Friday, February 26, 2010
MR S THIAGARAJAN, CEO, ETL INFRASTRUCTURE SERVICES LIMITED [EISL]
Mr. Thomas George Muthoot, Director, Muthoot Pappachan Group
Considering Licenses To NBFCs The proposal in the budget to issue new bank licenses to private players, especially NBFCs is a welcome one. We are yet to receive the full details of the proposal. We will be able to decide on our action plans only after receiving the complete details. However, this is an indication of the recognition on the part of the Government of the increasing role played by NBFCs in meeting the credit gaps of the unorganised sectors in the rural and semi urban areas. This is a welcome step in boosting the economic growth of the nation, since NBFCs have a better grasp of the credit needs of the people at the lower strata of the economic pyramid.Mr. Thomas George Muthoot,
Director,
Muthoot Pappachan Group
Mr. Rupen Patel, MD, Patel Engineering
A tightrope walk well achievedThe finance minister had to walk a tightrope in terms of consolidating growth while controlling the fiscal deficit. He has managed this quite well. For the infrastructure and housing sector the budget has several positives. Allocation for infrastructure has been hiked to 46% to Rs. 1.73 lakh crore. The FM has announced the government’s intention to build 20 kms of national highways a day and the allocation for road construction has been hiked by 13%.Similarly power sector allocation has been hiked by 100%. The announcement that IIFCL disbursements will touch Rs. 9,000 crore this fiscal going up to Rs. 20,000 crore next year would give a further boost to investments infrastructure. What will further boost investment in infrastructure is the additional allowance of Rs. 20,000 in standard deduction in case of investment in specified infrastructure bonds. The process of competitive bidding for coal blocks will be positive for companies wanting to set up power plants and will remove several anamolies from the present process.For the housing sector, the continuation of the interest subvention of one per cent for housing loans up to Rs. 10 lakh is welcome as it gives a further boost to the affordable housing sector. The extension of deadline for profit based deduction for ongoing real estate projects will help the industry which is just about recovering from last year’s financial meltdown.
Mr. Rupen Patel, MD, Patel Engineering
Sankar Lal Singh, Executive-Calcutta Stock Exchange
It is a responsible and conservative budget keeping eye on balance growth and deficit. Capital Markets (Sensex jumps 330 points) have never range bound after the budget and it’s a big thumbs up for market and no negative surprises in the long run since hike in excise duty will clearly bring down the government’s borrowings level.Sankar Lal Singh
Executive-Calcutta Stock Exchange
Mr. Sriram Subramanya, Founder, Managing Director & CEO of Integra Software Services
Direct Taxation for IT/ITES industry: 1. Extending Income Tax benefits under Section 10A /10B under STPI Scheme for an additional period 3 - 5 years, at least for SMEs 2. Possibility of moving the business from STPI to SEZ may be permitted (business of STPI which has not crossed 10 years of IT benefits ) 3. Income Tax and other benefits under STPI Scheme should be in line with companies gets registered under SEZ (Eg. MAT is applicable to STPI registered company and not applicable the companies registered under SEZ) 4. Dividend Distribution tax on Dividend amounts to double taxation and therefore, Dividend Distribution tax could be removed in the current budget. At least, Dividend Distribution tax should not be charged for the persons whose total income is less than the exemption amount. 5. Tax benefits available to Mutual fund should continue to be retained. 6. Budget of 2010 should give broad guiding path for the implementation of Direct Tax code. 7. Considering the fact that Housing sector plays a vital role in the GDP of the country, interest on housing loan could be enhanced from Rs. 1.50 lacs to 2.50 lacs per annum 8. Peak rate of 30% of salaried employees should be reduced to 25% and thereby purchasing power of the individual will go up and indirectly stimulate the economy of the country.
Mr. Sriram Subramanya, Founder, Managing Director & CEO of Integra Software Services
Bengal Chamber of Commerce and Industry
In the context of the worldwide economic recession, the Bengal Chamber expects that the Budget will reduce the corporate tax rate to 25%. This will generate more surplus funds in the hands of companies with consequential favourable impact on investment and growth. At the same time, the rate of short term capital gains tax may reasonably be expected to be reduced to 10% to bring it in line with the lowest marginal tax rate. This would result in giving a boost to the capital market. The earlier rates of depreciation may be restored to avoid hardship to the capital-intensive industries. It is also expected that the Budget will incentivise investment flows into India through attractive investment/depreciation benefits. To accelerate the pace of construction of more hotel rooms, the hotel industry may be declared an infrastructure industry under Section 80 IA of the Income Tax Act. It may be given full benefits of concession for infrastructure facilities available to other sectors like airports and power projects. Regarding personal income-tax, the Chamber expects a substantial increase in the deduction under Section 80C as well as for interest on housing loans. Deduction for health insurance premium under Section 80D is also expected to be enhanced. The Chamber also expects re-introduction of the tax benefit under Section 80L for bank interest, etc and withdrawal of the taxation of Employer’s Contribution to Pension since the benefit is contingent in nature. Regarding taxing of ESOPs, the earlier income tax provisions before FBT was imposed on ESOPs may be brought back by way of exempting the same from perquisite tax and subjecting the subsequent market appreciation to capital gains tax or else the ‘fair market value’ may be determined on the basis of market value on the date of grant of options.Regarding indirect taxes, the Chamber expects the Government to withdraw the excise duty cuts and other concessions given earlier to stimulate the economy. Given the conflicting needs of sustaining industrial growth and keeping the fiscal deficit within manageable limits, the following measures are expected:1. Increase of Excise Duty from 8% to 10% , Service Tax from 10% to 12%2. A Clear Road Map towards implementation of GST with revised date of implementation.3. Few more services will be covered under Service Tax.4. Possible excise duty hike in Steel, Automobile, Cigarettes and alcohol;5. More visibility about 3G auctions and disinvestments programmes.6. Addressing supply side constraints that are pushing up prices. Public Distribution system should be thoroughly revamped.7. More allocation towards Government’s eight flagship schemes for social sector reforms.
By Pallav Gupta (Chairman, Direct Tax Sub-committee, Bengal Chamber of Commerce and Industry) and T B Chatterjee (Indirect Tax Sub-Committee, Bengal Chamber of Commerce and Industry)
Thursday, February 25, 2010
Sanjay Behl, CEO, Reliance BIG TV
“License fees rationalization and withdrawal of Customs duty on STBs necessary for DTH Industry Growth”:
The current norms of DTH license mandates payment of License Fee @ 10% of Gross Revenue. This provides a large downside to the DTH operators as its nearest competitor The Cable Operator has no incidence of License fee although the primary content remains the same irrespective of platform. A high license fee regime at 10% and different entry costs structures makes DTH platform unviable to the end user curbing its real growth potential. It also offers absolute non-level playing field between DTH and other distribution platforms. Considering the growth potential of the DTH Industry with an annual addition of 10 million subscribers any incentives offered to the industry will offset any revenue loss to the exchequer in the form of License Fee and Service TaxThe last Union Budget introduced 5% Basic Customs duty on STB to incentivize domestic manufacturing of STBs. This has added Rs 100 crore burden on the DTH industry annually. Since nearly all of the STBs are imported from abroad due to lack of manufacturing capabilities in India, the imposition of Customs Duty has not helped the cause of promoting local manufacturing of STBs. Thus it is imperative that the Customs Duty levied on Digital Set Top Boxes from Customs be withdrawn.
