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Home / Budget 2019 / Budget Expectations /  Experts bat for better governance, compliance simplification in budget 2021

In Union Budget 2021, industry experts are hoping that the government will focus on better governance in banking sector, simplification of compliance and regulation, besides the government's emphasis on job creation, and a swift action on sectors that are under chronic stress. As India limps back towards growth, Union budget will lay the ground for supporting the economy in creating business opportunities and jobs. The financial system has been under severe stress following covid outbreak, while the stock markets have recovered, the banking system is still battling asset quality issues.

Ashish Chauhan, MD and chief executive officer, BSE Ltd who thinks that the budget should not lean much on the banking system for economic ramifications, said, “The budget should also rationalise the compliance burden for entrepreneurs, individuals and everyone. Reduction of authority in individual (tax) inspector hands, which has been creating tremendous hassles from SMEs to large companies. How we resolve this amicably will be critical," he said.

Chauhan, speaking at special edition of Mint’s Road to Recovery series of live online discussions also said India should take advantage of the opportunities that the country has received from the geo-political goodwill with other nations.

Other panelists included Roopa Kudva, managing director (MD), Omidyar Network India; Aymar De Liedekerke Beaufort, CEO, BNP Paribas India; and Ananth Narayan, associate professor, SP Jain Institute of Management and Research.

“I think that if there is one thing that can be addressed in the banking system, it is governance. If the bank boards can be freed up to be truly independent and I am talking about the public sector banks as well. That would be a huge step forward. A lot of the issues we have talked about have a lot to do with governance and if there is any meaningful announcement on that, it would be a big step," Kudva said.

She thinks that this is the time to look beyond banking which has hogged far too much attention in discussions on the economy than it needs to do today. “If you look at not just the public capital markets but the private capital markets in India – PE, VC, impact investing – has seen more capital come in than the stock markets. These are real drivers of the economy," she reiterated.

Kudva also said that the budget can focus in building resilience among those most affected is continue to build on the one differentiator that India has today: public digital infrastructure.

Others concur. Narayan emphasised that the government should allow the banking system to operate freely, make them accountable, do governance reforms and get the bad assets into one place from where recovery is possible. “Once you do a recapitalisation and reforms, very important, you cannot have the department of financial services getting involved in day-to-day banking activity for 60% of the system. You cannot have chairman (of a bank) earning only 30 lakh per annum for a 40 trillion balance sheet. You need to have the HR policies attuned to the market," he said.

Other key things that budget should focus on, according to Narayan are, focus on jobs and output, glide path to lower revenue deficit, spend money (on infrastructure, healthcare, nutrition, public services), action in sectors which are under stress, government divestment and covid bond to raise money by corporates. “Don’t tax, raise money through covid bond," he said.

Meanwhile, according to Beaufort it is difficult to estimate the 2021 recovery based on past experience as covid has impacted the world in an unprecedented manner. “It is a difficult phase and there can be many risks ahead. I think there will be more positive that will come through. There are many lessons that India can learn from other markets."

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