepping up investments, both public and private, is critical for boosting our growth potential. In this context, the New Industrial Policy needs to be made more potent in providing key directions in terms of continuity, consistency and certainty for all policies governing industry”, Mr Kirloskar highlighted.
On SEZs, CII President noted that its critical role in boosting investments. In this context, he suggested that a new model of SEZs be developed based on the original concept of SEZ which entailed 6 to 7 very large SEZs. Moreover, these 'New-Age SEZs' must be in the coastal areas which could also be used to bridge the East-West development divide.
In order to buttress consumption, it is essential to increase personal disposable income. In this regard, this would be the right time to reduce personal income tax burden. Hence, it is suggested that there should be zero tax till Rs 5 lakhs with a simple Return to file, added Mr Kirloskar.
“The Government could appoint czars like mission directors as was done in Aadhar to take a total value chain approach for employment intensive sectors such as housing and construction, agriculture and food processing, textiles and garments, tourism and automobiles, with monitorable employment targets, CII President stated. In the same vein, he added that with the stress on boosting productivity among enterprises, additional incentives are needed for employment generation so that further investments by large-scale industry are not entirely labour replacing.
Highlighting the sectors/areas, where concerted effort by the government is the need of the hour, Mr Kirloskar said that Empowered Committees of State Ministers and the relevant Central Ministers need to be instituted for addressing the development issues in areas such as Agriculture, Education, Healthcare, Labour reforms and Environment regulations. In addition, the land reforms also need to be overhauled by bringing in a new legislation after stakeholder consultations. In addition, States need to adopt Model Agriculture Land Leasing Act to allow for land aggregation and private sector investment in agriculture, he further added.
“There is a need to create and publish an approach for a unified regulator for the financial sector. There are no specific advantages being derived from having multiple regulators, whereas the benefits of a unified regulator are many, highlighted CII President.
Mr Kirloskar reiterated the fact that growing exports are critical for pushing India into the 8-10% growth trajectory. In this context, he stressed that it is important to overhaul the entire system of Export Incentives and Exports Credit. All incentives need to be WTO compatible, he added.