For many years, it was said that the Indian economy is at the take-off stage. It has, without doubt, finally taken off and has actually gained altitude. It is a fact that the flight path ahead is turbulent and full of challenges. But it is also a matter of great satisfaction that the pilot has an exceptional track record. Here are some suggestions I would like to make for Budget 2004:
* Simplification: The national Budget is not an exercise in managing financial resources alone, but also an important instrument to capture and then deliver the vision of the present day Government. Despite some major initiatives launched in the past, a lot still remains to be done in simplifying the rules that govern the business community. This includes tax rationalisation (most of the exemptions should be done away with), introduction of VAT, reduction in paperwork and automatic investment approvals.
* Widen the tax net: A number of individuals, services and products remain outside the tax net. Far too few carry the burden of taxes for the entire nation. It's time to cast the net deep and wide to bring in many more. This should also include the agricultural sector, especially the rich and affluent farmers. A middle-class urban salaried person is in no better shape to pay taxes than a rich farmer.
* Infrastructure: No amount of investment should be spared in building the infrastructure of the nation. Large-scale investment must flow into building and upgrading airports, ports, roads, power, telecom, health, water and sanitation. Allow liberal participation of private (including foreign) companies, in this infrastructure build-up. Be liberal in extending easy credit and tax holidays and roll out the red carpet to investors both domestic and foreign and turn India into a big construction site for the next five years. Millions of jobs will be created and India will witness a higher GDP growth once the infrastructure is in place.
{{/usCountry}}* Infrastructure: No amount of investment should be spared in building the infrastructure of the nation. Large-scale investment must flow into building and upgrading airports, ports, roads, power, telecom, health, water and sanitation. Allow liberal participation of private (including foreign) companies, in this infrastructure build-up. Be liberal in extending easy credit and tax holidays and roll out the red carpet to investors both domestic and foreign and turn India into a big construction site for the next five years. Millions of jobs will be created and India will witness a higher GDP growth once the infrastructure is in place.
{{/usCountry}}* Agriculture: India has done well to feed a billion and growing population on the back of the Green Revolution. It's time to take the next leap to encourage the industry and the agricultural community to convert the produce into value-added products, taking India from a grain producer to a food supplier to the world. Smaller nations with far less favourable weather conditions have dominated the world food space. India, with a big push, can become a world leader in food products. Incentivise, subsidise investment in the food sector, both in logistics - i.e. the cold chain - as well as manufacture, processing of produce into products. Export of fresh fruits and vegetables holds great promise for the country.
* Human capital: India needs to harness its human capital. As the world is ageing, India's young workforce is coming into full bloom. India has already taken a giant step in the last few years towards becoming a global services hub with its services sector contributing more than 55 per cent towards GDP. Low cost of innovation, R&D and an excellent human capital has helped India win various outsourcing deals from developed economies. Further boost in the form of easy venture capital and tax break is important. Investment in the education sector - both at primary and higher levels - is also essential.
* FDI: India needs to continuously seek higher FDI, especially in capital-intensive areas like infrastructure. The objections to increased FDI need to be dealt with. Wherever the government is convinced that a higher FDI ceiling is inimical to the national interest (although I have failed to identify any), the access to financial markets by way of seeking FIIs' investment over and above the FDI cap should be allowed.
* Telecom: India's telecom infrastructure is already connecting the country through a widespread network offering the lowest tariffs in the world. The economy is getting a tremendous momentum on account of a robust telecom network. Yet, paradoxically, telecom remains one of the most taxed sector. Licence fee, spectrum fee, service tax, import duties and even sales tax demands by the states over and above the service tax are limiting the telecom boom.
* Combine all the levies under a service tax regime. Remove all the other fees levied for operating this vital infrastructure enabling it to spread in every corner of the country.
* Allow higher FDI, or, at least, keep the FII investment out of the FDI ceiling.
* Since most of the equipment is not manufactured in the country, abolish or lower custom duties.
The loss of revenue will be more than offset by the growth in service revenue by way of customer and traffic growth. Mr Chidambaram, as you rise to present the Budget, you'll carry the good wishes of a billion.
(The writer is Bharti Tele-Ventures Ltd chairman and managing director)