What are the three things you want to see in the Budget?
The Kelkar committee had recommended that the STP (software technology parks) tax holiday for IT (information technology) industry should be phased out only when India signs a totalization agreement with the US. This should be implemented in total. Otherwise, it will substantially increase the effective tax rates of Indian IT firms and would put them in an uncompetitive situation in the global market.
Also, there is not enough SEZ (special economic zone) capacity coming up in the country to support the growth of the IT industry and this could affect the growth. The smaller companies would be more impacted if the tax holidays don’t continue.
The government should focus on increasing investment in the education sector. The focus should be on improving the quality of the faculty and increasing the talent pool. The government should push towards more reforms and private participation in education.
The excise duty should be further reduced to boost consumption within the country. Even the customs duty should be reduced to Asean (Association of Southeast Asian Nations) levels. The income-tax surcharge should be removed. This will help enhance the taxpayers base and boost collections.
If you could end one aspect of the budget, what would that be?
The whole budget process itself and the secrecy behind it. We need a broad direction from the government and all the policy changes should happen as and when required. Today, there is too much focus on the budget day and all the fiscal measures are consolidated and announced on the budget date. In a dynamic global environment, this would only reduce the velocity of economic growth.
If you were finance minister, what would be the one proposal outside your industry that you would want in the budget?
Increased focus, investments and reforms are required in both education and infrastructure. Currently, India has the extraordinary opportunity to take leadership in the global economic growth and lack of proper infrastructure is hurting our growth. Execution is key in infrastructure and we have too many regulations, which are impacting the timely execution of infrastructure projects. The other big problem is unemployment. The government should focus on enhanced reforms to allow private participation in the education sector so that the quality and quantum of pool can be enhanced to support the country’s growth.
What is the one thing you don’t want changed?
The focus on inclusiveness of all sections of the society in the budget.
Which budget disappointed you the most? Why?
The budgets presented by any government in their last two years (of the five-year term) generally lacked long-term vision and direction. They were generally more populist, with an eye on elections and less on reforms.
One proposal you think is shot down in every budget, but shouldn’t be.
The effectiveness of reforming and delivering the various subsidies by government. Most of the subsidies don’t reach the beneficiaries and there is lack of political will power to reform and redirect the subsidies to the right areas.
What would you consider to be inclusive growth, financial inclusion?
The financial delivery system, physical infrastructure, market access and productivity should be enhanced in rural areas. This will improve the quality of life in rural areas, which form a major part of the country.
V. Balakrishnan is chief financial officer, Infosys Technologies Ltd.
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