The Economic Times
Talking to ET Now, Arun Kumar , Chairman & CEO, KPMG India , says why tinker with long-term capital gains tax especially at a time when foreign portfolio investors have many other places to look at including the United States where the stock markets are doing well and where a tax reform is underway.
This time the government will be required to do a tight rope walk between not loosening their grip on the fisc much but on the other hand the need to really boost the economy without any wasteful expenditure. Do you think they would be able to manage and strike a balance between the two?
base has widened by 1.8 million accounts over the natural growth rate. The GST net has now embraced 50% more tax payers than before. So, having a wider tax base and more compliance, starting from November 2016 and picking up, GST provides a pretty good foundation for increased revenues that will definitely help the fiscal side. In addition, the privatisation did well last year but not as well as was expected to. But more privatisation is planned this year including Air India as was mentioned in The Economic Survey. These are the elements that I feel will help on the positive side of the fiscal equation.
The question is even economic data coming out from The Economic Survey seemed to suggest that the rural economy is quite sluggish and weak and the expectations are that this is actually going to be a rural budget because that is one part of the economy which actually requires government’s specific attention. What specific areas do you think the government would particularly focus on?
The Economic Survey did point to the fact that agriculture is growing only 2.1% when we expect the overall economy to grow between 7% and 7.5%. That is a very major issue especially since the lot of India lives still in the rural areas. We would expect to see in the budget some policy initiatives that would deal with small farms, maybe integration of farms as well as address initiatives to improve the transportation from the farm to the table. For example, in the area of logistics and so forth. We would expect to see a fair amount of focus on the agriculture sector.
One of our exclusive stories is that the government is definitely going to make changes in standard deductions in order to put more money into the hand of salaried people. What are your thoughts on this particular issue? Do you think this will be tinkered with and if yes, how beneficial can it be?
Increasing the slabs or increasing the levels for standard deductions would be very valuable, putting more money in the pockets of salaried tax payers especially would be very good for the economy at a time that the economy is going to be driven quite a bit by consumer spending. In my view that would be very beneficial and would be welcome.