Sanjay Behl, CEO, Reliance BIG TV
Anurag Garg
I would like to mention following Budget Expectations to Finance Minister in coming Budget.1) Excise Duty Rates should be left untouched in Sectors which are focus area for GOI like Power related equipments, Infrastructure Growth etc. to support these development areas .2) To make smooth Interstate Movement of Goods , Govt should abolish requirements of Way Bills, Road Permits etc being used for entry of goods in some states like UP, WB etc. On similar lines Octroi charged for some states should also be abolished3) For Housing Sector rebate on Invenstment Limit for Principal paid on Housing Loan should be increased, means increasing the limit of Savings under 80CC.4) Also for Housing Sector especially the Multistoreyed Apartments catching up in every state and city, govt should charge stamp duty only once and not on resale, as anyway the earnings of Stamp Duty in case of Flats is anyway many times more than the stamp duty charged if the same land is used for a Single House/Bungalow. Or customer should reduce the stamp duty on Flats as compared to Single House /Bungalow.5) Stamp Duty Charges are also not uniform across states , which should also be addressed when we are trying to move towards rationalisation taxes across states like GST.Anurag Garg
garganurag2003@yahoo.co.in
M P Vijay Kumar, Chief Financial Officer, Sify Technologies
We are currently in a strange position where the Indian economy is doing well but the global economy is yet to complete its recovery. The fiscal stimulus package cannot continue for long and there is a compelling need to bring down fiscal deficit. Having settled down well in the 2nd innings, the Dr. Manmohan Singh Government has a big opportunity on hand to set in motion some path breaking initiatives which can be effectively implemented in next 4 years. The growth in the next decade has to be driven primarily by expanding the digital economy and efficient tax administration. Just as Government expenditure on physical infrastructure has helped economies grow, this time around, the growth will be driven only by investment in digital infrastructure. This growth can be achieved by effective Public Private Partnership. There is lot of private entrepreneurship in the country and the Government only needs to create the right kind of business climate for encouraging young entrepreneurs with simple business laws and processes apart from providing a low cost accessible IT infrastructure. Late in the day for consideration in the budget, but am leaving these thoughts for deliberations for the next budget and any policy making formulation 1.Tax benefits for players in internet space. Absence of stamp duty was one of the reasons for dematerialized shares becoming very successful. For e-commerce to grow, a similar proposition of tax exemption or lower rates of tax could be offered for a defined time frame to encourage more online transactions. The internet economy could be demarcated similar to a SEZ and given the Government support through tax concessions. E-commerce has the potential for exponential and faster growth in volume of transactions and consequently GDP/Per capita income. Eliminating all the costs of physical infrastructure, the benefit of lower costs could be transferred directly to the consumer. In the long run online transactions will lead to transparent, easy and more effective tax collection for the Government. 2. Broadband to home – treat as essential utility similar to power sector. Encourage ISPs with accelerated depreciation/ tax holiday benefits to invest in fiber to home. In the years to come high speed broadband access at home will be critical for economic growth. 3. Administration reforms – effective tax administration friendly to small businessmen and professionals. Just as there is a LTPU for large corporates, a separate tax administration set up who can understand the issues of small businesses and support the growth is the need of the hour. For instance it is unfair to expect start up businesses to incur overheads in understanding complex tax laws and complying with them. There is a visible change in culture of people to spend more and save less. Also as a developing nation we require significant long term sources of funds to finance infrastructure projects. Encourage greater saving with Government (PPF/NSC/ 15 year bonds) where Government could borrow at say half of its current borrowing rates. The individuals will save, social security is ensured and Government could borrow at significantly low cost for long term.Partha Iyengar, Vice President, Distinguished Analyst Regional Research Director, India, Gartner
India’s IT industry (domestic and offshore) has gone beyond needing ‘micro level’ sops in the form of tax breaks etc. in order to provide or retain its competitive advantage. It is at a point where some major macro statements and investments have to be made in the areas of infrastructure and education, the two factors that are major constraints to the industry moving along the path to becoming an IT superpower. Specific steps have to be announced in terms of continued increases in infrastructure spend, both in the urban and semi-urban areas, as well as an expanded focus on revamping primary and secondary education (PLEASE stop tinkering with the IITs and IIMs). As a close second priority, a focus on broader reforms in the area of labor laws, privatization, FDI guidelines for various industries as well as a strong focus on IP protection are required. In all of the above, there are two phases. One is the statement of intent and allocation that will come in the budget. The second, and often equally important element, is the statement of the steps the government will take to ensure the actual IMPLEMENTATION and oversight of whatever is announced, which is where there are major issues even in the implementation of past policy announcements. The mandate given to the current government is the best chance that India has to set the course firmly towards global IT relevance and dominance. If we do not achieve this in the next five years, India will spiral down towards IT obscurity (a scenario we call “Global Irrelevance”).
Mr. Brotin Banerjee, CEO and MD, Tata Housing Development Company Limited
With the launch of affordable housing and improved liquidity scenario, the Indian real estate sector is looking optimistic after going through a rough patch since 2008. While Indian real estate may be geared up for better times in 2010, the liquidity crunch witnessed in 2008-09 has led to a situation wherein there is a need for easing of lending norms for the sector. Given recent controversies surrounding FDI in the sector, clear policy statement on FDI participation is a necessity.
We believe that the government needs to adopt a multifold strategy for revival in the real estate sector. The following would be our expectations from the union budget:
On the consumer front
Subsidize Stamp duty and registration
· The Government should initiate schemes to subsidize stamp duty and registration fees for the end consumers.
Taxable Income Slabs
· With salaried class being the most consistent tax payers in India as they are subject to TDS, last year’s budget provided only a marginal relief to the salaried class with just a Rs.10,000 hike in the limit for taxable income. The wish is to increase the minimum taxable tax slab to Rs.2.50 lakhs (for men). The next slabs can be at Rs.10 lakhs for 20% tax rate and 30% for income greater then 25 lakhs. Since the Fringe Benefit is now taxable in the hands of the salaried person, not raising the slabs significantly will increase the tax burden for salaried people.
Tax Exempt Investments
· The limit for tax exempt investments under Section 80C is continuing at the archaic Rs.1 lakh has to be increased. This will help those who have the potential to invest. This will also help the housing industry as currently people are not able to derive the full benefits for the principal portion of the housing loan repayment.
Availability of finance for people at the Bottom of the pyramid
· There is a lack of financing for the people working in the unorganized sector, this can be an another thrust area and the government should look at creating options to provide access to cheap and easily accessible financing options in terms of Housing loans, especially for the consumers at the bottom of the pyramid. There is limited or no organized funding for this segment as of now
· The government must ensure to strengthen the National Housing Bank and must encourage Micro Housing Finance Agencies to provide credit to the low income group
· Tax benefits for the home loan to be increased
On the Developer front
The Government must incentives developers by waiving off development charges and by focusing on stamp duty and registration for land.
The budget should also explore the Public Private Partnership (PPP) format which should be scaled up rapidly.
Provide infrastructure subsidies for building affordable housing and Incentives on the tax front could be in the form of introduction of tax benefits for development of affordable / low cost houses townships.
The developers should get infrastructure subsidies on developing townships as it leads to an overall infrastructure development leading to an increased cost for the developer
Increase focus on green development
The real estate sector contributes to more than 5% of global carbon emissions across the globe and subsides for green projects can lead to an increase in the green projects the budget should look at providing incentives to both consumers buying properties in green and developers focusing on green development.
Relaxation of ECB regulations
External Commercial Borrowing (ECB) is allowed for development of townships and further extension of this will serve the cause of increasing the housing stock in the country. The cost of borrowed funds for the developers is high and the availability of long term loan is also not easy. Therefore, it will serve as a great incentive to increase the access to overseas funds at lower cost through the ECB
Mr. Brotin Banerjee, CEO and MD, Tata Housing Development Company Limited
Manoj Chugh, President of EMC India & SAARC and the Director of Global Accounts, Asia Pacific & Japan (APJ).
“The most important direction expected in coming budget would be tax rationalization and a clear roadmap for GST implementation within the next 12 months. This would bring transparency and bring simplicity in the tax regime and allow businesses more flexibility on operations across the country. Further, the government should allow 100% depreciation for software spends by corporations. Investment in IT both hardware and software is a productivity enabler, which should be encouraged during tough market conditions. Lastly, professionals should be allowed tax rebates for skills upgrade training costs. This will encourage the Indian workforce to remain globally competitive and strengthen our ability to move up the value chain.”Manoj Chugh
S. Rethinavelu, President, Agro Food Chamber of Commerce & Industry, Madurai
ALL VALUE ADDED PRODUCTS SHOULD BE ACCORDED EXCISE DUTYEXEMPTION:
To arrest the unhealthy slide in our agricultural output and to make farming and processed food
manufacturing more attractive our Union government should exempt all agriculture based value
added products from excise duty in this year’s budget. This bold initiative will motivate farmers
to produce foodgrains required by the industrial sector and result in generation of more demand
for agricultural products and abundant additional employment opportunities in both farming and
food processing industrial sectors.
