The corporate sector's talk of a ‘policy paralysis or governance deficit' is baseless as tax receipts and foreign investment inflows indicate a vibrant and progressive economy, said Dr M. Veerappa Moily, the Union Minister of Corporate Affairs.
Whether it is indirect and direct tax collections or gross foreign direct investments, the trends do not reflect ‘any symptom of the paralysis.' It is purely a ‘negative perception' that is not substantiated by facts, he said, addressing an international conference on ‘Accountancy profession: leveraging emerging challenges for inclusive growth', organised by the Institute of Chartered Accountants of India.
Corporate tax
The share of corporate income-tax in the direct tax collections of the Government continues to grow and the ‘country is run by corporate funds,' he said. In 2010-11, of the total direct tax collection of Rs 4.46-lakh crore, corporate tax was Rs 2.99 lakh crore, about 65 per cent.
The Budget estimates for 2011-12 peg the corporate sector's contribution higher at about 67 per cent, about Rs 3.59-lakh crore out of the total estimated direct tax collections of Rs 5.32-lakh crore.
Investment inflows too belie the talk by businessmen and commentators that “political uncertainty and policy paralysis” have taken the sheen off India as an investment destination, Mr Moily said.
In 2011-12, the three major indicators of inflow of foreign funds — foreign direct investments, portfolio inflows, including FIIs and ECBs — have grown. The FDI and ECB inflows in April-September 2011-12 were higher than in the previous year.
The average portfolio inflows in 2004-08, the ‘India Shining' period was about $10.6 billion but in 2009-11 it was over $16 billion. FDI inflows are a bigger revelation, as they have doubled in the post-crisis period when compared with the inflows in 2004-08.
Studies show global FDI inflows in 2010 were 15 per cent below the levels prevailing prior to the 2008 crisis. But, in India, the FDI inflows continue to grow significantly indicating the confidence level of the businessmen.
The Government is working on strengthening the systems, with the Companies Bill set to be enacted in the Budget session, the National Competition Policy to be in place by March and a National Corporate Governance policy announced in about six months, he said.