The steering of a country’s economy is in the hands of the finance minister and he shows his prowess with the wheels on 28th Feb. He is supposed to drive towards the country’s economic progress by negotiating deftly the turns and cuts thrown in by the nation in form of expectations. Let’s see what such expectations are in line for our dear PC this time of the year. With India continuing to be a predominantly an agrarian economy, the demands of agriculture take prime importance more so in the light of suicides by the hands that feed the nation – farmers. It is being felt that timely and cheap credit is what ails the sector. Though NABARD has been there for many years but its focus has now shifted more towards rural development. Thus there is a demand for a bank exclusively to finance agri activities. Further, the subsidy system for fertilizers is being considered a failure which experts want to be replaced by a sort of credit card scheme so that farmers can take direct advantage and companies’ dubious acts of getting subsidies without providing farmers with adequate fertilizers can be avoided.
Next most important person is the common salaried man – you and me. The abolition of standard deduction is hurting the class and there is a vocal demand for its restoration. The tax which the service class could never understand – service tax though being opposed, is expected to increase as per tax experts. There is a demand for introducing slabs in service tax. Further, the much maligned tax – FBT the ambit of which could be increased. It is also expected that tax deduction limit of Rs.1,00,000, apart from being increased will include some specific limit for infrastructure.
Among the sectors, the most shining one – IT has some modest demands like incentives for domestic market in terms of increasing the profitability of service provider and for fresh investments. The sector expects some thrusts to the e-governance esp in health, education, transport and their monitoring. The sector wants export obligation on incoming FDI in IT and ITES – smell competition threat! The second most important industry is the pharma industry and the demands/expectation from the stalwarts of the industry is for encouragement to R&D. The infrastructure sector, which has been growing at a scorching pace, expects the PC to look at notifying gas/oil pipelines as infrastructure facility and being eligible for various tax breaks and some other small doses of encouragements. How can we forget to hear what the telecom has to say after creating ripples around the world? The major demand is for reduction of various levies that the sector is required to pay to bring them on par with global players and increase the competitiveness as more global players make
India their playground. The power generation sector wants the tax holiday to continue keeping in view the investments in the sector lined up and the shortage of supply in the country.On whole the corporate is not happy with FBT and though it wishes that it be rationalize, it is likely to continue for some time in its present shape. The corporate also wants PC to consider that effective double taxation in form of dividend distribution tax which was introduced to avoid the very effect continues.
Last but not the least, the M&A activity and thus the people who make that happen, I-Bankers – want the procedural hassles to be reduced to encourage consolidation in various sectors of Indian industry. On specifics, it is desired that carrying forward of losses allowed to the merged entity, permitted only to some sectors should be extended to all others esp service sector. Further, certain conditions that are to be met to claim benefit of losses on merger are very restrictive like continuing the loss making business for 5 years and owning 75% of fixed assets for those 5 years and the same deter many potent M&A deals.
All that now remains to be seen is what does the PC boot onto when he stands to the waiting Indian on the 28th of this month.