New Delhi, July 6 (IANS) Affordable housing sector got a shot in the arm in the Union Budget presented on Friday with Central government paving the way for an enhanced interest deduction of up to Rs 3.5 lakh.

Union Finance Minister Nirmala Sitharaman presenting the Budget in the Parliament proposed to allow for an additional deduction of up to Rs 1.5 lakh for interest paid on loans borrowed up to 31 March 2020. This will be applicable for purchasing an affordable house valued up to Rs 45 lakh.

Till now, interest paid on housing loans is allowed as a deduction to the extent of Rs 2 lakh in respect of self-occupied property. The hike of Rs 1.5 lakh is over and above the already existing limit of Rs 2 lakh.

The union government has already provided a tax holiday on profits earned by developers of affordable housing in order to achieve the goal of 'Housing for All'.

In addition, the Budget also announced a proposal to bring about a model tenancy law that will do away with several prevalent archaic tenancy laws in order to redefine the relationship between the lesser and the lessee.

The Confederation of Real Estate Developers of India (CREDAI) termed the impetus given to the real estate sector in the budget as 'heartening'.

"The Budget has addressed our long-standing proposal to reform archaic rental laws and promote public housing on government land figure have been among the immediate policy agenda outlined. With regulation of Housing Finance Companies returned from the National Housing Board to the Reserve Bank of India, we hope that the latter would bring about much needed reforms for financing of real estate sector such as land, giving priority sector status to housing finance and lower cost of funding," said Manoj Gaur, Chairman, Affordable Housing Committee, CREDAI.

Further, in order to align the definition of affordable housing in the Income Tax Act with the Goods and Services Tax Act, the budget has proposed to increase the limit of carpet area from 30 sqm to 60 sqm in metropolitan regions. This limit will be increased from 60 sqm to 90 sqm in non-metropolitan regions.

"The budget reinforces affordable housing as one of the key priority areas of the government. We identify ourselves as a key partner in such initiatives along with other important schemes such as clean India which addresses the crucial issue of open defecation, especially in rural areas, as it will lay a strong foundation for a cleaner and healthier India," said Rajesh Mehra, Director & Promoter, Jaquar Group.

The ASSOCHAM termed the budget as consistent in its approach towards affordable housing with more focus on increasing the carpet area, re-defining income criteria and giving infrastructure status under the Pradhan Mantri Awas Yojana.

"With its commitment towards affordable housing, the government aims to increase the number of beneficiaries in terms of the credit-linked subsidy scheme," said Pradeep Aggarwal, Chairman, ASSOCHAM National Council on Real Estate, Housing and Urban Development.

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New Delhi, July 4 (IANS) Finance minister Nirmala Sitharaman, who will present her maiden Budget, is likely to fulfil many of the promises made by the Prime Minister during his toiling poll campaign culminating in the historic mandate.

Taking forward the setting up of a separate ministry for fisheries (one of the promises made by Modi), the Budget will have schemes for ushering in a "blue revolution". The BJP's promise of allocation of Rs 10,000 crore for providing infrastructure like storage and marketing for small fishermen is likely to be fulfilled.

Giving incentives to agriculture exports, launching of national vegetable oil mission, improving flagship crop insurance scheme, massive promotion of Israeli drip irrigation technique and directing major chunk of MNREGA spending on water-related projects are some of the other proposals the government has lined up in the Budget, said sources.

The farmers will be looked after well in the Budget as the government will seek to ensure they get better prices for their produce. The focus of Modi government will be on water (as underlined in the setting up of a separate Jal Shakti ministry) as the Budget is likely to include a proposal to spend 75 per cent of rural employment guarantee scheme MNREGA allocation on water-related projects as has been the focus in the last five years.

The national mission on vegetable oil is in line with the efforts to curb huge imports to encourage domestic industry and oil seed growers.

The focus on drip irrigation along with fertigation in the Budget will be the outcome of Prime Minister Modi's close friendship with his Israeli counterpart Benjamin Netanyahu.

Pradhan Mantri Fasal Biima Yojana (Prime Minister's Crop Insurance) scheme will be improved with a likely allocation of Rs 14,000 crore. Proposals for having 10,000 new Farm Producer Organizations (FPOs), a comprehensive plan to bring two crore hectares under micro-irrigation and new agriculture warehouses along national highways are also on the cards, said sources.

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New Delhi, July 4 (IANS) The government may continue to lend its support to banks by infusing around Rs 40,000 crore into pubic sector banks (PSBs) in FY20 as part of the exercise to strengthen them and help them push up lending.

The fund infusion is likely to be proposed as part of budget proposals for FY20 to be announced on July 5. The Interim Budget presented in February did not provide any allocation for recapitalisation.

Sources said that the capital infusion in PSBs was important to boost private investment that has slowed down and was pushing down the country's growth. It will also help banks to maintain their regulatory norms.

In FY19, the Centre had pumped in Rs 1.6 lakh crore into PSBs, helping some lenders come out of the PCA framework.

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New Delhi, July 4 (IANS) Privatisation-bound national carrier Air India might not get financial support from the full Budget 2019-20.

According to highly-placed sources, the airline, which got a meagre Rs 100,000 as extra budgetary support in the interim budget, might not even land a spot in the expenditure document this time.

However, in the interim budget, the government had allocated Rs 2,600 crore to Air India Asset Holding Ltd, a SPV which is being used to park the majority of over Rs 55,000 crore debt of the airline.

On June 27, the Central government decided to restart the divestment process of national passenger carrier and its five subsidiaries.

As per the Ministry of Civil Aviation, continued support from the government had resulted in improvement of financial and operational performance of the airline.

The development comes after the Air India Specific Alternative Mechanism (AISAM), in a meeting last year, decided against divestment at that time due to issues like volatile crude oil prices and adverse fluctuations in exchange rates.

"However, continued support from the government had resulted in improvement of financial and operational performance of Air India. As per the recommendations of AISAM, the government will now go ahead with the process of disinvestment of the company," the Ministry said in a statement.

In December last year, the Centre had prepared a revival plan for the airline, comprising a comprehensive financial package and sale of non-core real estate assets.

The plan comprised of several major elements such as a comprehensive financial package including transferring of non-core debt and assets to a SPV (special purpose vehicle) and strategic disinvestment of subsidiaries.

Besides, the Centre infused Rs 2,345 crore into the financially strained national carrier under its 'Turn Around Plan'.

In addition, an inter-ministerial panel has decided to divest the government's stake in AIATSL.

The revival plan had come after government's efforts to off-load a majority stake in the airline failed. On May 31, 2018, "no response" was received by the government.

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New Delhi, July 4 (IANS) Electric vehicle manufacturing is likely to get a boost from the full Budget 2019-20.

According to highly-placed sources, tax incentives and other sops might be given to the industry for manufacture of EVs in the Budget 2019-20 which will be presented to the Parliament on Friday.

In 2015, the Faster Adoption and Manufacturing of Electric vehicles (FAME) scheme was launched with an outlay of Rs 795 crore. The initial outlay was for a period of two years, commencing from April 1, 2015, but was extended up to March 31, 2019.

Recently, FAME India Phase II was launched, with effect from April 1, 2019, with a total outlay of Rs 10,000 crore over the period of three years. Emphasis in this phase is on electrification of public transportation.

Even the Economic Survey which was presented on Thursday highligthed the importance of the segment. It recommended that the government frame appropriate policy measures to lower the costs involved in their overall lifetime ownership.

As per the survey, EVs hold enormous potential not only "because it is environment-friendly but also because India can emerge as a hub of manufacturing" which will generate employment and growth opportunities.

