25 Feb 2016 18:16 IST

Putting India on the world map

Promoting start-ups, improving infratructure and passing Bankruptcy Bill should top the agenda

Arun Jaitley should focus on promoting start-ups, as many college graduates and postgraduates are venturing into this field with mindblowing ideas. Innovations breed creativity, and these start-ups would definitely put India on the world map. Tax exemptions for a set number of years, till these start-ups break even, would help them experiment and take risks, as well as survive when they are young amidst heavy competition.

Deductions to salaried people

Standard deductions like that of income of house property (30 per cent) should be provided to the salaried people instead of the countless tedious allowances and perquisites. Also education and hostel allowances for students are barely ₹100 and ₹300 per month respectively which should be appropriately increased as per changing times.

Introducing taxes

The Government should consider raising the basic tax slab of income tax exemption from the existing ₹2.5 lakh to a higher limit. Additionally, a smooth rollout of the GST would help remove the tax on tax on certain goods and services and will help reduce the tedious administration of the other indirect taxes like service tax and VAT . Furthermore, uncertainty on taxation liability of MNCs who sell their assets to Indian subsidiaries should be clarified so that there is certainty for global companies to invest into India. (Referring to Vodaphone case)

The effective tax for the manufacturing sector is approximately 22 per cent, while tax of the service sector is approximately 25 per cent. However, the maximum marginal tax is 30 per cent. This is due to the fact the corporates take advantage of the many tax holidays and deductions provided to them. So Therefore, abolishing all the tax incentives, holidays and exemptions, and instead reducing the tax rate to a standard 25 per cent would help reduce the countless tax litigations, as well as ease the tax administration of corporates.

Reduction in bleeding of money, illegal dumping

An infusion of capital by the Government into PSU Banks would help them reduce their bleeding of money due to higher provisioning of NPAs and would help them comply with capital adequacy requirements of Basel III. Additionally, the Government should help Indian companies against illegal dumping by Chinese and other global counterparts so as to protect them and help them sail through losses as the metal and commodity market has fallen worldwide. The Government has already imposed the minimum import price for steel, but steel companies are still finding it hard to cover their variable costs. More initiatives like imposing safeguard duty or an anti-dumping duty would help Indian companies in these troubled times.

Infrastructure

India is a developing economy with an ever-growing population, and it is in dire need of sturdy and strong infrastructure in the form of roads, railways and bridges. Giving more impetus and easing PPP project requirements would go a long way in putting India on the world map.

Passing the Bankruptcy Bill

Eyes would be on the bankruptcy bill as the debt market is big in India. Large global private equity funds are interested in venturing into the same, but they are worried about the long-drawn procedures when a company goes into bankruptcy. Easier norms of bankruptcy proceedings would help these players to tap into the restructured debt market, and bring liquidity.

Let’s hope Jaitley turns out to be Santa Claus; offering a bagful of goodies to everyone.

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