Government should set its priorities right to focus on key issues

Lowering direct tax rates 

Now that the tax collections have started showing uptick with a wider base, it's time to provide for tax relief in both personal and corporate tax rates. This should be step change and not marginal. Only moderate slab revision (last done in 2014) will not help in increasing disposable income to increase consumption. 

Besides, FM should deliver his promise with the initial vision laid for gradually reducing the corporate tax from 30 percent to 25 percent over a span of 5 years, which has not been initiated as yet except for a token one through start-ups. This also includes aligning the Minimum Alternate Tax rates at 18.5 percent and dividend distribution tax at 15 percent. 

Also extension of timelines of MAT credit utilisation from 10 years need to be revisited as part of the tax reforms.

Lower interest rates

With a huge mobilisation of cash inflows happening through demonetisation, another reduction of interest rates to provide room for spending, give a modest push to automobile and reality sectors.

Infra booster dose

One of the quick wins for the government should be to roll out mega infrastructure development projects, rail, roads, highways, facilities, modernisation and the all-awaited 100 smart city project. All half-announced, half-done and half-hearted but immensely touted ambitions must be put on fast track time bound completion possibly under PPP model with specific planned Budget allocations. This will see accelerate project completion, ensure quick implementation, attract daily wage workers employment and quickly rebound the economy full throttle.

Energy efficiency 

FM must make specific time bound plan expenditures to commit for highly focussed energy efficient policies in making substantial increase in carbon footprint and encouraging energy efficient consumption by highly incentivising use of solar and wind power beyond a threshold level.

Align online 

Continue aggressive online transactions push initiated in course of demonetisation. Government should consider mandatory transfer of wages & salaries through online transfer for all income groups, link them with tax returns, encourage opening bank accounts under Jan Dhan Yojana. 

The much promoted government campaign of online transaction should be heightened with an auto-credit of transaction linked incentive direct to the account just like an interest waiver. 

However, all online measures must be strongly supported by high level of government sponsored cyber security measures, compatible technology enablement and most critical - uninterrupted high-speed and low-cost network availability across the country.

GST roll out

FM should make a specific announcement of an irreversible date of GST roll out with quick release of full legislation at final rates. This will give lot of headroom to all businesses, big or small, to get GST ready and herald a new era.

Indirect tax rate rationalisation

In a bid to attempt controlling inflationary trends whether pre- or post-GST, FM must look at indirect taxes rate rationalisation basis end-use of products by various sections of society. So within same product group whilst economy products and essential products mainly consumed by rural or weaker sections of society should be at a lower rate with step increase basis end use. 

Drive synergy in government expenditure 

Combining rail budget with the master union budget in itself should give immense play to the government spending to synergise, optimise and rationalise. This will leave much room for higher budgetary allocation on priority spending. 

Government subsidies

All subsidies should be eliminated except for the weaker sections of the society who are below poverty line. Furthermore, contractual workers and farmers who are genuinely impacted by reduced family income as a result of demonetisation and living in hardship must be supported by the government through one time subsidy or making available essential goods through the PDS or by direct transfer of cash subsidy to the Jan Dhan accounts or any other means.

Ease of business 

Simplification and speed should be the mantra of the FM in this budget to meet the government commitment of ease of doing business. Simplifying and streamlining tax administration, processes, reduced arbitrary powers of the administration, easing out bureaucracy, speedier completion of assessment, eliminate harassment, quicker dispute resolution and faster settlement of refunds will in many ways attract investments and entry into the tax net.

Transformation overload 

In a bid to set right good governance, the government should not be adopting too many transformational changes. This will lose focus on policy implementation and learnings from implementation lapses of demonetisation should be seriously introspected. GST rollout, ICDS implementation, change of fiscal year, Benami transaction bill, Real estate regulations, Online push, Digitisation, Startups, Skilling India, Swatch Bharat drive, Foreign Policy changes and many more. These are far too many on the cards in the midst of a struggling economic landscape will only get messy and would not be in good stead for the economic development and neither on political grounds.

Conclusion

While the FM is engulfed with a laundry list of to-do actions it is imperative that government priorities are well set right to focus on key issues. Therefore, it is desirable to enable policies for quantum leap in consumption, infrastructure boost, increasing liquidity, address inflation, lift the rural & agri growth and job creation across sectors.
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Saibal Sengupta is the CFO of Usha International Limited