What do corporates want from the next government?

The new government will be expected to give a major push to "Make in India" as it has the potential to create more jobs and lead to greater in-sourcing of production.

May 17, 2019 09:05 IST India Infoline News Service

Businessman
Traditionally, a major part of the elections tend to get funded by corporates. Obviously corporates expect some benefits in the form of faster pace of reforms, ease of doing business, tax exemptions, etc. As India stands on the threshold of another election outcome on May 23, 2019 corporates already have their wish list ready. Here are 10 things that corporates are expecting from the new government.
 
Bucket List of Indian corporates
  1. Corporate tax rate cut is something companies have been consistently asking for. The corporate rate of tax has been at around 30% for a long time now. In his first budget, Arun Jaitley had promised to cut corporate tax rates to 25% for all Indian companies over a period of 4 years. However, subsequent budgets restricted this benefit only to companies having turnover of up to Rs250cr. A flat rate of 25% income tax would be something that Indian corporates are surely going to expect.
  2. Notification of healthcare as a core infrastructure sector has been a demand for quite some time now. During the last five years, the spending on primary healthcare as percentage of GDP has been diminishing. Industry wants the government to commit at least 3% of GDP as spending on healthcare.
  3. Make in India was a great idea but left a lot on the implementation side. The new government will be expected to give a major push to "Make in India" as it has the potential to create more jobs and lead to greater in-sourcing of production.
  4. Exports need a big push. In the last five years, exports have been virtually flat. While that can be partially blamed on global slowdown in trade, the government is expected to give a more specific push as it gave to sectors like textiles, jewellery, pharma and software in the past. A concerted effort on these lines is what is clearly required.
  5. Corporates have constantly put pressure on the government to adhere to the Fiscal Responsibility Act. In the last two Union Budgets, the government has seen spillage of 20-30bps. This has not gone down well with global investors and the external rating of the rupee. Corporates would prefer a situation where fiscal deficit is reined in.
  6. Skilling and re-skilling has been a major demand of the Indian corporate sector. In fact, industry heads like N R Narayanamurthy have spoken about the inability of our education system to produce industry worthy engineers. Corporate bodies like CII have constantly called for raising the public expenditure on education to 5-6% of GDP to be able to sustain 8% GDP growth.
  7. Standardization of GST rates is one more thing that industry has been demanding. There are still too many applicable rates of GST and that is making the entire administration too complicated. Also, the tax credits are not seamless and that adds to the problems of the industry. Industry has long been demanding a sharp reduction of GST rates and doing away with ITC altogether. That will go a long way in simplifying the GST.
  8. The medium, small and micro enterprises (MSMEs) have not only been main providers of jobs in semi-urban and rural areas but have also been a key support infrastructure for the industry. In the last 3 years, the MSME sector has taken a major hit with demonetization and GST being prime factors. Industry bodies have called for a package of measures including tax breaks, concessional land holidays, long term incentives and easy funding for MSMEs to fill this gap.
  9. While infrastructure has received a boost, the speed still leaves a lot to be desired. Industry wants to address pressing issues like land acquisitions, environmental clearances, timely payment to contractors and simplification of public-private partnerships to facilitate this process.
  10. One of the big concerns of industry has been the continuation of the reforms process. One demand has been to create an independent Department for finance on the lines of the British Chancellor of the Exchequer. That is surely something of a long term goal to work towards. 

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