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Chief executive officers (CEOs) of Indian companies are expecting big and bold economic reforms from Finance Minister Arun Jaitley's debut Budget on Thursday. They say this is a historic opportunity for the Modi government to walk the talk and bring back investors, after four years of stalled reforms.
They expect rollback of retrospective taxation, privatisation of public sector units, increased foreign direct investment (FDI) limits across more sectors, rationalisation of subsidies and fiscal consolidation.
Anil Agarwal, chairman, Vedanta group, says encouraging private enterprise, exploration of natural resources, development of manufacturing, simplification of regulatory and approval processes, and promoting tourism can open new avenues for jobs and accelerate India's economic progress.
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"The need of the hour is to boost energy security through reform. We can meet at least 50 per cent of our oil and gas requirements from our own resources. What is needed is to encourage large companies to enter this sector, to unlock the true potential," he added.
The CEOs also expect the government to take steps on fiscal consolidation, so that the deficit can come down to four per cent of gross domestic product and could grow at an annual six-plus per cent. "For that to happen, tax benefits have to be given to employment creation activities in manufacturing & services. I am also expecting reforms in land acquisition and labour (issues)," says Venugopal Dhoot, chairman of the Videocon group.
"There is also a need to give more tax breaks to the middle class, suffering due to rising prices." With Prime Minister Narendra Modi's stated thrust on infrastructure, they say the government would raise resource allocation here.
They expect the rural job guarantee scheme to be restructured to emphasise rural roadways and irrigation projects. They also expect announcement of new flagship infrastructure projects with time-bound deadlines, such as the Delhi-Mumbai industrial corridor, a diamond quadrilateral for the railways, broadband highways and 100 new cities.
"India has to create 15 million jobs a year and almost 300 mn jobs in the next 20 years. All these will be created by the private sector and from foreign investment. The government should make land acquisition and environment norms easier, so that the ease of doing business in India increases," says Ajit Gulabchand, chairman of infrastructure firm HCC.
CEOs say they expect clarity on introduction of a national Goods and Services Tax (GST), discussed for several years. "The new government must do everything possible to build consensus in making GST a reality. The complex state tax laws make it very difficult for movement of goods. It is more difficult in many states to move goods to another state than to import or export overseas," says Hemant Kanoria, chairman of Kolkata-based Srei Infrastrcture.
"Introduction of GST will bring some degree of uniformity. Not only will it raise government's tax kitty, it is also expected to bring a lot of clarity and transparency in terms of tax implication on business. We hope the budget sets some timeline for implementation."
The CEOs also want a new FDI regime, with focus on raising limits in the defence, railways and insurance sectors to 51 per cent or higher. "Increased FDI in defence will help India to create its own manufacturing-based industry; India will then be exporting equipment," says Nikhil Gandhi, chairman of Pipavav Defence.
