Godrej group chairman Adi Godrej is disappointed with government's slow pace of action towards disinvestment. According to him, if government is committed to meeting the fiscal deficit target of 4.1 percent, it can do so by cutting down subsidies and accelerating the pace of disinvestment process.
When asked about his expectations from this Budget, he told CNBC-TV18 that he wishes for a cut in Minimum Alternate Tax (MAT) to boost manufacturing. The Confederation of Indian Industry (CII) has recommended for a similar cut in MAT.
Going ahead, Godrej is hopeful of better gross domestic product (GDP) growth and believes second half will show better results. He sees growth accelerating in both rural and urban India.
Also, Godrej anticipates fast-moving consumer goods (FMCG) goods to grow more in the latter half of the year.
Below is verbatim transcript of the interview:
Q: How can the Union Budget make the year happy? What would you want them to do?
A: It should be a growth-oriented Budget; this will be the first full year Budget presented by the new government.
The government is clearly growth-oriented so besides making the necessary announcements to improve the ease of doing business in the country which is urgently required, strong announcements need to be made to incentivise, manufacturing and gross domestic product (GDP) growth.
One of the major moves that required will be to reduce the rate of MAT. Once there are significant incentives in various fields such as geographical locations, certain industries however companies are not able to take advantage of it and therefore, invest less than they can because the MAT hits them. So a reduction in MAT to 8-10 percent will make a lot of sense.
Q: Many of the moves that we have seen out of the government recently would suggest that the reform process is well and truly under way. Would you still expect then a big bang Budget or do you think it could be just work as normal?
A: No. It should be a very strong growth-oriented Budget. Fiscal deficit clearly needs to be contained. There are two major ways the government can do it. One is because global commodity prices are down especially crude oil, food prices are low and subsidy bills will be much lower in the next financial year.
Secondly, the scope for disinvestment is very large. Whatever incentives are given they can be financed through these two methods so if the fiscal deficit is contained, inflation is contained, Reserve Bank of India (RBI) reduces its interest rates and the Budget is growth-oriented I think it can be a win-win situation, a virtuous cycle created and India can progress well.
We should aim that by 2016-2017 India should be the fastest growing economy in the world. We should overtake the Chinese growth rate and make sure we are ahead of any other major economy in the world.
Q: Government also has to ensure that fiscal deficit comes in even lower that is the Fiscal Responsibility and Budget Management (FRBM) target it dips to 3.6 percent next year. Will that leave enough money on the table along with tax cuts for much infrastructure growth?
A: The subsidy bill comes down dramatically, crude oil prices were down. Many other global commodity prices are down and disinvestment can be very big. If they start the disinvestment process from April onwards a lot of money can be earned through that so the balancing of the budget should not be difficult for this government.
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