What are the three things you wish from the Budget?
A macroeconomic environment conducive to investment and economic growth, with policies such as lower interest rates and a stable rupee. A continued emphasis on fiscal discipline is required to minimize inflationary pressures and to maintain adequate incentives for investment. The need of the hour is policies that reinforce the emphasis on structural economic reforms and aim at removing inefficiencies in the delivery of government programmes.
The finance minister needs to incorporate adequate flexibility in his policies to counter the impact of turbulent international markets and the subprime crisis, the impact of which is still being assessed.
If you could end one thing, what would it be?
We need proper design and planning for the measures being introduced; with solid, stable and rational recommendations that are announced with reasonable clarity and whose impact can be assessed clearly.
FBT (fringe benefit tax) and taxation of Esops (employee stock option plans) are cases in point, which would have benefited from proper planning. The measures in their original form led to some confusion when they were announced and required clarifications to be issued later.
If you were finance minister, what would be the one thingoutside your industry or area of interest you would want in the Budget?
Modernization of the tax system to encourage voluntary compliance,which in turn, requires emphasis on taxpayer services, and clarity and certainty in the interpretation of tax laws; a tax system that is broad-based and with lower rates. There is room to reduce the tax rates across the board (for personal and corporate income tax, and excise duties) without a reduction in tax revenues.
A 3-5% tax rate cut across the board, supported by pruning of concessions and exemptions, would strengthen the competitive position of India in the global markets, enhance voluntary tax compliance, and support the purchasing power of middle-income families.
The government should provide a concrete road map for GST (goods and services tax), at a combined Centre-state rate not higher than 15%.
Dispute resolution is another very important aspect that needs attention; disputes lead to blocking of revenue and lower voluntary compliance. A speedy resolution process will benefit all.
What is the one thing you do not want changed?
The focus on fiscal discipline.
One proposal you think is shot down in every budget, but shouldn’t be?
It has to be measures to improve the delivery mechanism for the various social and economic programmes.
What would you consider to be inclusive growth?
A strong rural economy with adequate infrastructure, a competitive India Inc., and the educated masses would mean inclusive growth to me.
Rajiv Memani is CEO and country managing partner, Ernst & Young India.