Jyothy Laboratories
The country has been reeling under unsympathetic market conditions. The previous budget was a disappointment. The investment in select sectors was as expected and nothing extraordinary. Given the current economic scenario, we would like to see the Union Budget to come out with strong measures & economy boosters from the Union Budget to restore confidence and spur growth. In this budget we expect GST to be rolled out at the earliest possible. The implementation of nationwide GST will help in simplifying the entire tax structure. It would be a win-win situation for both customers & retailers as GST will help in cutting business costs and generate more revenue. If the GST is delayed, there should be a provision for a uniform VAT to be implemented across the country.
Why India Inc wants GST so badly: FAQ
In the last budget, the then Finance Minister Mr Pranab Mukherjee has increased the excise duty to 12% from 10% resulting in increase in the prices of most of the FMCG products. This was accompanied by an increase in service tax by 200 basis points to 12%. Both these measures had led to lower disposable income in the hands of consumers. Currently Indian economy is going through a tough phase and one of the ways to move the economy out of this situation will be to increase consumption along with spur investment. We suggest that reduction in the excise duty and restoring it back to the last year level of 10% will not only increase consumption especially in the rural India, but will also be a psychological booster in the minds of consumers.
The government has started on a very positive note with a pilot project in 20 districts in 16 states for direct cash transfer of subsidies. The idea of cash transfer can be a game changer for India if it is implemented well. The Finance Minister in the coming budget should announce of direct cash transfer of subsidy at large scale. This will not only stop the leakage will increase consumption thereby help in the economic growth. There is an urgent need to create employment and empower the backward areas of our country that are lagging far behind the cities. The Finance Minister should make a special provision in the budget for employment generation beyond what has already been done so far by various schemes.
One of the main factors for slowdown in the economy is the high interest rates. Lot of companies have been facing the pressure of this and due to this the investment cycle has slowed down. Now the inflation has also moderated even though it is still on the higher side. Some of the steps like reduction in excise duty on important products and implementation of GST would further lower inflation and making a strong case for interest rate reduction. We are hoping that if all things goes as expected there is room for the interest rate reduction by at least 200bps that would help companies reduce their interest burden significantly along with boosting liquidity in the economy.
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