Lack of proper industry linkage and unremunerative prices for their produce has all along been
discouraging our farmers. Our Union government should therefore devise and float schemes not
only to transform farming operations more profitable but also to provide adequate subsidies and
incentives for farmers to engage in milk farming side by side to beget additional income. Milk
farming would also help our farmers to use natural manures for their crops at no extra cost rather
than solely depend on chemical fertilizers.
Excite duty exemption for all value added agricultural products coupled with schemes to create
sustained synergy between agricultural and industrial sectors and encouragement for farmers to
indulge in milk farming will provide the right platform for zero budget farming operations in our
country.
S. Rethinavelu,
President,
Agro Food Chamber of Commerce & Industry,
Madurai.
Mr. Prakash Tulsiani, Managing Director, APM Terminals Pipavav (Gujarat Pipavav Port Ltd.)
The first Budget of the new Government and Union Shipping Minister evokes expectations galore as ports are gateways to India’s economic prosperity. The perceptible increase in allocation of Government funds for major port projects must be matched by timely utilization to enable Indian ports to muscle up capacity. Ensuring optimization of resources and improvement of operating efficiency, shortening turnaround times, service quality and overall competitiveness of existing ports is a key challenge. Port operators are looking to enhance last mile port connectivity; adequate linkages to the hinterland and faster evacuation of cargo for decongestion. India needs dedicated freight corridors and these projects should be executed on fast-track. India needs more public private partnership projects for building ports, speedier acquisition of ships and equipments. Public-private partnerships to aggressively promote coastal shipping are vital because of simplicity of execution and environment-friendliness! Ports must offer customers seamless multi-modal transport solutions using outbound and inland freight corridors, which will bring in efficiency and cost savings. Ports should also focus on ‘going green’; should reduce carbon emissions; and be creative in developing environmentally friendly methods of operations. The port sector needs more investment-friendly policies to attract private funds to the tune of USD 13.6 billion by 2012, as per Assocham study. It’s time to take a holistic view of port development and interlink the same with the complete road-rail network. Backward integration helps end-to-end supply chain solution. It is also very important to establish PCS Connectivity (Port Communications System) as it increases efficiencies all round and makes Indian ports internationally competitive.
Mr. Prakash Tulsiani
Managing Director
APM Terminals Pipavav (Gujarat Pipavav Port Ltd.)
K Sudarshan, Chartered Accountant, Chennai
· Having just started my professional career, I would personally like to see the discrimination to salaried class be removed by bringing back standard deduction be , if not for all, atleast it should be given for salaried class earning upto a limit of Rs. 10 Lakhs.
· Further being an avid Xbox addict and with the gaming, animation industries set to be the next big thing, an explicit tax holiday provisions to be introduced, which will make India a lucrative hub for these industries.
· Further to encourage entrepreneurship, government can provide tax and other financial benefits for startups.
· Similar for housing, where interest payments on housing loans gets tax deduction, similarly at least for the salaried class may be with a threshold limit, tax benefits can be provided for interest payment on vehicle loans. This would be a big stimulus for the automobile industry as well as for the banking industry.
· Education for all being the objective, I think Section 80C be altered wherein tuition fees deduction should not only be limited for one’s own child but should also be given if he sponsors to any deserving child. This tax benefit will encourage more people to contribute for a deserving child’s education
· Finally, government must impose a cess to fund social sector infrastructure which is the need of the hour, introduction of GST as early as possible and to control the spiraling prices on essential food items.
K Sudarshan, Chartered Accountant, Chennai
Gopinath Mishra, Chhattisgarh
Gopinath Mishra, M.Sc,M.Phil(CS),M.Tech(IT),
Dy.General Manager (Information Services),
NMDC Limited (Govt. of India -Navaratna-PSU),
Qr.No.Type-V/9, AT/PO-Kirandul Dist-Dantewada,
Chhattisgarh-494556 INDIA
Phone: 91-7857-255261 (Res)/ 256057 (Off)/ 91-9425266409 (Mobile)
FAX : 91-7857-255227
Email: gopinathnmdc@yahoo.com
Mr. Rajiv Anand, MD & CEO, Axis AMC.
We believe that this government having been given a decisive mandate in the last general elections and given that election calendar is relatively light for the next year should embark towards clearing the huge backlog of reforms. The steps this government took over the last two years in strengthening the rural economy thorugh NREGS and the farm loan waiver is holding us in good stead. A similar bold plan needs to be implemented if we are to achieve long term sustainable, inclusive growth which is required for India to indeed benefit from the much talked about demographic dividend over the next 20 years. Given this background we would like to see this budget focus on the following: · Clear strategy to embark on a path of fiscal consolidation - The Indian economy has been rather resilient to the global crisis and will be clocking 7.5% growth for FY10. Pickup in growth will ensure buoyant tax revenues and absence of one off expenditure items would mean lower expenditure growth. It’s feasible to reduce the Expenditure/GDP growth by more than 1%. This would lead to a possible reduction of 150 to 200 bps of Fiscal Deficit. As we believe that growth will continue to be strong over the next 2 years, a meaningful reduction in the fiscal deficit is very likely. · The divestment program will play a key role towards consolidating government finances and also in keeping up the investment momentum in rural infrastructure. We expect around USD 4.5 – 5 bn from disinvestments. While it will help contain the fiscal deficit, we have also seen that as Public sector companies have been listed or government holdings diluted, these companies have become more efficient. · A key feature of the UPA government has been social and rural sector push through National Rural Employment Guarantee Act (NREGA) and we expect increased allocation towards poverty alleviation programs and social welfare schemes like education and health. We would also like to see a much larger thrust on implementation of projects announced to ensure that the larger objectives are achieved. · We would also like to see roadmap for the rollout of Goods and Services Tax and the New Direct Tax code.While the whole world struggles with huge fiscal deficits, India has the luxury of being a high growth economy which will help fix the deficits quickly and at the same time is critical for us to reduce the number of people below the poverty line. The Panacea of many of our problems is growth and hence we must ensure we do everything to ensure long term growth.
Mr. Rajiv Anand, MD & CEO, Axis AMC.
