PRE-BUDGET CONCLAVE. Budget should put more money into the common man’s hands: panel

The Budget should restore investment mood by putting more money into the hands of the common man to drive consumption, ease tax burden and compensate the impact of demonetisation that caused a liquidity crunch, felt senior executives at a panel discussion organised by BusinessLine and the Confederation of Indian Industry.

S Chandramohan, Chairman, Finance and Taxation Sub-Committee, CII-SR & President and Group CFO, TAFE, said with global trade not expanding due to falling investments because of increasing protectionism, the Centre should take specific measures pertaining to housing, road and farm sectors.

Incentives to individual home loan borrowers will help in realising the goal of a house for everyone. Principal deduction of ₹2 lakh under 80CC can be treated separately to increase the deduction levels. Similarly, interest deduction of ₹2 lakh can be increased to ₹5 lakh. Also, like in China, the deductions should be available for two houses, he said.

Expressing concern over the poor participation of nationalised banks in funding capex in the farm sector, Chandramohan highlighted the need for stronger push towards mechanisation.

“Today, private sector lending is about 75-80 per cent in this segment and participation of nationalised banks is as low as 5-6 per cent due to various reasons. If there is really a good push towards capex spending, including farm mechanisation, lower interest rates, it would definitely help the farm sector ,” he added.

P Ravichandran, Vice-Chairman, CII Tamil Nadu State Council & President, Danfoss Industries, felt that the Budget should offset the stress caused due to demonetisation. The overall objective should be to put more money in common man’s hands to drive consumerism and give a fillip to manufacturing growth.

Having taken the direction towards less cash economy, it is imperative for the Finance Minister to spell out a clear road map both for digital economy and transactions costs. “There are several transaction taxes levied for using credit cards. Everyday we are learning that some ‘x’ percentage tax is levied,” he said.

The country needed a very strong cyber security infrastructure. “We need to make sure the digital economy flourishes with a strong security infrastructure as well,” he pointed out. Ravichandran said, “medical insurance limitations should also be removed. The hospitals are charging high prices. There has to be some kind of fine balance in terms of a policy that allows increase in insurance limits while removing limitations. Everything here has to be simplified from common man’s perspective”.

Rajesh Srinivasan, Tax Partner, Deloitte India, raised concern over the lack of application, while formulating the taxation.

The government has carried on with whatever legacy was there. There has not been any thought to what should be done in the current context. Remove uncertainties and ambiguities in the tax system, he said.

Srinivasan felt the government’s promise of reducing tax rates just by 5 per cent - from 30 per cent to 25 per cent - would have no effect.

He also asserted that withdrawal exemption would hit the manufacturing sector badly as the return on investments is lower when compared with other segments. “So, withdrawal of exemptions along with marginal reduction in tax rates will not help to attract investments.”

Raghuvir Srinivasan, Senior Associate Editor, BusinessLine , moderated the discussion.

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