'Budget to test govt's pro-growth credentials'

Industry captains want tax sops, shows survey

Captains of India Inc believe this year's Budget will be "very important" in strengthening the pro-growth credentials of the Narendra Modi-led National Democratic Alliance (NDA) government, says a survey.

Broadening the tax base and reducing subsidies would help the government achieve its aim of reducing the fiscal deficit to three per cent by 2017-18, said the respondents, against the backdrop of crude oil prices touching a low of $28 per barrel.


The survey, conducted by Forbes and BMR Advisors, focused on the Budget expectations of chief executives (CEOs) and chief financial officers (CFOs).

"Respondents were unanimous that GDP growth in 2016-17 will be between sevne and eight per cent, which is impressive given the global slowdown, but which is still below the government's target of eight to 8.5 per cent. The emphasis on growth will require sectoral thrust," Forbes said.

Most respondents in the survey, conducted in January 2016 through a portal, said the government must focus on infrastructure, education, skill development and transportation, in that order.

For an overwhelming 88 per cent of the respondents, parliamentary logjam stalling the clearance of key legislation, including the Goods and Services Tax (GST), was a concern. When the respondents were asked to prioritise issues, over a third identified a non-adversarial tax regime as the primary issue, while an equal number identified quick introduction of GST as the most important. The rest batted for reforms in labour laws and curtailment of red tape.

The responses were divided on the measures expected for dealing with long-drawn tax litigation. More than a third of the industry captains expected some measures to be introduced, while a little less than half did not expect any changes. Nearly two-thirds of the respondents favoured tax incentives and weighted deductions to boost projects such as Make in India and Digital India.

Significantly, around 40 per cent of the respondents were unsure whether the measures taken to curtail black money were sufficient. However, the unanimous message from the industry was a demand for tax reforms.
KEY FIGURES
Sectoral composition of respondents (%)

1=5

Manufacturing 23.0

Services 13.5

Energy 7.5

Real estate 6.0

FMCG 6.0

Auto 6.0

Engineering 6.0

IT 6.0

Banking 4.0

PE 4.0

Healthcare 4.0

Others 14.0

Sources: Forbes