There have been mixed feelings about the Government since the demonetisation drive, which need to be addressed, even if it is through some populist measures. With the Union Budget only days away, here are some key areas the Government should concentrate on.
Infrastructure sector
With funding of over ₹2.2 lakh crore last year, the allocation for the infrastructure sector is expected to increase. The key to India’s economic growth is directly linked to investments made in building a strong infrastructural base.
In the past year, the Government has expressed its intent to fast-track a lot of processes, aided by digitisation, in getting approvals for infrastructure projects. This would be a welcome move. The National Investment and Infrastructure Fund is an example of how there can be a swifter transfer of funds. Such schemes, complemented by a vision to promote public-private partnerships, will act as catalysts to speed up growth in this sector.
It’s also important to smooth the challenges faced in raising funds for infrastructure projects. While schemes for swifter funding through official banking channels and primary capital markets help, it is time to open our gates wider to foreign investors by easing regulatory requirements which, at times, handicap the economy.
The renewable energy sector requires major rethinking. The domestic harnessing of solar energy has shown only sub-par growth, and needs more schemes to promote economic adoption by the masses.
The merger of the Railway Budget with the Union Budget is interesting. Investment in railways will continue to grow, as usual. Travel benefits to people from a lower economic strata through lower fares may help those hit heaviest by the demonetisation measures.
Taxation, corporate compliance
The Goods and Services Tax (GST) should simplify regulatory compliance, tax calculation, tax administration and reporting for business owners in multi-fold capacities. Schemes that further the transition to GST are expected.
Income-tax slabs are expected to be restructured; it is hoped that the exemption limit will be raised to around ₹4 lakh. The ₹10-lakh threshold for the 30 per cent tax bracket is expected to be raised to around ₹12 lakh. To counter this, the capital gains tax on sale of securities could be increased.
Simplification of the tax regime by rationalisation of provisions such as Section 14A of the Income-Tax Act, which has been a matter of continuous litigation, would be a welcome change. Further, tax holidays to promote investment in infrastructure and additional depreciation provisions would help stimulate growth.
The new Companies Act, introduced in 2013, continues to find itself amended frequently, trying to balance the stringent regulations and heavier compliance requirements with the easing of processes to promote business. Hopefully, the Budget will bring further amendments in favour of lowering the cost of starting and operating a business.
Digitisation of payments
Complementing the recent steps towards cashless transactions are policies promoting digital payments. Mobile wallets may be legitimised through an inclusion in the Budget. Such digitisation should also be incentivised through tax benefits.