Firms Aiming at Ease of Doing Business in Pre-Budget Meeting
- BY Jaspreet Kaur
Feature Writer, BusinessEx
- Dec 20,2019
- 18 Mins Read
In a bid to support the cash-crunched economy, a meeting between corporate leaders and the Finance Minister, Nirmala Sitharaman has taken place recently. India Inc. leaders, including Chairman of Bharti Enterprises, Sunil Bharti Mittal, President of CII, Vikram Kirloskar and President of Assocham, Balkrishan Goenka, asked the government to take measures to augment ease of doing business to “create more freedom for the industry to perform,” Press Trust of India reported.
In the pre-Budget meeting with the Finance Minister, the Indian industrialists raised various issues, encompassing some income tax issues curbing the path of Mergers and Acquisitions (M&A) or slowing down the process.
What Industry Leaders Said in Pre-Budget Meeting
“I have come here today to discuss only one thing — make doing business easy in the country. That was what my thrust was,” Mittal told reporters following the meeting.
He had also given some advice about demergers, M&A, certain parts of IT, NCLT process that were affecting M&A in the country and slowing them down.
“The idea is to create more freedom for the industry, for them to perform. I think the Finance Minister received them very well with her associates and secretaries. What we look forward to this Budget is that they unleash the energy of the Indian entrepreneurs to do more,” Mr. Mittal said.
In the meet, similar concerns were raised by Sanjay Goenka, Chairman of RP-Sanjiv Goenka Group. He said that to bring “ease of doing business, States have to play a crucial part and last-mile problems should be resolved.
“The discussions centered more around what can be done to stimulate growth, to facilitate the ease of doing business, ” Goenka said to reporters following the meeting.
“I think the Finance Minister and her team were extremely open to all suggestions,” Mr. Goenka said.
“It is the first time I have seen this kind of response from the government,” he added.
Talking about the Indian economy’s slowdown and its effects on capital utilization, Goenka said, “We all recognized that it is going to take a couple of quarters, three quarters, four quarters before this capacity gets utilized. We understand that, and that is the reality of the situation.”
Aiming at Reducing Income Tax
In the meet, Sandip Somany, President at FICCI, said that the industry experts have advised at reducing income tax, reported PTI.
“The industry representatives suggested the FM to reduce I-T for those who earn less than INR 20 lakh a year so that there is more disposable income in the hands of consumers and the economic benefits,” Somany said in an interview with the cited media agency.
“We have also asked the FM to take measures to reduce EMIs, which can happen only if the banks reduce the interest rates on loans,” Somany added.
Talking on banks’ reduction of 45 bps in rates in contrast to RBI’s reduction by 135 bps, Somany said, “If there can be more transmission of RBI’s rate cut to consumers, then the EMIs will reduce and it will also improve consumption.”
After the meeting, the Finance Minister, Nirmala Sitharaman said, “During the interactive session, prominent industrialists spoke about improving regulatory environment to safeguard investments through the ease of doing business, increasing export competitiveness, reviving private investment and kick-starting growth measures.”
Industrialists also suggested ways to boost the rural economy, especially to increase consumption, Sitharaman added.
As time is passing by, the economic condition of the country is worsening. According to the online platform, Trading Economics, the Indian economy expanded 4.5 percent year-on-year in the third quarter of 2019, below 5 percent in the previous period and market expectations of 4.7 percent.
Contrasting the expenditure side of Quarter 3 (Q3) with Quarter 2 (Q3), gross fixed capital formation slowed sharply (1 per cent compared to 4 per cent in Q2) and accounted for 31.3 per cent of total GDP (32.5 per cent in Q2). Also, inventories went down 0.8 per cent and exports shrank 0.4 per cent, following a 5.7 per cent rise in Q2. External sales accounted for 20.2 per cent of the GDP, slightly below 20.6 per cent in Q2. Imports declined at a faster 6.9 per cent. On the other hand, private consumption, the main driver of growth rose 5.1 percent, higher than 3.1 percent in Q2 and accounted for 56.3 percent of the GDP, compared to 55.1 percent in Q2.
According to the report, the Indian economy extended at the weakest pace since the primary three months of 2013, majorly owing to a reduction in factory output and exports and a decrease in investment.
The Indian government has proclaimed various measures to increase growth encompassing a decrease in corporate taxes, bank recapitalization, and concession on vehicle procurement.
The report also states that GDP Annual Growth Rate in India averaged 6.18 per cent from 1951 until 2019, reaching an all-time high of 11.40 per cent in the first quarter of 2010.
GDP Annual Growth Rate is anticipated to be 5 per cent by the cession of the quarter, as per Trading Economic Global Macro Models and Analysts.
Assessing twelve months' period, it is calibrated that GDP Annual Growth Rate in the country to stand at 6.20 per cent. In the offing, the country’s India GDP Annual Growth Rate is estimated to be nearly 5.50 per cent in the next year (2020).
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