"It may not be unrealistic to visualise one of the Indian cities emerging as the Detroit of EVs in the future," said the Survey tabled in Parliament by Finance Minister Nirmala Sitharaman on Thursday.

"Appropriate policy measures are needed to lower the overall lifetime ownership costs of EVs and make them an attractive alternative to conventional vehicles for all consumers."

Currently, the market share of electric cars in India is only 0.06 per cent, whereas it is 2 per cent in China and 39 per cent in Norway.

Globally, the sales of electric cars have been rising at a fast pace from just over 2,000 units being sold in 2008 to over 10 lakh in 2017.

The survey also highlighted that the market share of EVs increases with higher availability of charging infrastructure.

"It, therefore, becomes important that adequate charging stations are made available throughout the road networks," it said.

"In India, the limited availability of charging infrastructure seems to be a major impediment to increased adoption of EVs," it added.

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By Sunjay Kapur

Automobile sales have plunged by 17.07 per cent during April 2019 - an all-time low in the last eight years since 2011. Since the industry has a multiplier effect, the meltdown has significantly affected original equipment manufacturers (OEMs), auto ancillary and metal sectors.

The milieu of uncertainty against the high-voltage general elections, prohibitive rates of insurance and implementation of 28 per cent GST has taken a toll on the industry with almost every segment struggling to achieve their targets.

In April-May 2019, production figures stood at a total of 4,879,375 units, including passenger and commercial vehicles, three-wheelers, two-wheelers and quadricycles, marking a significant drop of 9.31 per cent over the same period last year.

Sale figures for 2018-19 too, do not paint a happy picture with almost all the segments being in the red. Passenger vehicle sales fell by 18.82 per cent in April-May 2019 while the drop in the commercial vehicle segment is 8.05 per cent. May was the worst month in 18 years as it witnessed a fall of 20.6 per cent in passenger car segment year-on-year.
Three-wheeler sales declined by 6.56 per cent, while the corresponding two-wheeler figure comes as a blow - a steep negative of 11.68 per cent in April-May 2019.

Automobile exports, too dwindled by 0.27 per cent. Recent data from the Federation of Automobile Dealers Associations (FADA) reveals that there have been a staggering 271 vehicle dealership closures in the last months. The cumulative result is a huge inventory pileup.

The coming year is not going to be any easier. 2020 is earmarked for the transition to the new BS-VI emission norms while pulling the plug on old BS-IV registrations from April 1, 2020. Coupled with the current scenario of demand slowdown, liquidity crunch, troubled financing with non-banking finance companies (NBFCs) and BS-VI expectations, manufacturers have stopped production.

Under the prevalent tax regime, automobiles attract peak GST rates of 28 per cent with an additional cess ranging across 1 to 15 per cent depending upon specifications and make of engine. Excise duties vary between 12.5 to 27 per cent; and sometimes even as high as 30 per cent. Add the 43 per cent. on dealer margins and you have the vital reason behind this unprecedented stagnation.

The rationalisation of GST to a uniform base rate of 18 per cent across all categories of vehicles and automotive components will play a huge role in lowering prices and consequently stimulating demand.

Envisaging a new India with electric and hybrid vehicles is not enough. To bring about this change, the government must introduce an incentivised tax policy and roadmap to spur investment and interest in electric vehicles (EVs). The current rates of custom duties for steel and aluminium alloys at 15 per cent and 10 per cent, respectively, should give way to the lowest tax bracket of 5 per cent, especially for electric cars. Reduction of import duties and a comprehensive strategy to concurrently develop transport infrastructure and a highway network is crucial for the EV dream to truly kick off.

These factors cannot work in isolation but must be supported by a comprehensive scrappage policy for old vehicles and tax reforms for encouraging R&D. The current 150 per cent weighted tax deduction was brought down from the initial 200 per cent and is scheduled to be scrapped from April 2020.

The importance of R&D cannot be undermined as technology will be the driver of growth in the next few years. I believe that the retention of weighted tax of at least 150 per cent or ideally 200 per cent on R&D spends will be the boost that the industry is looking for.

As we stand today, the market shows no signs of recovery. The automobile industry is hoping for comprehensive remedial measures from the new government to bring out of stupor a sector that employs almost 37 million people and has contributed 7.5 per cent to the nation's GDP.

(Sunjay Kapur is the CEO of SONA Group and Managing Director of SONA BLW Precision Forgings Ltd. The views expressed are personal)

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New Delhi, July 3 (IANS) As Finance Minister Nirmala Sitharaman presents her first Union Budget on Friday, telecom operators want the government to provide tax exemptions and broadband service providers have recommended greater emphasis on fiberisation among others.

According to the Cellular Operators Association of India (COAI), higher customs duty on the telecom equipment is disrupting the cost effectiveness of the telecom operators.

The industry body, in its budget recommendation, said: "Exemption from the levy of BCD (basic customs duty) should be granted on the telecom equipment", adding that "exemption from IGST (Integrated Goods and Services Tax) may also be granted for hassle-free importation of such vessels".

It has also sought exemption from GST on spectrum payment, license fees and spectrum usage charge.

"Given the huge burden of taxes and regulatory levies on telecom operators and considering the fragile state of their finances, special benefit should be provided to telecom operators in GST by way of exemption on regulatory payments of LF, SUC and spectrum assigned under auction," it said.

The COAI also asked the government to exempt operators from levy of service tax on Right of Way permission granted by the Centre, state governments and the development authorities.

The Broadband India Forum (BIF) also said that for achieving the National Digital Communications Policy's (NDCP) target of $100 billion investment in the India's telecom and digital space, the businesses need to be made more profitable and attractive for which high levies and spectrum charges have to be reduced.

"Exorbitant spectrum prices, very heavy levies and charges and some onerous licence conditions need to be corrected on priority to boost investments," it said.

It also suggested an infrastructure-push in the the form of higher fiberisation for the efficient internet coverage and success of the upcoming 5G network.

Further, the introduction of a number of new small-time players in WiFi provisioning space (PDOs) will be able to boost the broadband availability to the masses, the BIF said in its budget recommendation.

It also said that the potential of satellite communications should be tapped by optimisation of policy and regulatory framework.

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By S. Ranganathan

It is widely expected that the Union Budget will have a slew of measures that, if played out in full, will support growth both in the short-term and in the long-term. It may be noted that economic expansion during last fiscal has slowed down to a five-year low of 6.8 per cent, with growth for the running fiscal (2019-20) pared down substantially by the Reserve Bank of India.

We, therefore, believe that the Finance Minister will seize upon this opportunity to reboot economic growth and the Budget 2019-20 will, and can, act as a catalyst for growth for a slowing economy, given the strong political mandate for the government that ensures stability in polices which is a necessary condition to spur economic growth.

The Budget may be personally important for the Finance Minister since it gives her a unique opportunity to prove her mettle as she has stepped into the shoes of her more illustrious predecessors, but she has a daunting task of bringing back growth while maintaining fiscal discipline.

While growth remains the dominant theme, options to raise resources to fund a slew of supporting programmes and welfare schemes that were already announced by the government, remains a key issue. With the government crossing the half-way mark of the budgeted fiscal deficit through the first two months of this fiscal, the Finance Minister will have to look for other means to raise resources.

There is also a fair chance that the private sector may find it difficult to raise funds in the wake of increased government borrowing and a tight liquidity scenario in the economy set off by the corporates deleveraging their balance sheets following the IL&FS crisis.

