Setting up IEF website and seeing it rapidly being followed by avid readers over the last one year has been one of the most fulfilling roles in my over two decades journey as a print media journalist. A new city beckons ! Perhaps another challenging assignment in mainstream media ! This is my last editorial as the Founder-Editor of India Employer Forum website. Like any other concerned citizen impacted directly or indirectly by the current state of the economy, I shall continue to closely monitor the spaces of ‘employment’ and ‘ease of doing business’ and follow the steps taken by the government to bail us out of this unenviable situation.
The Finance Minister will present another annual union budget on 1st February 2020 but given the economic slowdown the expectations from this annual financial statement is different than its earlier versions. Without wanting to play spoilsport, one cannot but show reality and that’s the budget alone ‘is not’ and ‘will be not’ the sole antidote to all malaise inflicting the economy. It is one of the interventions that might help the economy revive but certainly not the most impactful one. A more sustained series of structural reforms over a period of time would be more effective in taking the Indian economy out of the state of slow growth onto the path of rapid growth above the range of 8-10%.
Let’s anticipate some of the popular expectations from the tax-payers and corporates along with the ‘must-to-do’ budgetary policy introductions. Honest tax payers – the salaried class – who sincerely contribute their mite with TDS expect some relief. It has been a long – standing expectation and hopefully the government lowers the personal tax rates while also reducing surcharge. Home loan buyers will be happy if the limit on the deductions on home loan interest is further enhanced. Deductions such as LTA, medical etc. might need another revision in slabs with the changing times. Last year’s budget mentioned about Inheritance tax exemption but it was ambiguous. One hopes to get more clarity on removal of Inheritance tax this year. The industry has been asking for abolition of LTCG (long term capital gains) tax for listed securities and DDT (Dividend Distribution Tax).
You might also be interested to read: Budget – A Great Opportunity To Reverse Economic Slowdown
GST continues to haunt traders and businessmen. Rationalization of slabs into more sensible ones will go a long way in strengthening ease of doing business and bolstering compliance. Every budget sets targets for disinvestment. Air India continues to bleed the tax-payers. One hopes the Finance Minister shares the list of all non-performing PSUs and the timeline for their respective disinvestment. Every penny saved, during these trying times, is a penny earned. Besides, the recurring expenditure on salary and overheads will stop to hit the tax-payers once the process of disinvestment gets over.
Agriculture in India has arguably grown, rightly or otherwise, with high doses of subsidies and tax exemption (agricultural income is tax exempt). Many industries have got a fillip owing to tax incentives. To create employment, it’s imperative to introduce or continue tax incentives in sectors which can generate jobs and employ masses sustainably over a long period of time. We have enough programs – skill India, Make in India, et al. New ones may not be needed. Instead, bold and maverick steps are needed to make these programs work effectively.
As I often say, good economics, and not populist measures emanating from politics, is the need of the hour. One hopes to see measures to revive the economy being introduced by the Finance Minister on 1st February 2020. If it works well, the ruling coalition can take credit for turning things around and if people are beneficiaries, no one will complain.
Editor – India Employer Forum
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Can’t agree more with your views.Long term structural reform focusing on the ease of doing business with continued support to entrepreneurs so that there is holistic development is the key for a turnaround of the economy. The quick fix solutions and populist measures which are the need of a political party should be minimal.Hope we get to see some out of box steps in this budget.
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