Mr. K.S.R. Anjaneyulu, MD & CEO, Lakshmi Vilas Bank
Notwithstanding the fact that the financial tsunami has permeated the entire world, India has proved its innate abilities and inherent strength to withstand in terms of GDP growth rate of 7% projected for this year and 8% for FY 2011. It was also supported by solid foreign exchange reserves to the extent of Rs 280 billion dollars, with GDP size of 1.2 trillion dollars, with lot of demographic dividends, strong financial system and collaborative approach between fiscal authorities and monetary authorities and excellent savings rate of around 37%. The only thing causing concern is inflation and fiscal deficit and huge government debt covering around 80% of our GDP which were intended to protect the country from the world’s financial crisis by injecting adequate liquidity into the system to ensure that GDP growth doesn’t come to a startling halt. It’s true that the government and RBI have to strike a balance between sustained economic growth, inflation and stability of financial system, but they need to prioritise depending upon the circumstances. As far as the Banking industry is concerned, I wish that the benefit of section 80C of IT Act should be given for bank deposits for the tenor of 3 years instead of 5 years. To enable banks to finance liberally for infrastructure, the interest income earned on this financing should be exempted from IT. Govt should think of various measures to support the banking industry to propel them to finance infrastructure needs of the country in terms of providing adequate take out finance or refinance on the lines of Export refinance, Agri refinance, SIDBI refinance etc. This will provide liquidity support and help banks in terms of structural liquidity management process, since there is a huge requirement of 500 billion US dollars for the next 5 years for funding infrastructure. Finally the aspect of base rate should be postponed for implementation till the FY 2011 in view of the practical difficulties involved. In the ensuing Budget, certainly the govt is expected to take some measures to control inflation and to contain fiscal deficit by exploring all the possibilities to increase revenues by widening the base, by reducing the tax rates and by incentivising the tax payers. It will also attempt to plug all the loopholes in the public distribution system and try to identify the really downtrodden who are eligible for government support either for food subsidy, oil subsidy or fertiliser subsidy. Finance minister will try to bring the aspect of oil subsidy as part of budget instead of showing it as an off-budget item. Government is expected to encourage agriculture production and its contribution to the GDP of the country. As originally envisaged under the FRMB Act, the revenue deficit of the country should have been nullified by the end of FY 2009 and fiscal deficit should have been contained at 2% of GDP by end of FY09. Since we could not abide by that promise due to the reasons beyond the control of the government, a specific roadmap may be given this time in the budget.K.S.R. Anjaneyulu
Ravi Menon, Executive Director, Air Works
“Indian MROs could offer hundreds of high valued jobs today, as a worldwide MRO destination for domestic and overseas aircraft. Instead India’s tax and excise duties severely disadvantage India’s MROs. So rather than using domestic services, carriers seek NOCs to get their maintenance done overseas. All domestic airlines take MRO work abroad despite current availability of a world class domestic option. The only beneficiaries of these policies are Singapore, Malaysia, Jordan and the other MRO destinations. We are hopeful that this budget will provide some relief to the Indian MRO industry by ways of reducing the taxes and the excise duty on the spare parts. India as a country has a rich talent pool which can be a boon for the Indian MRO industry to flourish”.Ravi Menon, Executive Director, Air Works
G. S. Roongta
Budget 2010-11 will of course be very challenging for the Finance Minister (FM), Mr. Pranab Mukherjee, to prove his skill and foresightedness.He has to kill two birds sitting in opposite directions by one arrow, which is indeed very difficult like Arjun in Mahabharat, who had to aim both the eyes of a bird by one arrow.
Mr. Mukherjee has to keep the fiscal deficit in manageable positive without affecting the growth trajectory.
To roll back the stimulus package partially or fully is the serious worry for the stock market, industries and common men equally because its impact will be felt by them all.
If the FM rolls back the stimulus package, it will hit the common man as he will have to spend more on the necessities as otherwise manufacturers will pass on the new burden on the consumers.
A partial roll back of excise duties looking at the health of industry will be the best choice for the FM to partially meet the deficit of revenue collection from sectors such as cement, automobiles, sugar, tea, coffee, breweries, alcohol based spirits, cigarettes, entertainment, TV, mining, capital goods, rubber & tyre and engineering, which can bear the brunt of such partial or full roll backs.
Besides, 16% plus volume increase in the manufacturing sector will help the FM to collect substantially higher revenues by way of excise, customs and service tax. The higher volume of production may result in higher revenue growth than what can be achieved by a roll back.
It may be remembered that the government had collected higher income tax after it reduced taxation rates both on individuals and corporates having realised that by reducing the tax rates, it could widen the tax net.
In the current circumstances also the government hopes to collect Rs.40,000 cr. through divestment of PSU holdings and Rs.30,000 cr. by auction of 3G spectrum, which with higher collections of taxes and duties should be able to meet the deficit sustainability and it may not be prudent to disturb the growth momentum that has set in.
The inflation rate, which has started galloping beyond RBI’s comfort level, might shoot up if the FM rolls back the economic stimulus hurriedly.
I think that the FM should not roll back the economic stimulus and risk derailing the economy at this juncture, when it has just started to take off.
G. S. Roongta
groongta@yahoo.com
Professor Debashis Chatterjee, Director, IIM Kozhikode
The requirement or procedural aspect of obtaining education loan should be made simpler.Bring the higher education under priority lending i.e. bank loans to higher educational institutions should be brought under priority sector lending and must be made available only to those accredited by statutory agencies which will ensure quality and timely access of funds.
Studies conducted in different countries (including US) show that current funding for key science, engineering, and social sciences, initiatives contribute to 99% of governmental agencies budget. By increasing the business research funding by government and other sources such as foundations and corporations, doctoral enrollment will increase and will in turn reduce faculty shortage in the long run.
In India, the total incremental education loan disbursements by the entire banking sector for last year was around Rs 8,500 crore, negligible considering the banks' total deposit base. The estimated home loan disbursements in excess of Rs 1, 00,000 crore for the same period. In fact, banks have ‘education loan programmes’ that require collateral and/or guarantee from a well-earning relative and interest servicing during the course. All this means that there is restricted finance available for potential students, even as the education sector itself is becoming diversified and vibrant. Setting up of Education Guarantee fund and setting up an Education Re-finance Corporation will help to solve these issues.
Professor Debashis Chatterjee
Director, IIM Kozhikode
dciimk@gmail.com
Mr. Faisal S R , Calicut
"The govt must raise basic exemption limit to Rs 3 Lakhs for salaried individuals from proposed Rs 160000. Then make it 10% between 3 Lakhs and 5 lakhs, 20% between 5 Lakhs & 10 Lakhs. Charge 30% for more than 10 lakhs – income tax on the annual income. From the coming slab from the govt poor man wiil be the looser and higher income group will escape from paying income tax to the govt, that is not fare and it will affect adversely the indian economy and increase the gap between haves have nots.." When the US and UK are imposing more tax on higher income group individuals, here in india, our 'respected leaders' helping higher income groups to lead our nation further to poverty as the income to the govt from higher income group may reduce due to this proposed slab.Mr. Faisal S R
Calicut
Mob.09387527045
Working as an Accounts Manager in a pvt firm
(M.Com + CA Articleship)
T V Ganapathy, Athipattu
1. IT Exemption Limit: Basic Limit for Individuals may be increased from 1.60 Lacs to 3 Lacs, 3 Lacs to 10 Lacs may be charged @ 10%, 10 Lac to 25 Lac @ 20% & 25 Lac to 100 Lac @ 25% & Above 1 Crore @ 30%For Women, basic limit may be increased from 1.90 Lac to 3.50 LacFor Senior Citizen, basic limit may be increased to 4 Lacs. 2. For Firms & Companies also 2 or 3 Tier Income-tax slabs may be introduced:Up to 50 Lac - 10%50 to 100 Lac - 20%Above 1 Crore - 30% 3. Surcharge may be removed for all income & education cess may be continued to bring down the illiteracy to 0% in our country. 4. Service Tax may be continued @ 10% 5. Short Term & Long Term Capital Gains may be reduced to 10% & 15% respectively. 6. a.Education allowance can be increased from 200/- to 1,000/- b.Transport Allowance can be increased from 800/- to 2,500/- c. Medical Allowance can be increased from 15,000/- to 50,000/- 7. 80-C limit can be increased from present 1 lac to 2 lac to encourage the savings among middle class people 8. Interest on self occupied property can be increased from 1.50 Lac to 3 LacBuilders who are promoting flats in the selling price of Rs. 5 Lac to Rs.15 Lac can be encouraged by introducing 10% rebate in their tax to promote housing for middle class people9. Tax Audit Limit u/s 44AB has to be increased from 40 Lacs to 5 Crores. 10. Sponsoring of Improvement in infrastructure like road, electricity, water by private companies may be exempted from their business income to encourage their participation in rural development. 11. Solar power utilisation may be exempted from the individual's income if they show the proof that they have invested in Solar equipments in their home. Regards,T V Ganapathy
Athipattu,
Minjur - 601203
Tuesday, February 23, 2010
Pawan Jain, Chairman - ASHIKA Group
Recent government move is clearly indicative of the fact that this year the major focus area would be to cut down the fiscal deficit and to gradually get on and lay out plan for fiscal consolidation. Hence, rollback of excise and duty cuts, bringing more services under the tax bracket, aggressive divestment, trimming off of subsidy burden and lowering spending on social schemes to a larger extent would be the focus area in the Union Budget. As far as divestment goes, government is expected to mop up Rs.250bn by March 2010. Budget 2010 would see greater push for divestment with a target to mop up Rs.450 to 500 billion by the end of next fiscal. Some of the Parikh committee recommendation atleast in terms of freeing the petrol prices and some of the petroleum products could well help the government in tinkering the subsidy burden to a large extent and as well set the pace for long awaited change in the policy structure to the OMC sector as a whole. As we have already seen just before the budget with some structural policy changes in the fertilizer sector, government's intention in terms of taking some of the longstanding key policy issues would be a key trigger for the market to watch out for. Structural reforms relating to retail, labor, pension funds and insurance would be key areas which the market would like being addressed by the finance minister. FDI and FII norms in select sectors like aviation, retail, insurance, media is long awaited. Thrust area for the budget would be infrastructure (Power, Roads, Airports, Port, Highways etc.) Above all, a roadmap for implementation of GST would be keenly watched for.Pawan Jain
Chairman - ASHIKA Group
http://www.ashikagroup.com/
Kolkata # 033-22891556
Mumbai # 022-66111701
M: 9830049008.