It is all the more important to increase household financial savings which will improve the liquidity situation in the economy without building price pressures. At the same time there is an express need to improve the Tax-to-GDP ratio without burdening tax payers with additional levies. For this to happen, tax officials should step up vigil against tax evasion at all levels and bring more people under the tax net.

Going by the government's vision of doubling farm income, we are of the view that the Budget will have a rural bias. We can also see the government giving thrust to rural infrastructure and affordable housing. The prolonged slowdown witnessed in the automobile sector could probably nudge the FM to introduce a "scrappage" policy for old vehicles as this may act as a catalyst to commercial vehicle producers and also to NBFCs who finance these vehicles.

We also expect the Finance Minister to clearly spell out the divestment policies, including those of strategic public sector undertaking (PSU) divestiture and un-utilised land assets with state-owned undertakings.

The Budget can also lay down a clear road map for recapitalisation of state-owned banks and also provide them with growth capital.

The Ayushman Bharat Healthcare Scheme is expected to get more clarity in the Budget. Markets would be keenly looking for innovative funding schemes to carry out the massive infrastructure spend needed to revive a slowing economy and this could be a big test for the Finance Minister.

Capital markets are also hopeful of the Budget doing away with the incidence of double taxation so as to lift a sagging primary market which is so vital for corporates to raise equity capital.

(S. Ranganathan is the Head of Research, LKP Securities. The views expressed are personal)

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By Anjana Das

New Delhi, July 3 (IANS) A tax on properties, jewellery, shares, fixed deposits (FDs), cash in bank inherited is likely in the upcoming Union Budget, official sources here said on Wednesdsay.

The sources explained that the move would not be to raise resources but to demonstrate the government's pro-poor orientation, discourage wealth accumulation and fight black money.

Globally, the UK is an example where such a tax is levied.

While experts have said this tax will harm a slowing economy needing capital, the Finance Ministry is likely to present it as a "bold and inclusive move" to deny the rich more wealth via inheritance which would create further distortion in wealth distribution in the country.

The Finance Ministry, however, does not think on these lines. Officials said the time is right for levying such a tax, which people can avoid by giving donations to government-approved institutions and trusts for public welfare.

The sources also said the government is looking at re-introducing an estate tax on inherited property and illiquid assets after 35 years. In 2005, the then Finance Minister P. Chidambaram had introduced a banking cash transaction tax (BCTT) of 0.1 per cent on cash withdrawals above Rs 10,000 -- a limit which was later raised to Rs 25,000.

The tax was, however, scrapped in 2009 owing to low collection on this count.

In many countries, the heir must pay Inheritance Tax for inheriting any property or assets from parents, grandparents or any other relative or friend.

Currently, the Income tax Act, 1961, clearly excludes a case of transfer under a will or inheritance from the purview of gift tax. Accordingly, Indian law does not provide for taxation of property received by way of inheritance.

The Inheritance or Estate Tax was abolished with effect from 1985. Once a property is inherited, the owner can choose to sell it subsequently. This way, the capital gain or loss too, will accrue to the legal heir.

Further, the holding period of ownership will determine whether capital gains will apply under long-term capital gains tax or short-term capital gains tax.

Tax experts are unanimous about the negative impact of such a tax.

"Inheritance tax is called an estate duty. It was just a like a wealth tax. All assets of a father to his children minus liablities could be included," tax expert Ved Jain told IANS.

"When the new tax is introduced in order to avoid repurcurssions, government can fix a tax of 5 or 10 per cent on inheritance assets of more than Rs 10 crore . It may not be a big amount, but in India how many people have Rs 10 crore," he said.

"Not much funds can be raised through such a tax. It is not imposed to raise revenues, it is a thought process -- socialist or communist or capitalist. It is not a revenue generating measure. It is a socialist thought. This will harm the economy," Jain added.

According to the expert, "globally, a developed country like US imposes such taxes and there are there no issues. But India is a developing country, needs capital formation. It will seriously affect the industry.

"The major challenge for inheritance tax is the liquidity to pay the tax. If one has shares worth Rs 50,000 crore in a company, if you pay Rs 5,000 crore tax, the person has to sell the shares to pay tax.

"A property of Rs 100 crore will be needed to pay Rs 10 crore tax...where will one pay from?" asks Jain.

(Anjana Das can be reached at anjana.d@ians.in)

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The Kotak Securities report said that the scope of lowering tax rates is also thin owing to the government's challenged fiscal position arising from large tax slippages in 2018-19, which will be at the centre of investor focus.

The brokrage house said that the government will have to implement difficult reforms in the budget to increase India's investment rate via improving its ease of doing business rankings and reducing its role in business.

"In order to present a credible budget, the government will need to revisit tax revenue assumptions in the the FY2020 interim budget. We assume that the government will base the FY2020 tax revenue targets on actual FY2019 collections," the Kotak Securities reports said.

Government's focus on increasing the rural spending will be positive for FMCG (fast moving consumer goods) companies as rural consumption is an important growth driver for earnings of India Inc. Moderate hike in cigarette taxation could be positive for ITC as it should be able to pass on the hike, the report said.

Kotak also said it expects higher allocation for spending on railways, highways and urban infrastructure, while on banking, it said impetus to the affordable housing segment by way of taxation on housing projects will be positive for NBFCs (non-banking finance companies) exposed to the sector.

On the stressed automobile sector, Kotak said: "We expect the government to rationalise GST to 18 percent for few automobile segments, as lower cost of vehicles would improve the affordability of consumers in this phase of a slowdown."

Export duty on iron ore may be reduced to 0 for grades between 58-62 per cent, Kotak also said in its budget-related expectations.

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According to the budget recommendations by the Association of Mutual Funds in India, the government should introduce DLSS on the lines of Equity Linked Savings Scheme, (ELSS) to deepen the Indian Bond Market.

"The government's plans to significantly increase investment in the infrastructure space will require massive funding and the banks are not suited or equipped to fund such investments," AMFI said.

"If large borrowers are pushed to raise funds from the market, it will increase issuance over time and attract more investors, which will also generate liquidity in the secondary market."

It has also recommended that at least 80 per cent of the funds collected under DLSS shall be invested in debentures and bonds of companies as permitted under SEBI Mutual Fund Regulations.

"A vibrant corporate bond market is also important from an external vulnerability point of view, as a dependence on local currency and markets will lower risks," the association said.

It has been further proposed that the investments up to Rs 150,000 under DLSS be eligible for tax benefit under "Chapter VI A, under a separate sub-Section and subject to a lock in period of 5 years" (just like tax saving bank Fixed Deposits).

In the recent past, India has emerged as one of the key markets in Asia. However, the Indian corporate bond market has remained comparatively small and shallow, which continues to impede companies needing access to low-cost finance.

As per the data from Asia Securities Industry & Financial Markets Associat ion (ASIFMA), the corporate bond markets of Malaysia, South Korea, Thailand, Singapore and China exceed that of India as a percentage of GDP.

Additionally, the responsibility of providing debt capital in India has largely rested with the banking sector. This has resulted in adverse outcomes, such as accumulation of non-performing assets of the banks, lack of discipline among large borrowers and inability of the banking sector to provide credit to small enterprises.

"Indian banks are currently in no position to expand their lending portfolios till they sort out the existing bad loans problem. Thus, there is a need for a vibrant bond market in India, to provide an alternative platform for raising debt finance and reduce dependence on the banking system," AMFI said.

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New Delhi/Mumbai, July 3 (IANS) Subdued sales along with high costs have not only slowed the growth of the Indian auto sector, but have also applied breaks on new hiring, a trend which industry insiders warn can force the industry to off-load manpower.

