The world economy continues to be in recession. No one knows when recovery in the developed world will start. Perhaps recovery in the developed world may start from early 2010.
Rahul Bajaj, Chairman, Bajaj Auto Ltd
To improve our current precarious fiscal situation, we have to look at both offensive and defensive aspects. We have to try to raise revenue, without raising taxes, and cut unnecessary expenses. Also, we should resort to disinvestment.
If you had three wishes for the budget, what would they be?
• It is essential to increase domestic demand, contain fiscal deficit and keep inflation under control. To increase demand, banks should lend to companies, especially SMEs (small and medium enterprises), and to customers. Banks are still not lending at a reasonable rate of interest because of the large borrowing programme of the government, the competition for deposits and the continued risk aversion of banks.
To ensure fiscal prudence, the government must ensure that the money it spends is for creating productive assets and wasteful, non-merit subsidies are gradually eliminated.
• The government should invest in physical infrastructure, especially roads, power and irrigation. This will provide additional employment and increase purchasing power and, hence, domestic demand for various products.
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• To reduce the fiscal deficit, the government must disinvest from non-core public sector units. This will also improve their efficiency and productivity. The government should, over the next two-three years, not hold more than 51%, and the balance 49% can be held by retail shareholders or one or more private sector groups. It is, however, important to ensure that disinvestment is done in a very transparent manner to ensure that the government gets the maximum possible price for its equity and that no favours are done to any party. Excluding some core and strategic public sector units, disinvestment should be carried out in all other public sector units, whether they are incurring losses or making profits.
If you were the FM, what would be the one thing you would want to change?
From the corporate sector point of view, if I have to end something, I would end the FBT (fringe benefit tax). I would want banks to start lending again at a reasonable interest rate.
What is the one thing you would not touch/change?
The one thing I would not change is the reduction in excise duties and service tax which have been extended in the fiscal stimulus packages since October 2008.
What is your idea of inclusive growth?
My idea of inclusive growth is to ensure that there is growth and then to ensure that spending on social infrastructure including primary education, primary health, clean drinking water and sanitation in all villages is done efficiently and without corruption.
Keeping in mind these objectives, the budget should give attention to at least the three points mentioned above.