Ajay Patil, Director - Finance, Eaton India
“Budget 2010 proposals have to be dealt in a manner to ensure sustaining what appears to be a promising economic recovery, controlling spiraling inflation especially food prices and fiscal deficit. The continuation of economic stimulus package and it’s duration is another keenly watched decision especially for the critical sectors like Automotive and Engineering goods. Industry is expecting a definitive position on GST implementation considering the scale and complexity of dismantling present Indirect tax regime. The continuation of tax sops for IT and ITEs sector will again be a big expectation as the service sector recovery, expansion and investments will be driven based on clarity on tax incentives especially grandfathering of benefits to SEZ units”Ajay Patil ---- Director - Finance, Eaton India
Mr. Kanwaljit Singh, Managing Partner, Helion Advisors
A Positive Message: We have weathered the recession storm of the last couple of years and the FM must help maintain the ‘feel good’ about the economy. The Budget somehow seems to have more than its fair share of impact on public sentiments and therefore apart from all the details of income and expenditure, the FM must ensure that the ‘message’ is positive. This will entail a few things; 1. The withdrawal of the stimulus must be done in parts, 2. Inflation in general and food prices in particular must be brought under control even by easing imports if necessary and 3. Greater clarity in taxation – on both the GST and Direct Tax Code and its application. Sector Focus: The budget should go some way in encouraging key sectors like Education, Healthcare and Clean Technology. There is an urgent need in the country for rapid scale up in each of these and it can be achieved only through enthusiastic private participation. It also helps that these sectors are currently finding favour with entrepreneurs, young and old alike. Any ‘stimulus’ to these sectors will generate more than commensurate rewards. Reforms Agenda: Both for the sake of the medium-long term health of the economy and for the sake of external stakeholders (whose sentiments are critical both in global finance and global geo-politics) we must use this budget atleast as one tiny step towards fiscal prudence (getting the deficit down to sub 5% levels). From that perspective, the initiatives on the PSU disinvestment front and all the talk of de-regulation in petroleum prices and fertilizer subsidies are very encouraging. Opening up non-strategic sectors for FDI is also something that the FM could consider strongly. FDI in Retail for example, has the potential to revive an industry that has faced a few hard knocks recently, create a multitude of jobs for varied skill sets and stoke domestic demand and consumption. This brings us to the Financial Sector, the domain that requires some urgent reforms. Finding the necessary balance between the need to regulate and promoting much needed investments is of paramount importance. While the RBI has rendered yeoman service in ensuring that the global recession did not hit out shores too hard, now is probably the time to be a little more aggressive and pro-active in vying for investments. Promoting Entrepreneurship: This is ‘The Land of the Million Entrepreneurs’ and for India, the key to growth and particularly inclusive growth lies in multiplying entrepreneurial initiatives. The Budget must include provisions aimed at promoting MSMEs. Access to finance on reasonable terms and ease of starting a business are critical from that perspective. While the License Raj is officially dead, the Government should see that even the smallest traces of it are wiped out. Finance must reach where it is most badly needed and where it has the best possibility of a positive impact not just on the economy but on the society itself. Among other Financial Institutions MFIs too have a big role to play; and the Government while setting the rules for MFI play must ensure that the cost of finance for MFIs are not set too high, making the entire exercise self defeating.
L. MARUTI SHANKAR, M.D., 7SEAS TECHNOLOGIES LTD.,HYDERABAD
Ø Budget Grants Needed for Animation & Gaming industriesØ Animation Academies should be established
Ø Gaming Courses should be introduced at University Levels
Ø Special Animation & Gaming Policy Needed
Hyderabad, February 23: There have been drastic changes taking place in the Animation & Gaming industry since 2006. The reasons for these changes are: Changes in the tastes and thoughts of people, Low cost in human resource, and availability of specialists.
ü Since Animation & Gaming industry is a field of entertainment,at this moment it is very required to pass a special policy, independent to that of IT sector. This policy should include facilities like Special exemptions, Tax holiday (for 10 years), allotment of lands for industrial establishments etc. These facilities help to reduce the cost of gaming property creation,man power, gaining rights, so that it is possible for the industry to sustain and to develop at a very good rate.
ü As per NASSCOM expectations, Animation & Gaming industry requires more professionals in coming years. Keeping this in view,if government establishes Animation academies and introduce Gaming courses at University levels, the students can lay golden routes for their career by choosing this field. The Companies can also provide abundant job opportunities by conducting campus interviews. This system is already being implemented in countries like Great Britain, Canada, Philippines etc.
ü Gaming console market can progress rapidly with low cost if the government brings down the import duties on Gaming console, hardware and software.
S.Devarajan, Chennai
1. To Consider strengthening of Ministry of Power (as in the case of Railway Ministry) with separate Budgeting etc. to enforce more thrust and concentration on development of required infrastructure, removing bottlenecks and constraints, to accelerate generation of Power (to the extent targeted as per current 5 Yr plan), its proper distribution without power loss and put in place regulatory & administrative function to the extent called for. Separate Budgeting, financing and implementation of projects to be entrusted to the Ministry, like Railways & Defence, not only till the self sufficiency in Power sector is attained but also till new technologies are in place to cater uninterrupted power supply over a period of next 10 – 15 years (min).2. To consider provision of adequate concessions & incentives to green power generation projects like Solar, Wind Mill Projects etc and related industries to confirm India’s interest towards prevention of Global warming.3. To consider imposing further strict regulations in Commodity Trading Market as it plays major role in inflation which not only affect the industrial players in the market but also the “Aam Aadhmi”.S.Devarajan
Materials Dept.
Larsen & Toubro Limited,
ECC Division
Head Quarters Office
Mount Poonamallee Road,
PO Box 979,
Manapakkam,
Chennai 600 089.
Ph: 9445006276
Email : deva@Lntecc.com
Prof B S Bhatia, Dean, UnitedWorld School of Business
Higher Education in BudgetDiscussion at Unitedworld School of Business
Higher education plays an important role in economic growth and social development of the country. As per the report of knowledge commission only 7 percent population from the relevant age group enters higher education mainly because of lack of availability of institutes. Major concern raised by knowledge commission is about the quality of higher education in most of our universities which is much below the desired level. In order to increase the gross enrolment ratio to 15 percent, a network of 1500 universities is required by 2015.
Expanding opportunities for higher education on such a large scale requires vast resources both financial and others. This cannot be achieved by government alone. A model of public private partnership should be followed and where ever possible higher education should be assigned to private players with suitable regulations. It has been proved beyond doubt that the quality of higher education provided by private institutes is much better. Private institutes should be facilitated rather than restricted in the field of higher education. Some suggestions are as follows;
· Spending on education as a percentage of GDP should be increased to 6 percent.
· Service tax which is charged at the rate of 10% from private/autonomous educational institutions at present should be abolished.
· Education should be treated as infrastructure and tax benefit should be made available similar to those available for other infrastructure projects.
