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    Posted June 29, 2014 by

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    Budget – “For” the People of “Against” the People?

    The forthcoming budget will decide whether the Indian democracy has voted “for” the common man or “against” the common man. The budget which will be disclosed on the 10th of July will not be about populist measures but will be about striking a balance between the Common Man's interest and Corporate India. With the present economy being in doldrums it is pretty obvious that tough decisions will be taken to stem the economy from deteriorating further. Foreign Direct Investment has always played a vital role in improving the economic situation of the nation.

    FDIs has already been introduced in a couple of sectors such as Indian Railways and Defence sectors. Indian Railways is the largest employer of India and receives massive revenues yet it incurs losses to the tune of Rs 26,000 crores. Having the second largest rail network in the world minting profits should have been inevitable yet it makes losses; the reason being there were no railway hikes in past decade. Thus increase in crude oil prices and inflation were not factored in. Hence, increase in the railway fare hikes were imminent.

    The second sector which received the FDI was the defence sector. With the neighbouring countries of India breaking the Line of Control now and then, FDI in the defence sector was long overdue. 100% introduction of the FDI in the defence sector will boost economic development and is likely to provide employment to 2 million people directly and indirectly. With the introduction of the FDI sector in India, Indian army will be all set to receive advance weaponry which will empower the army for better face-offs against neighbouring army.

    In my opinion, there are three more sectors which should be opened to doors for the FDIs. Those are: Infrastructure sector, Power sector and rolling of the Goods and Service Tax.

    1) Under the UPA regime, infrastructure projects worth Rs 12.24 lakh crore were stalled. This became one of the main reasons why economic growth of India remained stagnant for a long time, in fact touched a decade low. This is one of the main triggers why Indian growth steeped to a new low. If FDIs are introduced in the sector it receive a huge boost. The economic and profitable cycle of the company will start churning creating huge employment and business in the process. The present government has started approving the infrastructure projects on a fast track basis, especially the corridors which connects metro cities with each other.

    2) This sector is the basic necessity of mankind yet it is on the verge of making losses to the tune of Rs 100,000 crore and cities like New Delhi are reeling under the load shedding for 8-10 hours. This sector has been facing fundamental problems such as restraining few companies to enter in this arena. Some of the existing players in this sector have had their hands tied owing to red tapism. Apart from this most of the power companies are facing problems due to high debt margins which is having a negative impact on the operating margins. The government needs to restructure the debt and subsidies so that the operations start running smoothly. Power generation depends a lot on coal. Hence, the government also has to be careful about allocating coal blocks to the power companies and ensure no manipulation or corruption takes place.

    3) The seed of this idea took place well back in 2008-09 but has not yet been implemented. The Indian Corporate sector wants the Government to implement GST. Period!!. Implementation of GST will do away with all the small and indirect taxes which are applied on the goods and services. Additionally, the whole tax regime will be simplified. Implementation of GST will positively affect the GDP of nation to the extent of 1.2%. Right now the challenges which are faced by the GST are linked to Central Tax compensation and authority to collect and levy taxes on certain sections of the economy.

    4) Another think which can impact the Common Man on a very small scale is raising the limit of taxable income from Rs 200,000 to Rs 500,000. This will encourage people to save more and will trigger an infusion of more cash in the system. Additionally this will also encourage people to save via various instruments such as Mutual Funds, Savings Scheme, etc.

    These are the three important sections which the upcoming budget is expected to cover. If these sections are covered in favour of the Indian corporate, then 50% of the Indian economic health will improve.
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