At present, the sector has been impacted by low demand, high interest costs and ever increasing cost pressure due to heavy discounting.

Significantly, the sector is a massive employer and is considered as the backbone of the manufacturing sector.

The slipping demand has forced the original equipment manufacturers (OEMs) to curtail production, thus stalling hiring levels and wages.

The auto sector supports almost 37 million direct and indirect jobs and a truncation here will have adverse ripple effects across other ancillary industries such as rubber, steel and auto retail.

Industry insiders contacted by IANS confirmed the hiring freeze and a likely downsizing, if the present situation continues.

"The slowdown has led to an imminent shutdown for a short period to begin with, which also impacts the job situation for temporay (employees), and can spread to the permanent ones," said Grant Thornton India Partner Sridhar V.

"It all relates to minimising lockup of inventory at the dealership end," Sridhar added.

On a broad level, the trend eminates from the fact that India's economy is reeling under a consumption slowdown owing to farm distress, stagnant wages and high interest costs. It has also been hit hard by below-average rainfall till now his season.

Specifically, the slowdown has impacted the automobile sector the hardest and a weak monsoon might just accentuate this trend. In terms of figures, the off-take data for May showed that domestic passenger car sales were down 26.03 per cent to 147,546 units.

Besides OEMs, the whole gamut of the industry, including its retail arm, is feeling the heat.

"There is a freeze in new hiring, while some job losses have also been caused due to the slowdown that has hit the sector very badly," FADA President Ashish Harsharaj Kale said.

"The cost factor for the industry (dealerships) has escalated and the trend has been accelerated due to the slowdown. With profitability already a challenge, this has led to a freeze in new hiring and job losses will increase if the slowdown continues as its now getting beyond the sustainable levels of the auto dealers," he added.

Statistically, on an an average every PV dealership has 100 direct and 100 indirect employees.

According to the Federation of Automobile Dealers' Association (FADA) data, recently some 300 dealerships have closed.

The industry is seeking a stimulus package along with reduction in Goods and Services Tax rate and a scrappage policy from the full-year 2019-20 budget.

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By Sivaramakrishnan V.

The Budget is coming up with the proposed New Education Policy (currently at draft stage) in the background and hence allocation towards education will be closely watched. We think this the Budget should draw from the point made in the NEP on achieving 'foundational literacy and numeracy' by 2025.

It will be worthy to tie-in early digital literacy with this effort and therefore allocation towards 'ICT in Education' during primary schooling should be strongly considered.

Another area of focus should be the Continuous Professional Development (CPD) of teachers with its delivery through the Public Private Partnership (PPP) model. Budget allocation combined with minimum mandatory hours of CPD will help to upskill our large educator community.

Previous budgets have focused on skilling and vocational streams, and as an extension, the government must have an outlay for English language teaching so that the employability quotient of our young workforce goes up. This has the potential to directly impact the country's GDP.

Education, being on the concurrent list, is a subject of interest to states as well, hence, any new initiative must fit in well with the agenda that the respective state department of education (DoEs) have to carry forward.

(Sivaramakrishnan V. is Managing Director, Oxford University Press)

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By Rajan Samuel

Conventionally speaking, access to 'roti, kapda and makaan' (food, clothing and housing) has formed the key metric of assessing human growth and development, especially in a developing nation like India. Though we have achieved considerable success in providing food and clothing to a major section of the population, housing still remains a key challenge. A majority of the population in India, especially those living below the poverty line, continue to have no access to permanent, secure and affordable housing. Lack of access to decent and stable homes has the potential to drive communities of vulnerable populations into a never-ending cycle of economic penury and social exploitation.

The first Budget of Prime Minister Narendra Modi's government in its second term in office will need to provide priority focus on rolling out mass housing schemes as part of a strategy to bring the deprived sections of the population within the social and economic mainstream. The broader aim of the budget should also be to establish greater connectivity between the policy vision, and on-ground implementation of policies to ensure greater outreach of housing programs.

The housing pyramid is typically classified into the High Income Group (HIG), Middle Income Group (MIG), Lower Income Group (LIG) and the Economically Weaker Section (EWS). The Economically Weaker Section (EWS) of the population is the most vulnerable and generally considered to be at the lower end of the economic spectrum.

According to the National Housing Bank, out of the total national housing shortage, the Economically Weaker Section (EWS) has three-fourths of the housing shortage and the Lower Income Group (LIG) has a quarter of housing shortage approximately.

Support for Vulnerable Communities
The Housing for All by 2022 mission under the Pradhan Mantri Awas Yojana (PMAY) offers financial assistance to people from the EWS category. There is a dire need for a segmentation of the EWS category. Several vulnerable sections of the population such as the extremely disadvantaged Irula tribal community, farmers' widows, families living with HIV-AIDS, rag-pickers, the transgender community, commercial sex works, differently abled, devadasis and many other communities are presently not extended financial help under the subsidy schemes.

These communities deserve due recognition as a weaker section of the population, and must be given priority for gaining access to affordable housing. The Chief Minister of Maharashtra Mr. DevendraFadnavis has announced that persons with disability will be given a priority in the allocation of houses under PMAY. This example must be followed by other states too.

Housing support services to the doorstep
The Budget should also place priority focus on creating Housing Support Services (HSS) to ensure that benefits of affordable housing reach the lowest rungs of the population. The government should place special emphasis on forming Mobile Housing Support Services which will operate in all 725 districts of the country. These Housing Support Services will be crucial links in the affordable housing ecosystem, to ensure wider success and broader outreach. It can serve the following purpose:
* Dissemination of Information: Providing in depth information on all government schemes and insurance to the end user, to ensure last mile connectivity.
* Access to Technology: HSS can provide assistance concerning house design, access to prefabrication or other alternative technology, rainwater harvesting, setting up tools bank and materials bank (to ensure that the correct materials are made available locally, and used to build durable and permanent houses) for the homeowners.
* Technical Support and Implementation - Provide construction technical assistance, technical training, training on financial literacy and so on.

In addition to being the one-stop-shop for families at the grassroots level, HSS will also have the potential to address the water crisis that India is currently facing. Recognizing the drastic problems of water scarcity and depleting water sources in different parts of the country, in the face of uneven rainfall and extreme climatic conditions, Prime Minister Modi has called for the implementation of a national program along the lines of the Swachh Bharat program, to protect and augment India's water resources.

According to the C.P.R Environmental Education Centre (a centre of excellence of the Ministry of Environment and Forests), India uses only 10-20% of its annual rainfall. Water conservation and rainwater harvesting should be made mandatory just like the Aadhar cards across the country. Rain Water Harvesting can even be incentivized to motivate people to save and conserve water.

For families living in tribal hamlets, rural and urban areas, a house is not just a roof. It is about dignity, an asset to call their own, and an opportunity to achieve strength, stability and self-reliance to build a better future for their families. A decent home signals a transition from a nomadic lifestyle, towards socio-economic progress and development. Affordable housing is foundational in India's development because it will eliminate barriers to a better, healthier, more financially stable life.

(Rajan Samuel is the Managing Director of NGO Habitat for Humanity India)

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By Tulsi Tanti

Pune, July 2 (IANS) The World Bank's Economic Prospects Report has forecast India's economy to grow by 7.5 percent during this and the next two fiscals, retaining its top spot as the fastest-growing major economy. India's growth estimate is the brightest spot in a grim forecast for the world economy.

The continuation of the National Democratic Alliance (NDA) government, led by Prime Minister Narendra Modi, augurs well for key sectors of the economy, including the renewable energy sector, which has been its focus area.