· Incentives should be provided to industry to take professional or skilled trainees/apprentices
· Tax benefit should be given on amount spend by an individual on higher education. Loans for higher education should be made affordable by easier terms and lower interest rate.
· Government should allocate more funds for special education for physically and mentally disabled children in all major towns.
· Government should encourage educational research by: (a) providing grants for research even to self-financed colleges and autonomous educational institutions (2) providing reasonable honorarium to research guide for guiding the Ph.D. students
Mr. Anirudh Bhuwalka, MD & CEO, Asia MotorWorks Limited
There is a need to speed up the implementation of GST in order to rationalize the taxation bringing in economies but more importantly to make the long distance intercity transportation more efficient and productive, without frequent stops for local taxes and octroi duty, etc. The focus here is on ensuring a faster and more or less uninterrupted flow of traffic between cities. And a more rational duty structure that does away with multiple rates at multiple points of taxation. The phasing out of old vehicles has an effect on both safety and improved environment. Hence the suggested 10 years age limit in all A and B class cities. This would result in more modern vehicles getting inducted, and it is recommended that the Government consider incentives to minimize the initial cost of replacement. A policy for discouraging the shifting of these vehicles to smaller towns could also be put in place simultaneously in order to ensure that old, polluting and unsafe vehicle leave the system.Newly manufactured vehicles conform to strict emission norms, but old/ existing vehicles are a major source of pollution. Here it would be ideal to raise the bar by ensuring that, by year 2010, there are no vehicles with emission norms below BS I are running in India. This would result in the need to either upgrade engines or scrap old vehicles. The cost increases due these exercises would have to be compensated by suitable incentives. The current state of economic revival is not so robust that it warrants a sudden and complete withdrawal of the stimulus package, which has worked so well for us in India. We would need to continue to keep a watch on factors that may hamper growth, especially in the infrastructure sector, which is largely dependent on Government expenditure. Our view is that the Government should continue to provide impetus to growth as Fiscal 2011 is critical for the global economy and India cannot be treated in isolation.
All steps given above are for increasing traffic fluidity and hence higher average speed of good transportation. This increase in transportation speed has to be maturely and responsibly handled. Hence there is need to focus on enhanced safety of vehicles; crash testing of all cabin alternatives to meet norms, strict adherence to wearing seatbelts, fitment of side front and rear under-run protection devices, better braking performance, etc should be mandatory and strictly enforced. With more highways and rural roads coming up, the absence of a safe regulatory environment can have drastic consequences.
K.S.Narayanaswamy, Coimbatore
I am a senior citizen in my 86th year having retired from the post of Nursing Superintendent of the Tamilnadu Medical Service. For me and other senior citizens interest income from deposits have completely dwindled to about less than 50% of what it was in effect some years ago. Interest on balances in the Savings Accounts in Banks have also come down very much. Investing in fixed deposits and watching the interest accruing has also become a tiresome job. You have been good enough to grant some preferential rate of interest for senior citizens for deposits made in Post Offices Such a concession as far as I am given to understand is not available in all nationalised banks. Interest income from all sources put together is exempt from income tax upto a limit. Amounts in savings accounts even if a minimum is there for more than a year does not get the interest that the same amount will fetch if placed in fixed deposits though such amount in S.B. account is as good as a fixed deposit with the bank My request to you Sir is to exempt entire interest income from savings accounts of senior citizens and pensioners (all categories) from income tax. The number of beneficiaries will also be very small in number and this concession is not likely to affect the tax income of the government to a great extent. Another point I wish to bring to your kind attention is - The interest on savings accountant is based on the minimum balance in the account for each month and paid once in six months. In this the most minimum balance of the six month period will be in deposit for six months, the next lowest balance for five months ,the next lowest for four months and so on. And the balances do deserve a little more interest since any short term deposit for 15 days and more definitely gets a higher rate of interest than when the same amount is in savings account These balances may be paid interest half yearly, treating the balances as if in short term fixed deposits and for periods of six months, five months, four months three months two months and a month at 6% 5.5%.5% 4.5% 4.5%, 4.5% and so on, or the then existing rate whichever is higher(?). This concession if implemented will help senior citizens to some extent. I am sure you will understand the suggestion stated herein and do give us senior citizens some relief.
K.S.Narayanaswamy
B.25.Hudco Houding Unit
Behind Rangavilas Mills
Peelamedu. Coimbatore 641004
Ph.0422 571477
e.mail sagoki@eth.net or sagoki@airtelmail.in
CA. M. Lakshmanan, Madurai
1. Formerly a deduction was allowed under section 80L for ‘Bank Interest’. This may be restored by giving deduction upto Rs.10,000/- for interest received from Banks form Savings Bank Account. At present the interest earned in such Savings Bank account is to be included in taxable income as ‘Income from other sources’, however low the amount may be, which is cumbersome. 2. Now at the time of assessment the credit for TDS is denied if the same does not appear in Form No. 26AS (consolidated statement wherein all the TDS of the particular assessee appears) though Certificate for TDS is available with the assessee. If the person who has deducted tax does not pay the TDS in time or file the TDS return properly the tax deducted will not be found in the Form No. 26AS. For the fault of the ‘Deductor’ the ‘Deductee’ is penalized. It is like the preamble of Income Tax System which says “Robbing Peter to pay Paul”; here Peter is penalized for the fault of Paul. So a procedure is to be evolved to overcome this anomaly. 3. As at present the entire Dividend is exempt at the hands of the recipient without any limit and the limited company pays DDT(Dividend Distribution Tax) @ 10% at the time of distribution of dividend. The assessee who earns Rs. 100 as well as an assessee who earns Rs. 1,00,000 are taxed at the same rate i.e. @ 10%, which is paid by the company. One who earns more has to pay more tax and who earns less has to be either exempted from payment of tax or has to pay less tax. In order to overcome this type of disparity a deduction may be allowed under section 80L upto Rs. 10,000/- and if the Dividend is more than this exemption limit of Rs. 10,000/-, the same may be added with Total Income as Income from other sources and the DDT may be allowed as rebate form the tax payable so that the income will be taxed at appropriate tax slabs.4. The limits for section 269SS&T relating acceptance and repayment of loans and for section 40A(3) relating payment for any expenditure are to increased to Rs. 50,000/- from the present limit of Rs. 20,000/-, which overdue for a long time. The latest modes of payments such as direct payment by cash into the recipient’s bank account, (which is a boon to the businessmen due to ‘anywhere banking’), transfer through internet banking and RTGS (Real Time Gross settlement) are to be exempted. These sections may be amended so as to take cognizance of direct cash payments to the parties concerned only for initiating penalty proceedings.CA. M. Lakshmanan, B.Com., F.C.A., DISA(ICAI), FIIISLA, Partner, M. Lakshman & Co., Chartered Accountants, 16, Pandian Street, Alagappan Nagar, MADURAI 625003
U. Sridhar, Trichy
The United Progressive Alliance (UPA) is just a few months away from presenting its second Budget in less than a year since the general elections of 2009. Though the gloom of global recession is behind us, inflation continues to be a worry. Now the ordinary income and investment people have suffered lot. My expectation is ordinary people get benefit and see the budget through Increase in limit of deduction under Section 80C: Deduction under 80C includes investment for provident fund, PPF, LIC, housing loan repayment, expenditure on children education tuition fees, etc. and the existing limit is Rs 1 lakh. The same has been in existence for several years and considering the time period which has lapsed and the inflationary trends in the economy, it should be increased to Rs 3-4 lakh. The list of eligible tax saving investments should be extended to include investment in IPOs and NFOs. This will give a further boost to the capital markets and satisfied small investors.U Sridhar II MBA]
Dept of Commerce and Financial Studies,
Bharathidasan University,Trichy.
