New Delhi: As Finance Minister Arun Jaitley gets ready to give final touches to Budget 2015, India Inc is hoping for bolder reform action to revive growth but can the finance minister manage to put up a fine balancing act? Speaking to CNBC-TV18's Shereen Bhan, CII president Ajay Shriram said the focus should be on kickstarting the investment cycle.
"India today requires an accelerated rate of economic growth because we require jobs. We require 10 million jobs a year for the next 10 years," the CII President said.
Below is the transcript of the interview on CNBC-TV18.
Shereen Bhan: What should be the Budget's focus area?
Ajay Shriram: India today requires an accelerated rate of economic growth because we require jobs. We require 10 million jobs a year for the next 10 years. How do we kickstart investments, that is the question and with that in mind we have talked about giving incentives or making it easier for investments to happen so that it becomes viable.
So one side is the investment, but the other side we have also said one must move towards increasing consumption and savings and for that we have recommended instead of Rs 2.5 lakh as cut-off for income tax, please raise that. Please give other benefits to individuals who can have savings or have money for investments.
So we have to look at both sides but the objective is in the national interest of what is good for the growth of the economy so that we can provide jobs for our 10 million jobs a year for the next ten years and we have to give that a kickstart.
Shereen Bhan: Year after year, we have discussed the possibility of minimum alternate tax (MAT) being done away or at least the MAT rate being reduced. This time around it seems like there is a move to at least look at the possibility of lowering the MAT rates specifically for the manufacturing sector and maybe even for large big ticket infrastructure projects like the smart city initiative so on an so forth. Do you believe that on MAT this year perhaps we could finally see some relief? It is part of your recommendations.
Ajay Shriram: There is a logic in it. That is the reason why we have recommended that. In 2007 when MAT was implemented it was seven and half percent. By last year it has come to 18.5 per cent and this is in the overall package of the government's aggressive push for the Make in India campaign. Ultimately to Make in India and get manufacturing to 25 percent of gross domestic product (GDP) from about 15 per cent of GDP we have to do something different.
It is very simple, there is a phrase which makes a lot of sense. If you always do what you always did you will always get what you always got. So we have to make a change and the change is very important right now because the kickstart to the economy with the vision of the Prime Minister, the finance minister and the entire team we have to do something different, we have to kickstart the economy faster, MAT, getting into NIMs, DMIC. There are so many areas where work needs to be done but we have to do that much more aggressively to get manufacturing really taking off.
Shereen Bhan: Do you expect bold reform on subsidy rationalisation?
Ajay Shriram: Subsidy rationalisation to get it to who it is supposed to go to is a direction which is a win-win for everyone because no one is losing out. A policy decision what are mentioned earlier or giving it to only those below the poverty line, that is a policy decision, but to make it targeted for instance I was told the total subsidy today on kerosene is about Rs 30,000 crore.
It is estimated, I am saying as only an estimate, that the loss is almost 40-50 percent because of theft and leakage etc. Can that come on to the Aadhaar card or direct transfer like they have done for LPG. That will automatically reduce the government's spending, give it to the people who deserve it and the government saves money.
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