The industry is looking for a huge stimulus for investment, a push for the 'Make in India' initiative, lowering of taxes and streamlining of GST so that tax collections will go up and investment will be improved.

Given this background, the following are the key expectations of the Renewable Energy (RE) industry from the upcoming Union Budget.

-- Re-introduction of accelerated depreciation at a rate of 80 per cent for windmills and solar projects to retail investors with project size less than 25 MW. The step, besides providing a level playing field for SMEs and small investors and continuing diversity in investments in the sector, will also benefit Central Public Sector Enterprises (CPSEs).

-- GST on services relating to setting up, power evacuation and operation & maintenance services (OMS) of a Renewable Energy project should be capped at 5 per cent from the present 18 per cent.

-- Concessional rate/preferential rate of finance is required with a 2 per cent rebate as cost and availability can potentially impact viability. This will directly benefit consumers as energy prices will be kept low.

-- The export incentive must be hiked from the present 2 per cent to 10 per cent to make Indian exports competitive in the global market. Also, the Power Finance Corporation and the Indian Renewable Energy Development Agency Ltd must be mandated to allow issuance of the line of credits to OEMs for exports from India.

-- The activity of generation and distribution of power should be included in provisions of Section 32(1) (iia) (Additional depreciation), 32AD (Investment allowance for setting up projects in backward area of AP and Telangana) and 115BA (Section allowing an assesse to opt for concessional rate of tax of 25 per cent.

-- The profits of the undertaking engaged in the business of generation and distribution of power and infrastructure business were allowed to be reduced from the book profits for the purpose of calculating MAT. This should be restored.

-- Open access and ISTS charges waiver (like SECI bidding) to all manufacturing units for their captive power requirements should be allowed.

-- Creating recurring income for farmers through the Farmer's Scheme in FiT based projects.

(Tulsi Tanti is the Founder-Chairman and Managing Director, Suzlon Group)

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New Delhi, July 2 (IANS) A recent survey has shown that majority of the Indian taxpayers do not expect any major changes in the direct tax policy in the upcoming Union Budget to be presented on July 5.

Around 53 per cent of the taxpayers interviewed in the KPMG's pre-budget survey felt that there will not be any major announcement on direct taxes. Around 27 per cent said that there will be major changes, while 20 per cent were not sure of any eventuality, the report showed.

"The new and simplified Direct Tax Code (DTC) being on the anvil, majority of the respondents expect that the Union Budget 2019-20 is unlikely to announce any major direct tax policy amendments.

"The levies like minimum alternate tax, dividend distribution tax, surcharge and cess are also unlikely to change significantly," the report said.

Also, most of the companies surveyed upon do not expect reduction in corporate tax for all firms and LLPs (limited liability partnership).

"Majority of the respondents expect that the corporate tax rate is unlikely to be reduced to 25 per cent as applicable to small companies. The respondents expect that the tax rate for LLPs will be aligned with the tax rate applicable to companies," it said.

The survey also showed that while 46 per cent of the companies with turnover exceeding Rs 250 crore feel that corporate tax will not be reduced to 25 per cent, 39 per cent hope for a cut.

Majority of the respondents also expect that for individuals there will be an increase in the basic tax exemption limit of Rs 2.5 lakh. They also expect a higher tax burden of 40 per cent on "super rich" taxpayers having taxable income of above Rs 10 crore, the survey revealed.

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By Sivaramakrishnan V.

New Delhi, July 2 (IANS) The Union budget is coming up with the proposed New Education Policy (currently at draft stage) in the background and hence allocation towards education will be closely watched. We think this the budget should draw from the point made in the NEP on achieving "foundational literacy and numeracy" by 2025.

It will be worthy to tie-in early digital literacy with this effort and therefore allocation towards 'ICT in Education' during primary schooling should be strongly considered.

Another area of focus should be the Continuous Professional Development (CPD) of teachers with its delivery through the Public Private Partnership (PPP) model. Budget allocation combined with minimum mandatory hours of CPD will help to upskill our large educator community.

Previous budgets have focused on skilling and vocational streams, and as an extension, the government must have an outlay for English language teaching, so that the employability quotient of our young workforce goes up. This has the potential to directly impact the country's GDP.

Education, being on the concurrent list, is a subject of interest to states as well and hence any new initiative must fit in well with the agenda that the respective state Departments of Education have to carry forward.

(Sivaramakrishnan V. is Managing Director, Oxford University Press)

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New Delhi, July 1 (IANS) Although the angel tax has been the most pressing issue among Indian start-ups, there are several other taxation issues that start-ups want the government to address in the upcoming full budget.

According to Local Circles, a social networking platform dedicated to citizen engagement, the government should also take steps for faster and streamlined TDS and ITC refunds.

"Many start-ups and SMEs have reported that the refunds of the TDS (Tax Deducted at Source) take a long time. So much so, that refunds due in September 2018 for many start-ups and SMEs have still not been made. It is requested that the government processes TDS refunds within 45 days for past due refunds and any future refunds," Local Circles said in its letter with budget recommendations to the Finance Minister.

It also said that as several start-ups have reported that refunds of input tax credit (ITC) "are not being processed at all", creating a cash-flow issue, the government should streamline the process of ITC refunds for start-ups and ensure that they are processed on a priority basis.

In its letter, the online community raised its concern over instances where many start-ups have become liable to pay GST on behalf of their customer as soon as the invoice is raised. "It is suggested that GST becomes payable for startups and SMEs at the point of payment realisation, and not invoice generation. In the event that this is unfeasible, we strongly recommend that law (notification number S.O. 5622(E) dated 2nd November, 2018) is further strengthened so that timely payment compliance improves," it said.

According to Sameer Aggarwal, Founder and CEO, RevFin, an online lending start-up, the government should mandate all tax and ROC compliance processes only once a year in a specified time frame and in a single process.

"Even new compliance requirements should be done as part of this, rather than doing as a one-off at different times during the year. This will reduce time and cost of using professional services. Process like TDS payments should be done through a direct debit process which should include all banks rather than a few banks only," he said.

On investments made from capital gains like sale of property or shares, Aggarwal said that such investments into start-ups should be made fully exempted from tax.

Recognition as a start-up should automatically qualify companies for a start-up fund which would have up to a three year repayment holiday until the start-up is established, he added.

Social-work based start-up Mrida Group's Managing Director Arun Nagpal recommended that the government should facilitate easy availability of credit facilities through the banking system and growth capital through angel funds and venture capital funds.

In order to boost health-tech start-ups, the budget must come up with a medical innovation fund, said Savitha Kuttan, CEO, Omnicuris, an online medical education platform.

"Government should come up with medical innovation fund separately to boost health-tech start-ups and do away the outdated taxes that are hampering their growth potential. Government should also address the GST compliance by reducing the tax rates," Kuttan said.

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New Delhi, July 1 (IANS) The government is looking at various measures to invigorate infrastructure financing, critical for reviving the investment cycle and boosting growth. The budget is likely to announce key plans, including setting up a new credit enhancement non-banking finance entity with an initial corpus of Rs 500 crore to help infrastructure sector companies mobilize funds from the market at attractive rates.

The proposal for a credit enhancement fund was first announced in the budget for fiscal 2016-17 by then Finance Minister Arun Jaitley. But since then, the scheme has not taken off due to various regulatory hurdles.

A senior government official said that a plan is being finalized under which infrastructure financing firm, India Infrastructure Finance Co Ltd (IIFCL) would become the premier infrastructure financing institution.

