The Forbes India-BMR Advisors Pre-Budget Poll of CEOs and CFOs offers insights into the expectations of India Inc from Union Budget 2016.
With the government working towards achieving double-digit growth and increasing the ease of doing business, the survey captures the mood of industry captains towards these efforts and what needs to be further calibrated and reformed.
Nearly all respondents, polled in January 2016, affirmed that Budget 2016 will be “very-important” in strengthening the pro-growth credentials of the NDA government, which is entering the mid-term of its tenure. Respondents were equally unanimous that GDP growth in FY17 will be between 7 and 8 percent, which is impressive given the global slowdown, but which is still below the government’s target of 8 to 8.5 percent. The emphasis on growth will require sectoral thrust.
Most respondents believe the government must focus on infrastructure, education and skill development, and transportation, in that order.
Parliamentary logjam stalling the clearance of key legislation, including GST, was a concern for 88 percent of respondents. Nearly three-fourths of respondents said a simplified tax regime would be the biggest benefit from the implementation of GST. When the respondents were asked to prioritise issues the government must address, over a third identified a non-adversarial tax regime as the primary issue, while another third identified quick introduction of GST as the most important; the rest prioritised reform in labour laws and curtailment of red-tapism.
The response was divided on measures expected for dealing with long-drawn tax litigations: More than a third expected some measures to be introduced, while a little less than half did not expect any changes.
Nearly two-thirds of respondents favoured tax incentives and weighted deductions to boost government projects such as Make in India and Digital India.
Against the backdrop of crude oil prices touching a low of $28 a barrel, the survey respondents believed that broadening the tax base and reducing subsidies would help the government achieve its aim of reducing the fiscal deficit to 3 percent by 2017-18.
Given a choice between professionalising PSUs as opposed to the conventional divestment approach, nearly half the respondents favoured a strategic divestment approach, to the extent of dropping the corporations’ PSU status; only a fourth preferred divestment with retention of PSU status.
The government has introduced several initiatives to keep its promise of curtailing black money. Around 40 percent of respondents are unsure whether these measures are sufficient, with a third being convinced of the initiatives and another third remaining unconvinced.
The unanimous message from the C-Suite of India Inc, however, is a demand for tax reforms.
The article was first published in Forbes India.