Marico Ltd chairman and managing director and former Ficci president Harsh Mariwala feels the Budget would do well to provide incentives to some avenues for investment so that surplus monies are not increasingly invested in gold, leading to a further ballooning of the current account deficit (CAD).
In a pre-Budget interview with Firstpost, Mariwala said Finance Minister P Chidambaram had already started talking about the need to control gold imports to keep the CAD down.
“One way could be to increase the import duty, but that could also increase smuggling. The other way could be to provide an impetus to other investment opportunities like the capital market, which could make people shift from gold to other areas,” Mariwala said, pointing out that gold was the second largest item of imports and not really productive.
Giving a firm thumbs-up to Chidambaram for the steps he has taken since coming back as finance minister, Mariwala said his priority would be to fix the two deficits – the fiscal deficit and CAD. He said he was pleased that the FM had been making several important statements before the Budget, and that the mystique of keeping secrets in the Budget was being removed to a large extent.
“This is a very good sign. The Budget should be far more open,” he said.
On the possibility of new taxes, Mariwala said the FM would not be able to afford to give negative shocks. He said even if the minister wanted to introduce a tax for the rich or an inheritance tax, he would, perhaps, do so at a low rate to give a general step in that direction, rather than do something dramatic or aggressive.
Saying that the UID scheme would help curb wastages in welfare schemes, Mariwala said he hoped the FM would tighten spending and make the spends effective and reduce irrelevant fixed overheads so that the government’s need to raise money would be lower.
On subsidies, he said the roadmap for reducing diesel subsidies had already been announced. The Budget should come up with a combination of reduction in subsidies and impact planning so that intended beneficiaries of welfare schemes got the allocated funds.
Mariwala said he did not believe that the FM would keep the next year’s general elections in mind while presenting the Budget. He said the FM could, in fact, go with the view that it would be better for the government if it could make a big impact by making the right moves to get the economy back on track.
“If you see the state level, governments which have performed have been voted back to power,” he said, adding that while there would be greater restrictions on the FM as the elections drew closer, at this stage he had all the freedom and he would “use the opportunity to do whatever he can”.