Letters to the editor dated September 25, 2019

This refers to ‘Nirmala’s booster shot could have come earlier’ (September 24). Indian Inc has been asking for such a cut for quite some time now. Unlike the PSBs amalgamation, and new initiatives announcedto support MSMEs , real estate and export firms, this news made everyone ,from investors to corporates, happy. One does not need to be a rocket scientist to understand that it will have a huge adverse impact to our fiscal position as well as the State’s finances.

But then, the Finance Minister and the government took the plunge because they saw merit, especially in longer run. Nirmala Sitharaman would hope that now when corporates will have bigger cash kitty with them, they will invest in fresh capex leading to economic revival and employment generation. Yes, if this step was taken few months ago, it would have saved millions of small retail investors and those foreign investors who left our country. But its better late than never. Now with some structural reforms for land and labour, the economy can get back on track sooner.

Noida

Apropos ‘The flight of the wealth-holder is leaving India vulnerable’ (September 24). The steep increase in outward remittances under the Liberalised Remittance Scheme (LRS) is a cause for concern. The RBI should undertake a detailed review of selected transactions under the scheme to find out whether the reasons for such increases can be justified. If any transactions are suspicious or undertaken to bypass the legal system, these should be probed.

Notably, it has been reported that the SIT on black money has also observed that the LRS is used to avoid paying taxes in India on funds transferred abroad via the scheme by gifting funds and thereby diverting income earned on these funds to non-residents.

Jaipur

This refers to ‘Coffee in crisis’ (September 24). The statistics highlighting the shrinkage of cultivated area of Arabica coffee is alarming, not only from the commercial angle of loss of foreign exchange, but more so from the perspective of climate change. With no solution in sight for the stem borer menace and heightened cost of maintenance of Arabica plantations, price not so remunerative and drop in yield, there is a calculated shift from Arabica to Robusta, at the cost of elimination of shade trees, a prerequisite for Robusta plantation. Unless the scientific community resolves the serious issue, the plight of growers is likely to escalate, apart from irreversible environmental degradation.

Hassan

With reference to ‘Tax cut not likely to simulate demand: Experts’ (September 24), it’s almost certain that companies will not elect to go for product cost reduction to push demand. Cost reduction calls for system overhaul or modification of existing ERP functioning, but the better option of tax computation requires little effort or least involvement of any expert.

A better reform could have been personal tax rate reduction, that implies increased disposable income resulting in a higher amount in the hands of consumers, effecting superior consumption. Higher demand means no idle capacity or layoffs, and may require additional capital investment leading to improved productivity or generation of new employment.

For corporations, it’s time now to concentrate more on tax computation, presentation of half yearly accounts and comparison of periodic results (by choosing the most beneficial tax rate option).

However, instant cheer in the capital market is based on expected increase in earnings per share (EPS) because of corporate tax rate revision. If we keep other facts as it is, and if the amount of profit before tax slipped by 15 per cent due to slowdown and tax rate is opted for 25 per cent instead of the earlier 35 per cent, then risk stands remote for corporations to maintain the same EPS.

Gurugram

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