In the new framework, the IIFCL will not only offer funding support to projects but it will also carry out the function of credit enhancement, enabling infra companies easier access to credit. This would be done through creation of a special purpose vehicle - the National Infrastructure Credit Enhancement Ltd or NICE, to be piloted by the IIFCL. The NICE will function as a dedicated credit enhancement NBFC.

While tax relief for housing sector is on cards in the Budget to give a leg up to infra development, the credit enhancement fund piloted by the IIFCL's SPV would facilitate infrastructure investments by insurance and pension funds. The NBFC will also seek to bolster lower-rated bonds issued by companies in the sector by providing its own balance sheet support to viable projects. More than 85 per cent of corporate bond issuance in India is by borrowers with ratings of 'A' and above, according to RBI data.

It is expected that the credit enhancement SPV will also get equity support from National Housing Bank (NHB) and National Bank for Agriculture and Rural Development (Nabard) but the IIFCL will be the main stake-holder. The NBFC may also get funding support from the government through the Budget so that the entity starts its work with a minimum fund size of Rs 500 crore, sources said.

The Centre had earlier mooted the idea of the IIFCL and several state-owned institutions like the LIC, the State Bank of India and the Bank of Baroda to come together to set up a dedicated credit enhancement company as a non-banking finance company. But IRDA regulations prevented the LIC from being part of the fund while the banks could not participate due to rising NPAs and other commitments.

The government is looking to bolster infrastructure investment as it is key for boosting growth in the economy. It is estimated that India needs $4.5 trillion to be spent on infrastructure developments over the next 25 years. But it is expected to garner a lot less. Innovative funding and financing schemes is being looked to bridge the deficit and allow the sector to grow at desired pace.

(Subhash Narayan can be reached at subhash.n@ians.in)

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New Delhi, June 30 (IANS) The Film Exhibition Industry of the country needs tax incentives in the form of a tax holiday period, lower tax rates and subsidies among others to achieve its potential and for its higher penetration into the Tier-II and Tier-III cities, according to the Federation of Indian Chambers of Commerce and Industry (FICCI).

In its budget recommendation, the movie theatre industry body has said that although India is the world's largest producer of movies, its film exhibition industry is largely untapped.

"While there has been de-growth in screen-counts in India over the past few years, China has recorded phenomenal growth which can partly be attributed to a lower tax rate.

"Tax incentives in the form of tax holiday period, lower rates, weighted deductions, subsidies etc for the film exhibition industry (for instance similar to the one in Section 80HHF of the Income Tax Act 1961 which has been discontinued) be provided, in order to increase penetration of the exhibition industry in Tier 2 and 3 cities," FICCI's recommendation said.

It has further sought clarity over the the definition of "royalty" pertaining to sale, distribution or exhibition of cinematographic films.

Definition of royalty under the Income Tax Act 1961 excludes consideration for the sale, distribution or exhibition of cinematographic films, it said, adding that the law was made when non-theatrical rights were not in existence but now with the advent of digital age, there are various non-theatrical ways to exploit film rights as well.

"There is ambiguity as to whether grant of non-theatrical rights also form part of the exclusion and clarity around this would be much appreciated. Clarity in the definition of royalty pertaining to sale, distribution or exhibition of cinematographic films be provided," it said.

The industry body observed that Rule 9A and Rule 9B of the Income Tax Rules permit deduction of expenditure incurred on production of films and acquisition of film distribution rights respectively based on when the copyrights or distribution rights in films are exploited or depending on the date of release of the film and the provision is an old one which requires changes in light of the recent trends for instance films which are showcased on the digital platform.

"There are several ambiguities surrounding the applicability of the aforesaid rules (applicable to satellite, music), scope of its applicability on expenses (only revenue or both capital and revenue), etc to name a few. It could be clarified that these rules could be extended to movies produced on digital platform and also remove ambiguity regarding its applicability to satellite, music etc," FICCI added.

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By Ravi Dutta Mishra

New Delhi, June 30 (IANS) RBI Governor Shaktikanta Das recently cautioned against "cherry-picking" of data, subtly arguing against the former Chief Economic Adviser's paper, but neither was Arvind Subramanian's paper the only one on GDP over-estimation nor his methodology.

A recent IIM Ahmedabad research paper titled 'Over estimation in the growth rate of National income' by Sebastian Morris and Tejshwi Kumari used similar methods to conclude that India over-estimated its growth rate.

"Ever since the Central Statistical Organisation (CSO) changed the method of computation of national output (income), from what was centred around final goods to a dominance of the use of estimates of value added across productive entities, the growth rate from the latter series did not seem to reflect the reality, " the research paper said.

While Subramanian's research paper showed that India's GDP growth had likely been overestimated by about 2.5 per cent points per year from 2011-12 to 2016-17, Morris and Kumari's paper said the growth was most likely under 6 per cent and closer to 5-5.5 per cent.

Subramanian's paper caused a huge controversy and a fiery response from the Economic Advisory Council to the PM.

The council gave a "point to point" rebuttal to his paper. Among the several points raised by the council was usage of selective indicators to derive a conclusion.

Besides, the council had said India has frequently revised its GDP calculation methodology and the latest one by Central Statistics Office (CSO) that changed the base year to 2011-12 along with other methodological changes, (as many countries do regularly) was no different.

"Trying to find suitable proxies or approximation of GDP growth rate, when the official estimate is faulty is a legitimate exercise," Professor R. Nagraj of Indira Gandhi Institute of Development Research (IGIDR), Mumbai told IANS.

"In fact, Subramanian has said that he was inspired to do the study by a paper on Chinese GDP growth overestimation published in Brookings Papers earlier this year, " Nagraj added.

Nagraj also said there is nothing unusual about Subramanian's effort to come up a proxy for official GDP growth rates using co-related variables.

Much of the criticism of GDP growth rates was that the official estimates were quite at variance with other macro correlates such as growth in bank credit, capacity utilization on manufacturing, investment growth, Nagraj said.

However, noted statistician Pronab Sen said that the most of such papers are produced considering the old method of GDP calculation as the correct one, which might not be the case.

Sen said that the new methodology was brought it to correct the flaws of the old methods, "Otherwise why would one use new methods?"

Several doubts arose after India brought changes in the way it calculates its growth rate, chiefly because it showed that India grew at a faster rate under NDA 2 than under the previous UPA 2, particularly when economists across the board had said the demonetization exercise will take a toll on the growth rate.

(Ravi Dutta Mishra can be contacted at ravidutta.m@ians.in)

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By Venkatachari Jagannathan

Chennai, June 30 (IANS) Finance Minister Nirmala Sitharaman in her maiden budget speech on July 5 should give a short and stern message to the heads of three government-owned general insurers to focus on bottomline growth and outline the roadmap for their merger, say industry experts.

The three companies are National Insurance, Oriental Insurance and United India Insurance.

At a time when consolidation is happening among the private general insurers, experts to whom IANS spoke to were baffled at the government's idea of demerger instead of merging the three firms as announced earlier.

The experts also voiced their opposition to another government-owned general insurer, New India Assurance, that went public taking over the other three companies or taking substantial stake in the company that emerge after their merger.

"New India taking over substantial stake in the new entity that is formed after merging the three companies, is like putting good money after bad money," R. Raghavan, former General Manager, General Insurance Corporation of India and the founder-CEO of the Insurance Information Bureau.

"The Finance Minister should give a stern direction to the heads of PSU general insurers to focus on growing their profits than the topline. The three PSUs are undercutting each other to grow their gross premium income," an expert told IANS on the condition of anonymity.

