What are the finance minister’s three biggest challenges?

The three biggest challenges are high inflation; wide fiscal deficit and a current account deficit that can widen any moment given the volatility of oil prices; and low confidence level of investors.

Which are the areas you would first look at if you were the finance minister?

Containing inflation would be the priority as it has the potential to derail all other plans. At the same time, I would have to ensure that anti-inflationary measures are not such as would stifle growth. Hence, I would like to emphasize on supply-side measures. Proper expenditure management and putting the taxation system back into the right trajectory are the two prongs for deficit management that I would look at.

What are the two or three things the finance minister should do to revive investment and growth?

Improve governance by bringing in more transparency, responsiveness and accountability; make the taxation system conducive (through reform on the direct tax front and introducing GST, or goods and services tax, as early as possible); banking sector reform and making the FDI (foreign direct investment) climate attractive.

What areas in your sector do you think need to be addressed in this budget?

There are several provisions in the new Company Law that will significantly increase transaction costs for companies without improving corporate governance in any major way and these need to be reviewed after stakeholder consultation.

Second, the government must align tax policies with sectoral regulations to boost investments in the manufacturing sector. The inverted duty structure, particularly in the defence and IT sectors, are examples of how imports of finished goods are cheaper (0% customs duty) than domestic manufacture.

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