Pre-Budget Analysis session held at IIM Kozhikode; panelists propose wish-list for Government
Kochi, February 2, 2016:
Focus on agriculture, encourage household savings, abolish income tax,
bring back black money, bring financial transparency, enhance
penetration of medical/Life insurance, explore PPP for healthcare,
indigenization of medical equipment – these were some of the items on
the wish-list of eminent panelists who participated in a pre-budget
analysis session held at the Indian Institute of Management Kozhikode
(IIMK) Kochi Campus.
The
session’s keynote speaker was renowned economist, senior BJP leader and
ex-MP Dr. Subramanian Swamy. The panelists included the likes of Dr. VK
Vijayakumar, an investment strategist with Geojit BNP Paribas; Dr.
Venkatachalam Shunmugam, a Senior Financial Markets and Risk
Professional; Dr. K. Hari Prasad, President, Hospitals Division, Apollo
Hospitals Group; Mr. V George Antony, Managing Director of UAE Exchange,
India and Mr. George Korah, Managing Partner of M/s Korah & Korah
Chartered Accountants, Kochi. Dr. Rudra Sensarma, Associate Professor in
Economics at IIM Kozhikode, moderated the discussion.
Mr.
Subramanian Swamy, at the session, said, “The government has been
taking many positive steps for the Indian economy, since the last two
years. I hope that the Union Budget 2016 is growth-oriented and proves
its commitment to the Indian middle-class by taking steps to alleviate
their concerns.” Dr. Swamy suggests reforms to accelerate export of
agriculture produce. He attributed much of the stress in financial
institutions to loans advanced to large companies. This budget should
focus on measures to improve access of funds by Small and Medium
Enterprises (SMEs). He strongly suggested an enhancement of investments
as a proportion of GDP and at the same time reduction in the capital
used to produce a unit of output. While the former can be achieved by:
(i) improving the household savings rate, which can be achieve by
increasing the term deposit rates as well as by abolishing personal
income tax with a caveat to invest this money in the banking system and
(ii) reduction in lending rates. To address the later, Dr. Swamy
suggested measures to curb corruption and enhance efficiency.
Dr.
Rudra Sensarma said, “The panel discussion brought forth diverse
perspectives on a wide-range of issues. It will be interesting to see
what the Modi government does this year to address the demands of
corporate and the burgeoning Indian middle class.”
The
panel discussion touched on a variety of themes such as the balance
between Startups v/s Large Infrastructure Projects, the ‘Make in India’
initiative, Public Private Partnership as a tool for sustainable growth,
poverty alleviation through financial inclusion, Universal Health
Coverage in India among others. Prof. Rudrasen Sharma provided a brief
overview of how an economy is analyzed from the view point of a macro
economist. There are four macros for economists-(i) GDP growth rate
which currently is at 7.5%, (ii) Inflation which is currently at 7-8%
CPI, (iii) Fiscal deficit which is currently at 3.9% and (iv) Current
account deficit which measures the vulnerability of a economy to
external shock, is estimated to be 1 to 1.5%. However, there are
concerns on the reduction in industrial growth rate, reduction in bank
credit disbursal and stalled economic reforms. The new challenges as per
Prof. Rudra are the same old acronym LPG which now stands for Land
acquisition, Privatization and GST.
Dr.
Vijayakumar suggested fiscal consolidation even if it comes at the cost
of growth being capped at 7-8%. The current slump in growth is
primarily driven by a crash in global commodity prices and this
recession which Dr. Vijaykumar coins as “Made in China” is probably not
going to last long and hence he is optimistic about future growth rate.
Dr. Vijaykumar was of the opinion that a reduction in interest rates at
a time when Fed is thinking of quantitative easing would result in a
capital flight and hence detrimental to Indian economy.
Dr.
Venkatachalam argued that a sub 30 price of crude is not necessarily
good for our economy since about 30% of our export revenues are actually
due to petroleum products. Further, there is a high probability of
capital flight from emerging markets due to a reduction in investments
by sovereign funds origination in oil rich economies. He expects a
easing of FDI norms and processes to attract foreign investments.
Dr
Hariprasad, regretted the neglect of Health sector in all prior union
budgets. He despised the existence of luxury tax on admissions to ICU.
Although medical tourists spend four times the amount normal tourist
pays, their visa process and fees are higher than normal tourists. Apart
from addressing these issues, he also expects a comprehensive PPP
policy in hospitals and incentives to indigenize medical equipments.
Mr.
George Korah, suspects that the high tax rates in GST may adversely
impact the poor. He sought more clarity on the definition of a startup
in this union budget. Mr. George recommended exemption limit on personal
income tax to be increased to Rs 10 lacks per annum and a super rich
tax slab of 40% in addition to the existing three slabs.
Finally,
Prof. Rudra summarized the discussion commenting that the focus of the
current government is more about governance than on big bang policy
reforms. Hence, he expects this budget to be a non event.
About Indian Institute of Management, Kozhikode
Started
in 1997 with its Postgraduate Programme (PGP), the Indian Institute of
Management Kozhikode (IIMK) is on a high growth trajectory today,
offering widest range of academic programmes in the field of management
education. These include Fellow Program in Management, Executive PG
Programs, Management Development Programs and Faculty Development
Programs. IIMK set up a Satellite campus at Infopark, Kochi, in 2013
dedicated to Executive Education.
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