Monday, February 22, 2010
A.Venkataraman, Chartered Accountant
Today the most of the industry are set up in and around metros /tier 2 cities. It is rarely seen that industries would like to go to semi urban areas.if tax holiday provided in the ensuing budget for the industries which are set up in semiurban./ rural industries , then it would eliminate the following problems faced by india today 1. Pollution probems if the industry is situated in one place.(Air, Water)2. Growth is Centered around only on few places rather than scattered3. Employment opportunities is restrcted to ciities only and there by restrciting inclusive gowth planned by the Govt
A.Venkataraman
Chartered Accountant
M.K. Gupta
1.all taxes leveived my govt. should be in the range of 5% to 10% as in any business it is assumed 5% to 10% net profit margins. 2.base exemption limit should be 5lacs after that 5% for 10lacs and 15% above 10lacs
3.long termsaving should be encouraged. 4.widrawal should be taxed(if it eet regime) should be on reduced or 25% tax bases 5.cash transaction should be discouraged totally 6.all exemption should be avoided
Mohan Sekhar, President & COO, Collabera
Expectations from the Union Budget –We hope reducing inflation and fiscal deficit will be two of the most critical issues this budget addresses. Other important areas that need attention are infrastructure and education. We hope the budget will provide stimulus for increasing foreign investments in these areas and also provide for incentives to increase public-private partnerships. At the same time, we believe that the FM will need to take a hard look at rolling back stimulus in other areas. Specific to the Information Technology sector, we are hoping to get an extension to the tax holiday beyond 2010, by at least 5 more years. This, we believe, will enable the Indian IT sector to compete with other emerging global IT destinations. This will also help the small and medium IT businesses, which accounts for close to half of India’s software exports.Mohan Sekhar
President & COO, Collabera
Mr. Jay Shankar, Chief Economist, Religare Capital Markets Ltd.
Dr. Jayakumar Christian, National Director, World Vision India
"If we want the increasing number of youth indulging in violence to stop,and a future sans violence, this budget must visibly demonstrate thegovernment’s commitment towards the children and youth of our country.Budget 2010 is an important opportunity for the government to express itspolitical commitment to the youth and children of our nation. Recentelection was a clear mandate to the nation to take our youth seriously.Our current internal conflicts also demand that we pay attention to theyouth-drain in our nation - lost to the mainstream. The nation demands anincreased strategic investment in children and youth of our country. Theallocation in health and education is dismally low. We need to assure thosein the lowest rungs of our society especially children in povertysituations equitable 'quality ICDS' with adequate funding and engagement ofCivil Society in monitoring it. The National Rural Health Mission needs amajor revamp to serve mothers and provide effective prenatal care. "
Rakesh Jain, Director-Corporate Centre & CFO, ICICI Lombard GIC
The General Insurance industry is in a developing phase with significant scope for penetration. Tax rate for unrealized gains for General Insurance companies should be at par with the applicable taxes to the other industries, which will act as a catalyst to the growth and penetration of the industry. In an attempt to boost investment in infrastructure and social sector by insurance companies, income arising from such investments be made tax exempt. Although India is a country vulnerable to natural disasters, less than 1% of homes in India are insured. Premiums paid for home insurance should be made tax deductible upto Rs 10,000 which would help fuel the penetration of home insurance in India. Further rural/micro insurance policies also be granted service tax exemption in view of the target population for such policies who are basically from the rural and social sectors thus increasing their affordability. Currently, policies with premium of less than Rs 50 are exempt from service tax. The said threshold limit set in the year 1994 needs to be revised to at least Rs 1,000. The General Insurance industry also expects a circular exempting tax deducted at source (TDS) on payments made to foreign reinsurance and consequently a rise in premiums charged to the customers.**
Mr. Rakesh Jain joined ICICI Lombard in 2001 and is the Director Corporate Centre and CFO Head Marketing and E Channel of the company. He joined the risk Management department of ICICI in 1998, prior to which he was working with ITC classic. An alumini of St. Xavier’s College of Commerce, Kolkata, he also holds ICWA and CA degrees.
Mr. Vishal Bali, CEO, Fortis Hospitals
Health systems around the globe are designed to provide a means to distribute society’s resources to balance affordability. For any country economic growth must bring with it a faster growth of its healthcare sector. At no other time in our history has there been more debate on the healthcare agenda of this country and the need for faster reforms to bridge the growing healthcare aspirations of our people. Longevity of life in high income developed countries has often been attributed to higher accessibility, by contrast in low income economies like India poor health has been demonstrated as one of the several constraints for economic growth. The challenge to advance human health for any country besides investing in basic health and hygiene is a multiplier of its ability to train, retain and sustain its healthcare human capital through revitalizing education, improving training and preventing migration. Our population growth is touching 2% and it is estimated that by 2030 India will surpass China as the most populous country on the planet besides the fact that by 2025 an estimated 189 million people in this country will be more than 60yrs of age needing higher healthcare spends. India has 16% of the world’s population,18% of the world’s mortality and 20% of the world’s morbidity and our public expenditure on health is still 1% of GDP. Budget 2010 needs to put Healthcare on the reform agenda for the country to make a fundamental difference. In India healthcare sector is largely contributed by private rather than public funds with the private sector contributing 4.5% of GDP spend. Can a rapidly developing economy like ours be so dominantly dependent on private spending? It therefore expected that health expenditure rate will mirror the GDP growth of 7-8% and Govt will contribute through a higher spend on the sector. While we continue to build our healthcare delivery systems contributed largely by the private sector it is imperative for the government to take appropriate measures to strengthen the foundation of healthcare delivery model in our country by increasing the GDP spend to 2% and make healthcare accessible to a larger population of our country. Outlining few recommendations from the healthcare sector that Budget 2010 should provide: · Priority or Infrastructure status. If we have the intention of not being a“ sick“ country then healthcare has to be given as much importance as roads, ports, highways, airports and IT. Massive investment is required to bring up the quality of health care in India. The current ratio of bed: population of 860 beds:1mn population stands nowhere as compared to the WHO norm of 3960 beds : 1mn population. nation where the ratio is 7:1000. The budget needs to focus on ways to incentivize private sector to accelerate investments.· A direction towards a public and private combined healthcare spend to reach 7% of GDP over the next 3 yrs.
· Focus on inadequate water,sanitation and sewage management to halt the rise of communicable diseases.The national disease surveillance program needs to be more effective.
· The National Rural Health Mission plan needs higher layout and its expanse should go beyond the current 18 states which will take its focus to a National Health Mission.
· Decrease in capex by the Ministry of Health from has resulted in lack of adequate modernization of Public Health infrastructure.The capex expenditure must move upwards of 10% of the total outlay.
· “ Healthcare Parks “ on the lines of Software Technology parks which are subsidized by the Govt should be started to provide susidized tertiary care to the less affording and those sponsored under the Govt healthcare schemes.
· National Policy Direction on Public-Private partnership in healthcare facilities. Reports say widespread malnutrition impacts economic growth dramatically with the World Bank saying that in the poorest countries it slashes 3% from annual economic growth. More than 27% of the undernourished population globally lives in India posing a huge constraint to economic development of the country. Immediate measures should be initiated to scale up of basic interventions like mass immunization and better primary health. As a country which has exhibited its prowess and intellectual capability in numerous knowledge based sectors to emerge as a frontrunner in the globe we have the unique opportunity to design viable and sustainable healthcare delivery models. We therefore need “Healthcare in India” to be a priority in budget 2010.
