X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Expectations from the Finance Bill 2003-04 - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Feb 12, 2003

    Expectations from the Finance Bill 2003-04

    India is becoming globally competitive and the Indian industry is increasing its exports. What is needed today is a responsive policy regime, which will reduce transaction costs, enhance efficiency, invest in the social sectors and make India more efficient so that productivity increases.

    1.    Investments in the social sector
    It is absolutely essential for the government to provide for primary education and a midday meal programme. There should be an additional allocation of around Rs 40 bn to meet the requirements of the children for education. I would like to suggest a national health insurance programme to be instituted, with 50% of the premium contributed by the GOI. This would require an investment of about Rs 35 bn and this money could be used by the insurance companies for building infrastructure and defraying the health costs of the poorer section. Higher education should be liberalized by granting autonomy to our universities and the IIT's and the IIM's; allowing the setting up of Private Universities; bringing in a more liberal and more cost effective National Student Loan Programme through the banks and providing a line of credit of say, Rs 20 bn through Hudco to Universities and institutions of Higher Education for infrastructure so that better capacity is built up.

    2.    Investments in Judiciary
    The commercial sector is often bogged down by a slow legal process. Our legal system requires investment in greater number of courts, more judges and investment in IT infrastructure. I suggest an increase in the investment by around Rs 25 bn for this purpose.

    3.    Investment in Infrastructure
    The State Road Transport Undertakings (SRTUs) are starved of investment. The GoI should consider granting Rs 20 bn to SRTUs. This, along with a bank borrowing of Rs 20 bn should be used to increase SRTUs fleet by more than 20% in one year and have a significant impact on the automobile industry. The railways should be encouraged to borrow from the financial markets. This would allow pending projects to be completed in the next 3-4 years. I suggest that the GoI should give a grant for this massive investment at Rs 20 bn a year for the next 20 years so that the interest on the borrowing can be serviced and capacity can be created urgently.

    Our major cities suffer from inadequate investment in roads, power distribution, drinking water and sewerage facilities. I suggest an enhanced allocation of around Rs 25 bn as interest subsidy, so that our corporations and municipalities can raise funds from the financial markets and invest in urban infrastructure. At, say, a subsidy of 50% at an interest of 9%, this would create an investment potential of Rs 550 bn. This would have a dramatic impact on the infrastructure in our cities. The interest subsidy could be phased out over 5 years so that the cities stand on their own feet.

    4.    Cost reduction
    I suggest a decrease in the interest paid on the Special Deposit Scheme from 9% to 6.5% keeping in view the lower interest rates in the market. This would save the GOI around Rs 30 bn.

    I suggest a cut of at least Rs 35 bn in the current export promotion schemes in the form of drawback and other schemes. This money could be ploughed back to infrastructure for export. In a number of areas, the drawback is more than the tax cost of the inputs.

    5.    Tax Policy
    I suggest that in indirect taxes, excise duties be reduced to 14%. Further, the special excise duty on automobiles, air-conditioning and polyester filament yarn should be abolished. This big bang approach would make these sectors more competitive and expand the market tremendously. India needs bold reforms at this stage.

    I suggest an increase in the service tax to 14%, fully modvatable, so that the service sector contributes to the exchequer. This would offset some part of the decline in the revenues due to the decline in the excise duties.

    The total tax incidence on manufacture should be reduced from the current levels (excise & state VAT) to say 19-20% over a period of time to make Indian goods more competitive.

    I suggest an input VAT of 12% (being the average rate of state VAT) on all imports, fully modvatable, so that local manufacturing is given a level playing field. This would mean abolition of the Special Additional Duty.

    I also suggest the abolition of the Expenditure Tax on hotels and the Inland Air Travel Tax to make tourism more competitive. Because of such taxes, our tourism sector is not competitive and India has missed on a major engine of growth.

    Overall, these suggestions would lead to enhanced investment in the social sector, reduced transaction costs, and greater efficiency and positively touch the life of every Indian citizen. This would also mean enhanced investment in the future of our children and, hence, in India's future. As our Prime Minister said recently, our children are India's future and we must ensure that they are well fed, well educated and well empowered and we give them a country with good infrastructure, good policies and a globally competitive economy.

    T. V. Mohandas Pai,
    Member of the Board and Chief Financial Officer,
    Infosys Technologies Limited

     

     

    Equitymaster requests your view! Post a comment on "Expectations from the Finance Bill 2003-04 ". Click here!

      
     

    More Views on News

    Insider Leaks Equitymaster Stock Picks (The 5 Minute Wrapup)

    Jul 25, 2017

    Equitymaster HQ has been infiltrated. Valuable stock ideas have been leaked. Who's responsible?

    Raymond and Other 'For Profit' Companies Who Don't Care about Shareholder Returns (The 5 Minute Wrapup)

    May 27, 2017

    What happens when minority shareholders are short-changed in the normal course of business?

    Why Commission Driven Model In Mutual Funds Should Be Eliminated... (Outside View)

    Feb 15, 2017

    PersonalFN believes SEBI has taken a step back-apparently in the admission of it going overboard with the regulations.

    This Book Changed How I Looked at the World of Man and Money (Vivek Kaul's Diary)

    Aug 24, 2016

    And here's your chance to claim a free copy of this book...

    The Developed World is Dying because of Demographics, Debt, and Deflation (Vivek Kaul's Diary)

    Aug 12, 2016

    And Why India's demographic dividend could turn out to be a doubtful debt...

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    MARKET STATS