The slump in the Indian economy has prompted industry leaders to knock on the doors of the government. Nirmala Sitharaman, the finance minister, has assured them of “quick action" to revive the economy. She has been busy lately meeting representatives from public and private banks, MSMEs and the automobile industry. According to reports, she is slated to meet representatives of capital markets today and of the real estate sector on Sunday. These industry leaders are seeking measures to help them cope with the prevailing situation—such as tax rationalization and easing of harsh penal provisions introduced in the Companies Act for non-compliance with corporate social responsibility (CSR). The auto sector, which is probably facing its worst slowdown in 10 years, wants a stimulus package that includes reduction in GST and relaxation of credit facilities for retailers, according to a recent report.
The industry demand of doing away with the prospect of executives being put behind bars for a CSR failure is fully justified. Businesses, by generating value and providing employment, do their bit for society just by chasing their goal of profits. Direct social work undertaken by a company is an added do-gooder exercise. Penalties for not doing it defy reason. Tax rationalization also seems like a valid demand, given that Indian industry finds it tough turning globally competitive with such a large chunk of earnings given to the exchequer. The auto sector’s woes also need redressal.
However, any stimulus package that requires an extra expenditure by the government would be unrealistic. Unless the Centre’s social sector schemes are scaled back, there just isn’t enough headroom for it. Revenues, remember, have been sluggish, and resources are scarce.