In his 2018 budget speech, then Finance Minister Arun Jaitley announced the government's decision to merge National Insurance, United India and the Oriental Insurance Company and list it in the bourses.

"Subsequently the government had selected EY as the consultant to advise on the merger. The consultant is yet to initiate its job, as informed to us by GIPSA (General Insurance Public Sector Association)," Sanjay Jha, Secretary Standing Committee (General Insurance) All India Insurance Employees Association (AIIEA), told IANS.

However there was no progress after that.

"With the continuity in the elected government ensured, hope of action on the merger of the three PSU general insurers, is bound to gather momentum now," K.K. Srinivasan, former member, Insurance Regulatory and Development Authority of India (IRDAI), told IANS.

According to Srinivasan, merger of three weak companies may not immediately create one strong company. But it will surely eliminate suicidal business competition among them.

"After the budget speech of 2018-19, there was a period of uncertainty, coupled delays in appointment of Chairman and Managing Directors (CMD) of two out of three companies appears to have adversely affected the performance of the three. Any further inaction will not augur well for the health of these companies," Srinivasan said.

Speaking about the demerger idea - breaking the PSUs into smaller outfits - Srinivasan said it does not appear to be realistic as it would result in creation of more government owned companies.

"For multi-line general insurers there are inherent synergies and cross subsidisation. For the PSUs that are in existence for the past several decades the synergies get inbuilt. As a result, demerger will not work," an industry expert preferring anonymity told IANS.

"Nearly 70 per cent of total business for the insurers is from motor and health portfolios. The severe undercutting in the fire insurance business has cut down the size of this portfolio. So, what lines of business to be demerged and what loss making business to be turned profitable," Raghavan said.

"The demerger idea is doubtful and there is no official confirmation. Demerger will not give the financial benefits that the government is expecting and will not serve any purpose," K. Govindan, General Secretary, General Insurance Employees All India Association (GIEAIA), told IANS.

The experts are of the view that Sitharaman should give a stern direction to the CMDs of PSU insurers to focus on profitability.

"Once the companies improve their profitability then the government can kick start the process of merging them. That way the government can unlock better value by listing the merged entity," they said.

According to them, demerger or merging the three companies and New India taking substantial stake in the merged entity will be a wrong strategy.

The experts said that insurance was a business of large numbers and size does matter in terms of risk retention, financial strength and other aspects.

On their part, the Unions in the sector are for merging all the four companies into a single entity that will bring a "synergy effect" resulting into cost-effectiveness, reduced management expenses, increased risk retention capacity, increase in retained premium (less outgo on re-insurance), bringing out innovative products and better utilisation of assets.

According to the AIIEA, if the four PSU general insurers are merged into a single entity, it will be a behemoth organisation with a strong base of about Rs 70,000 crore of gross domestic premium and Rs 2,25,000 crore worth assets.

Meanwhile Srinivasan said: "A clear idea on the restructuring of the three insurers will perhaps emerge in if the subject matter finds a place in the ensuing Sitharaman's maiden Union Budget.

"But if the matter is not touched in the ensuing Budget, media speculations will continue. Also the rot in the three PSUs will worsen."

(Venkatachari Jagannathan can be contacted at v.jagannathan@ians.in)

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By Rohit Vaid

Mumbai, June 30 (IANS) Come July 5 and India Inc's clamour for stimulus measures to boost consumption growth might just fall on deaf ears as Finance Minister Nirmala Sitharaman is expected to rather tighten the government's purse strings in the upcoming full-Budget 2019-20 than adhere to the industry's concerns.

Industry watchers and economists expect Sitharaman to pay heed to fiscal disciple in her first budget as the Union Finance Minister. The interim budget, had projected the deficit at 3.4 per cent of the GDP for FY20.

Conversely, India Inc wants solid measures coupled with broad policy reforms to rejuvenate the slacking economic growth besides creating jobs.

In 2019, India's economy is reeling under a consumption slowdown owing to farm distress, stagnant wages and high interest cost. It has also been hit hard by below-average rainfall season, till now.

Consequently, a slowdown has gripped sectors such as automobile, FMCG, construction, jewellery and aviation with dealers having to stock higher than usual levels of inventory.

Specifically, the slowdown has impacted the automobile sector the hardest and a weak Monsoon might just accentuate this trend. In terms of figures, the off-take data for May showed that domestic passenger car sales were down 26.03 per cent to 147,546 units.

"The government is expected to play a fine balancing act in terms of heeding to the request from the auto sector for a stimulus in the form of a reduction in GST as these measures could impact its efforts to maintain the fiscal deficit target," Grant Thornton India Partner Sridhar V.

"A struggling sector would however need this push either through tax reduction in the form of GST or leaving more money in the hands of consumer through further rationalisation of income tax."

However, any stimulus measure is unlikely given the high possibility of lower tax collection due to an already existing slowdown.

"The government does not have much revenue leeway to increase the expenditure space in absolute terms over and above the interim one," Edelweiss Securities Lead Economist Madhavi Arora told IANS.

"A slippage may happen (from FY20BE in interim) even if they don't increase expenditure substantially. The revenue target looks too optimistic."

The lack of a stimulus or a major upswing in government's capex will also hamper revival in private investment, aggravate farm distress and make bankers more reluctant to lend.

"With few expenditure allocations expected to be altered from the interim budget estimates, the upcoming budget for 2019-20 is unlikely to reveal the revised priorities of the new government," ICRA's Principal Economist Aditi Nayar said.

"Since the revenue growth assumptions in the FY2020 IBE appear optimistic in light of the FY2019 Prov., there is a possibility of a downward revision in the targeted level of tax revenues in the upcoming budget, which would likely result an increase in the targeted fiscal deficit relative to the FY2020 IBE."

To put it simply, based on the current trend in GDP and tax revenue growth, it will be an uphill task for the government to adhere to its FY20's fiscal deficit target without squeezing expenditure.

"Although, inflation and current account deficit are less of an issue in 2019 than in 2014, accelerating GDP growth and fiscal deficit continues to be a challenge for the government," Sunil Kumar Sinha, Director -- Public Finance and Principal Economist India Ratings and Research (Fitch Group), told IANS.

"The new government must focus on reducing tax disputes and increasing tax compliance besides ironing out the remaining glitches in the current GST regime," Sinha said.

This will be first full-Budget after the NDA won a decisive second term. Scheduled wise, the Economic Survey 2018-19 will be tabled in Parliament on Thursday, July 4, followed by the Union Budget on July 5.

(Rohit Vaid can be contacted at rohit.v@ians.in)

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By Rajesh Patil, Rakhi Thakkar & Bhavishi Vichhi

Corporate tax rate
Currently, companies whose gross receipts or turnover does not exceed a certain threshold are eligible for a reduced tax rate of 25 per cent. This benefit is not available to other companies, limited liability partnerships (LLP) and firms, who are resident in India and are taxable at 30 per cent. The rate of tax in most developed countries is much lower, e.g. 21 per cent in the US, 19 per cent in the UK. To promote economic growth, boost investment in India and to increase tax collections, it may be a welcome move to reduce the tax rate to 25 per cent for all domestic companies, LLPs and firms.

Dividend Distribution Tax (DDT)
Dividend was initially taxable in the hands of shareholders. The Finance Act, 1997 first introduced DDT, wherein the rate of DDT was 10 percent. Currently, the effective rate of DDT is 20.56 percent after grossing up.

Foreign shareholders may not get credit for DDT paid in India with exceptions for certain countries. Accordingly, it may be beneficial if dividend is taxed directly in the hands of the shareholders, like the erstwhile system. This will enable foreign shareholders to claim foreign tax credit for taxes paid in India.