George Menezes, COO – Appliance Division,
With the budget round the corner, the foremost question in everyone’s mind is, ‘Will the country be able to maintain its growth trajectory if the fiscal stimuli are withdrawn?’People advocating this assume that the economy is back in full steam and the scorching pace of growth will continue. Honestly, we are concerned! The growth momentum that we have achieved should not be dampened by any sudden withdrawal or roll back of the stimulus measures initiated to drive consumption and growth. The current cost escalation, inflation and the likely tightening of interest rates do not augur well for business. The buoyancy that we saw in the market can get severely dented. As it is, people are getting cautious with their spending, as disposable incomes are coming down with soaring inflation impacting cost of living. We have clearly seen this trend in the urban markets where the spending this year has considerably slowed down. It was only the smaller towns and rural economies which did well because of the huge government spending which went into rural infrastructure, employee guarantee schemes, which could, to a large extent, moderate the impact of the lack of monsoons last year. While looking ahead, nobody is sure of how benevolent will be the weather gods. If there is a repeat of last year, then, we are in for a difficult time ahead. As somebody said, the stimulus package is like a steroid. A sudden injection can ramp up performance but a sudden withdrawal can deal a crippling blow. Hence we have to think this over very carefully and move cautiously. The Consumer Durable industry, where we operate, got a fillip last year because of 3 major reasons: (a) an excise drop which brought down the prices, (b) an improved liquidity which helped Consumers and Trade alike and last not but the least, (c) a scorching summer which propelled the growth of cooling products. And if these 3 variables which helped last year were to go adverse this year, just imagine the plight! The industry growth in the fiscal year 2009-10 actually picked up only in the latter part of the year and if you look at the year as a whole, it is encouraging but not stupendous, something to go gaga over! In our country, where penetration levels of consumer durables are at a pathetically low level, it is important to create an environment which will encourage spending and propel growth. While the durable majors are doing their bit by coming out with Innovative Products and Technologies, Energy Efficient appliances and Exclusive Consumer Offers, a conducive tax regime and supportive monetary policy will complement the industry’s efforts. Sustainability is the key word!George Menezes
COO – Appliance Division
Godrej & Boyce Mfg. Company Ltd
Chaitanya.K
I, being the responsible citizen of India always aspires to look a well developed india before my death. But we all know that it can be possible only with the well educated citizens. Though our nation has been succeded in reaching to the literacy rate of 61% from 12% from the day of our independence, we all should admit the fact that India is still ranked at 147 in the literacy rates. And we can see the developed nation only when India could produce educated people at large. And our strong desire is to change the notion of " highly populated nation" to " highly educated people on the earth" So, if the funds are more allocated towards the quality of education and improve the literacy rate on priority basis we all can move forward with a well educated nation.
Chaitanya.K
Dr.M.Srinivasa Reddy, Tirupati
Employment:
All talk by governments, key policy makers, economists inevitably touches one issue i.e. job creation, apart from several issues like fiscal deficits, interest rates, incentives, subsidies. The basic principal to make an incentive work is to link it the direct outcome as perfectly as possible. Most of the incentives aimed at job creation are linked to it indirectly at best. For example big manufacturing companies, gets several facilities from the government, but the employment generation from them is meagre when compared to services and unorganised sector in India. To encourage job creation the government may replace many of those incentives, with an allowance based on the sum of salaries paid (per head salary not exceeding 15 times of nominal per capital income of India), for example 10 percent of that sum.
VAT to PAT:
The whole world is fearing the climate change, which largely hinges on energy consumption and the resultant pollution. large parts of world is expected face the shortages of potable water due to the twin hazards of climate change and pollution. Then, why tax value creation leaving pollution? The tax burden should ideally shift from value creation to energy consumption (exempting the clean energy) and pollution creation.
Incentives/Subsidies:
In a country called Giclo two friends a Rabbit and a Jumbo lost their natural habitat, and therefore decided to get into transportation business separately. Within a few minutes the Jumbo got many orders and the Rabbit has nothing to do. It then approached the Government for support to get level playing field with the Jumbo. The government babus found good case in its problem and granted a truck and subsidised fuel to the Rabbit. In no time the Jumbo had to watch helplessly at the speeding truck of the Rabbit. With no business the Jumbo joined a circus company for livelyhood. A sage who observed these events thought the subsidies and incentives should be temporary, like the supplements to patients to become normal and compete. Will our Pranab listen.
Dr.M.Srinivasa Reddy
Professor & Head Dept.
Management Studies,
S.V.University, Tirupati (A.P.)
Mr. Ashwani Sondhi, CEO, aSpire e-Travel Technologies India LLP
At present all corporate entities whether mega large, large or SME are all taxed at similar income tax rate. Whereas the large corporate are able to enjoy favorable rate of interest and deductions under various provisions of income tax act, the SME is at a disadvantage. To strengthen the working of SME’s, a differential rate of tax could be looked at; at least for the initial years of existence. This measure shall send very strong signals for boosting confidence of SME’s.
Removal of service tax on services rendered by SME’s could be another measure to nurture the fledgling industry. The removal could be time based, with exemption available for initial years of existence.
Internet penetration and speed of internet in India are among the lowest in the world. Suitable budgetary allocation for such infrastructural development is a must. To enable larger population to access internet and the virtual world, removal of sales tax on computers and packaged software is essential.
Assignment of infrastructure status to Tourism industry would be a very positive step. Tourism industry is a growth multiplier industry and employs the largest number of people directly or indirectly. Tourism infrastructure in terms of roads, airports, tourist circuits, ports, seaways, rail roads, hotels, conventions centers and resorts needs to be developed and the budget could define the necessary framework for such investment either directly or under PPP model.
Mr. Hanuman Tripathi, CEO & Managing Director, InfraSoft Technologies Limited
“I feel that SEZ policy should be revised to create a push for building smaller size SEZ within city limits of all major towns reserved for SME companies in IT services, inclusion of Tax holidays (Service Tax and Excise exemptions) to domestic software companies serving Financial Inclusion & Rural Empowerment with their technology and rationalization of perquisite value for ESOPs for non-listed companies to Book Value or any other rationalized model to attract entrepreneurial quality of people to join the sector for longer term. Additionally, I also expect an extension of Tax holidays for IT exporters under the STPI scheme. If the government has reservations, this extension can be limited to IT companies under Rs 500 Cr revenues (SMEs) which do not have access to SEZs. “
Mr. Amar Chintopanth, Executive Director & Chief Financial Officer, 3i Infotech
“I expect the budget to relook at perquisite taxation on ESOPs (Employee Stock Ownership Plans) since ideally gains on share sales should get taxed only when they are sold. The FM should relook at the MAT (Minimum Alternative Tax) rates since the current rate of 15% is quite steep. To preserve India’s competitive edge globally and for a long-term continuation of its leadership in the global IT market space, the government should not cease tax holiday extensions for units in STP areas by 2011.“Mr. Anirudh Bhuwalka, MD & CEO, Asia MotorWorks Limited
There is a need to speed up the implementation of GST in order to rationalize the taxation bringing in economies but more importantly to make the long distance intercity transportation more efficient and productive, without frequent stops for local taxes and octroi duty, etc. The focus here is on ensuring a faster and more or less uninterrupted flow of traffic between cities. And a more rational duty structure that does away with multiple rates at multiple points of taxation. The phasing out of old vehicles has an effect on both safety and improved environment. Hence the suggested 10 years age limit in all A and B class cities. This would result in more modern vehicles getting inducted, and it is recommended that the Government consider incentives to minimize the initial cost of replacement. A policy for discouraging the shifting of these vehicles to smaller towns could also be put in place simultaneously in order to ensure that old, polluting and unsafe vehicle leave the system.
Newly manufactured vehicles conform to strict emission norms, but old/ existing vehicles are a major source of pollution. Here it would be ideal to raise the bar by ensuring that, by year 2010, there are no vehicles with emission norms below BS I are running in India. This would result in the need to either upgrade engines or scrap old vehicles. The cost increases due these exercises would have to be compensated by suitable incentives. The current state of economic revival is not so robust that it warrants a sudden and complete withdrawal of the stimulus package, which has worked so well for us in India. We would need to continue to keep a watch on factors that may hamper growth, especially in the infrastructure sector, which is largely dependent on Government expenditure. Our view is that the Government should continue to provide impetus to growth as Fiscal 2011 is critical for the global economy and India cannot be treated in isolation.
All steps given above are for increasing traffic fluidity and hence higher average speed of good transportation. This increase in transportation speed has to be maturely and responsibly handled. Hence there is need to focus on enhanced safety of vehicles; crash testing of all cabin alternatives to meet norms, strict adherence to wearing seatbelts, fitment of side front and rear under-run protection devices, better braking performance, etc should be mandatory and strictly enforced. With more highways and rural roads coming up, the absence of a safe regulatory environment can have drastic consequences.