‘India should focus on reforms’
India is a consumer-led economy with over two third coming from consumption. The government needs to rationalise taxes in a manner that leaves money in the wallets of the poor. Reducing corporate tax is positive, but in a pandemic with low demand, corporates will not invest which was the objective of lowering corporate taxes. Also, it is naive to expect that reduction in taxes is passed on to the consumer, Crux Management Services president Dr Vikas Singh tells Y V Phani Raj in an interview, besides highlighting what the government should do in these pandemic times. Excerpts-
Project execution
The government must lead the investment cycle but focus on completing the several projects that are underway and not start new ones. Completed projects trigger growth and are long term multiplier. Incomplete projects are just ‘spending’.
Achieving self-reliance
I think Aatmanirbharta needs to be understood in the larger context. No economy can be Aatmanirbhar nor is it desirable, in the way it is being projected. What the PM did not say but meant was that the Indian economy is frail, even fragile and is affected adversely. It is largely, but more importantly disproportionately dependent both on the supply and demand side on global economy. India must focus on creating ‘enabling’ ecosystem, build relevant capacity, invest in technology, value-adding institutions and implement contextual reforms to gain competitive advantage. India needs good governance and judicial reforms. Similarly, we need to bring in labour and land reforms. Let’s focus on the sectors where we have competitive advantages.
MSME support
MSMEs are hit bad. While credit to the MSMEs is a challenge it is not the biggest concern. The average MSME employs no more than two people. This data alone is insightful. The number of ‘forms’ they need to fill, the number of inspectors increase. Then there are several irrelevant compliances. GST framework too has not been supportive of the MSMEs. We need to take a hard look at the sector; and quickly. They create over 75 per cent of the jobs, export about 30 per cent and are often ‘orphaned’. Their contribution is not recognised. Efficient and vibrant MSMEs add immense value to the larger corporates, reduce their cost and make them competitive. They now must actively participate in supporting the MSMEs. It is in their interest.
Union budget
Most budgets go to big government. There is too much focus on allotment and not on impact. Our study highlights a disturbing trend. There is a persistent and negative correlation between GDP growth and the level (expansion of) government spending and worsening when the government is ‘already’ very large.
Healthcare priorities
Our singular focus must be to save lives now. Health, education, and social security are asset of intrinsic value and economic multipliers. Nation must build, own; but outsource service & delivery, and not profit. I do hope the pandemic will provide a valuable lesson to the policymakers. We cannot solve the health problems by building hospitals. We can solve it by investing in a robust and sustainable preventive healthcare. Unfortunately, the nature and character of big government is that they prioritise hospitals over health.
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