EXPECTATIONS FROM BUDGET 2016-17
Q: What are your major expectations from Finance Minister Arun Jaitley as far as the upcoming Budget 2016-17 is concerned?
H Neotia: Well, we hype up the budget quite a lot but generally, budget is one such occasion when the government has an opportunity to share its vision for the economy.
Broadly, we would like the growth momentum to continue, the reforms to continue, the disinvestment to continue. We have also suggested that the fiscal deficit reduction target, that the Finance Minister had set out from 3.9% to 3% over a period of three years, could be pushed back by 1-1.5 years so that they have a little fiscal headroom to make some additional investment in the infrastructure projects or public projects. It may be appropriate to do under given circumstances because we need to spur growth and the growth is going to happen on the back of public spending as a precursor to private investment which will happen. That's what we have suggested.
Of course, we fully understand that any such move has its own consequences. And our sense is that the consequences of both doing and not doing are there. But I'm sure, economists are better poised to answer this question.
Q: What are your expectations on tax regime, especially corporate tax?
H Neotia: Broadly, the Finance Minister had said that we are going to reduce corporate tax from 30% to 25% and also reduce the allowances and reliefs that were given to various sectors. We have only requested that this roadmap be laid out. We have suggested that as the reduction happens, these allowances should also be withdrawn in tandem so that the corporates can know in advance how things are to unfold and they can plan accordingly.
Q: Are you hopeful that the economy will touch 8% growth in fiscal 2016-17.
H Neotia: Certainly, we are very hopeful. We also feel reasonably confident that we will get very near that figure. We hope we won't be third time unlucky with Monsoon. We had two difficult Monsoons. Hopefully, we are better prepared this time and we'll not have problem with the Monsoon. Some luck, some effort together should get us to near 8%.
MAKE IN INDIA
Q: How do you look at ‘Make in India' project of PM Modi? Is it really working the way he had envisaged it?
H Neotia: It's a one year old concept. We are talking at a time when the world economy has been slowing. We are talking at a time when private investments are yet to start as everyone's balance sheet is stretched and there is overcapacity. But I think the whole idea of ‘Make in India' is very important and very good. We have already seen some of this happening in defence, for instance.
Even in case of Bullet train project, I don't think everything will be made in Japan. Probably, some critical components will be made in Japan but a lot of tracks and everything else will be manufactured in India. So, all of this should result in a lot of robust development of the industrial ecosystem in our country.
That's very important because it helps the migration of farm workers to blue-collared workers before they become white-collar workers. So, I think as an idea, it can't be debated. It's a phenomenal idea. The focus of the government on this is certainly very laudable. That it will take time to bear results is something we have to keep in mind.
BULLET TRAINS IN INDIA
Q: Do you think bringing ‘bullet trains' at this stage is a right area of priority for the government? It has been pointed out that right now we need to focus more on Indian Railways.
H Neotia: See, we must understand that there are many things which are done to position the nation also. First of all, it's an important need to connect our cities more efficiently with faster facilities.
In case of Bullet trains, as you know, there is very low-cost funding from Japan. The money is coming with a 50 year period of re-payment. Would that money be available to India for other railway projects? It's coming primarily because of tie-up for this bullet train project. So, it's a separate source of funding.
The second thing is that it's going to be 7-8 years before it gets operational. India will be a different country in 7-8 years. At that time, we will probably think this is something that should have happened. If you remember when the metro project started in Delhi, it looked like something which was very futuristic. Now it's taken as the best blessing that Delhi has and now almost every city in India is aspiring to be connected by metro.
So, I think these projects are important to position the country, to do the right things, to ultimately say that we are moving in the direction that brings efficiency, speed of connectivity and modern technology. So, I personally believe it's a very right decision.