Deductibility of expenditure incurred in respect of activities relating to Corporate Social Responsibility (CSR)

Explanation 2 to section 37(1) of the Income-tax Act, 1961 provides that CSR expenditure, not being an expenditure incurred for business, shall not be eligible for deduction while computing the taxable business profits. CSR expenditure is mandatory under the Companies Act, 2013. Accordingly, the same should be allowed as a deduction.

Obligation of filing return of income in India
At present, non-residents and foreign companies earning only interest income or dividend income do not have the obligation to file income-tax return in India wherein tax has been withheld. It may be preferable if similar benefit is extended to income earned in the nature of royalty and fees for technical services wherein taxes have been withheld.

Consolidated tax return
Under consolidated tax filing system, the main entity of the group is responsible for all or most of the group's tax obligations / compliances. This will enable to minimise administrative cost. It may be considered to introduce this concept in a phased manner with implementation first on listed companies.

Standard deduction from salary income
The Finance Act, 2018 has introduced a standard deduction from salary income up to Rs 40,000 in lieu of reimbursement of medical expenses and transport allowance. It will be a welcome proposal if the government enhances the limit of the standard deduction to reduce the tax burden on salaried individuals.

National Pension Scheme (NPS)
The withdrawals made from the NPS on closure of account or on opting out of NPS, are taxable in the hands of the employee to the extent of 60 percent. This is not in parity with other schemes. It may be considered to fully exempt the said withdrawals from NPS to promote more individuals to be a part of the NPS.

It will be interesting to see what Budget 2019-20 has in store for taxpayers at large.

(Rajesh Patil is Director, Rakhi Thakkar is Manager and Bhavishi Vichhi is Deputy Manager with Deloitte Haskins and Sells LLP)

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By Anjana Das

New Delhi, June 30 (IANS) Parliament is likely to start discussion on the General Budget on July 8 while voting on Demands for Grants is likely between July 11-17 as the Narendra Modi government presents the first Budget of the second term on July 5.

"The tentative dates for discussion and voting on demands-for-grants for 2O19-20 are expected between July 11-17. The general discussion on Budget is tentatively scheduled on July 8," a communication from the Finance Ministry's Budget division said.

Finance Minister Nirmala Sitharaman faces an uphill task. She has to rescue Asia's third-largest economy from the brink of a major slowdown. In May, India lost its spot as the fastest-growing major economy in the world though government said it still is the fastest growing.

India's GDP slipped to a 5.8 per cent growth in the last quarter of FY19, down from 6.6 per cent in the previous quarter, and lower than the 6.4 per cent growth registered by China. The consumtion demand and investment cycles are the lowest pressing for higher government spending in a year when revenues are on the downside. Job creation is missing with unemployment at the highest 6.1 per cent.

Sitharaman also has to meet a tough disinvestment target in a slowing economy and tough market to expand the government kitty in a year when tax revenue are almost certain to be lower. The government is looking to garner Rs 90,000 crore from disinvestment, up from Rs 85,000 crore it got last year. The bulk of last year's earnings, however, came from the central public sector enterprise (CPSE) exchange-traded fund (ETF), a pool of PSU shares, as against the government's desire to sell strategic stake in government-owned companies.

This fiscal government will milk the current ETFs and launch new ETFs like financial sector ETF and debt ETF. So far the government raised Rs 2,350 crore in the first two months of the current fiscal. To kickstart the disinvestment process, Niti Aayog, a think-tank of the government has suggested 35 PSEs where the government is likely to sell its stake. Recently government said Air India will be attempted to be sold. Last year too, the government had tried to sell Air India, but it didn't find any takers.

Both Direct and Indirect Tax revenues are also not matching the huge agricultural package the government is giving like the recent Rs 87,000 crore expense, up from Rs 75,000 crore for the Direct Income Scheme for the poor and marginal land farmers. With a slowdown gripping the economy, the non-tax revenues like CPSE profits and dividends are also not on higher trajectory.

Besides laying the roadmap, the Finance Minister's challenge will be a tightrope walk between containing the fiscal slippage and handling growth slowdown. The latter, due to slowdown in consumption, exports and gross domestic capital formation, calls for an economic stimulus package which is at odds with the objective of fiscal consolidation.

Fiscal deficit at 3.4 per cent will be difficult to maintain, but credit rating agencies warn of downgrade for India should it fall, making raising capital for Indian companies costly. It will also raise the interest costs of the government while FIIs will shy away.

But at the same time she will have to fulfil the common man's aspirations as it is the common man which has voted her party back to power for the second time with as the largest party.

(Anjana Das can be contacted at anjana.d@ians.in)

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New Delhi, June 29 (IANS) The Department of Post can expect to be allocated more funds from the Budget for a facelift that includes improvement of postal operations and promotion of philately, upgrading bureaus, innovative products and processes, opening up of more Postal Savings Banks, 40 lakh ATM cards and digitisation of post offices.

Postal operations, which come under Central Sector Schemes, were allotted a revised Rs 661 crore in 2018-19 Budget and in the interim Budget 2019-20, this was hiked to Rs 773.47 crore. It is likely to be further increased to Rs 1,500 crore while for the India Post Payments Bank, the allocations could be Rs 500 crore from the current Rs 335 crore in the interim Budget, sources said.

The department, which is vital for the country's mail network with its whopping 1.55 lakh post offices serving the important rural but unremunerative areas, while in urban areas, it is fighting for survival from competition from private couriers and digital world where email, money transfer, SMS, and Whatsapp are more fast. It has, however, been alert to meet the challenges through continuous innovation, new products and services at affordable rates and the unsurmountable network of post offices.

There are also plans to open 150 BOs (Branch Post Offices), 1,000 cash safes, training 45,000 officials, upgrading 55 workplace training centres and related activities.

For the smooth operations of the India Post Payments Bank's 650 branches with 50,000 access points for financial inclusion of un-banked and under-banked people, the likely to be hiked funds will be used for equity infusion for technology induction maintenance and manpower.

The 120 PO projects - new, old, heritage buildings and related activities for improved customer experience and postal operation - and the estates management allocations could be up under the overall postal operations to Rs 100 crore from the current Rs 85 crore, sources added.

With 'Inclusive India' being the motto of the NDA government, the postal operations are to be expanded and increased, they said. The rising allocations provision is for postal operations, which include major activities such as mail operations, IT Induction and modernisation of post offices in presence and services.

The funds will be utilised for maintenance of data centres and IT infrastructure for the department - the Financial System Integrator (FSI), the Core System Integrator (CSI), Network Integration (NI) and DARPAN (Digital Advancement of Rural Post Office for a New India) Project.

The Ministry of Communications had launched DARPAN project to achieve total digitisation of postal operations in the country, under its IT Modernisation Plan. The project seeks to increase rural reach of the department and enable BOs to increase traffic of all financial remittances, savings accounts, RPLI policy and cash certificates.

It also will improve mail operations processes by allowing for automated booking and delivery of of accounts.

Overall, this project will help to improve quality of service, add value to services and achieve financial inclusion of the un-banked rural population.

The Department of Posts, with its network of 1,54,965 post offices, is the largest postal network in the world. While the core activity of the department is processing, transmission and delivery of mail, there are also a diverse range of retail services undertaken by the department, which include money remittance, banking, as well as insurance. Of late, the Department has undertaken the disbursal of the social benefit payments, such as under the rural job guarantee and social security pension schemes.

To meet the developments and challenges of the new environment where the mail is seeing a decline the world over, the services provided by the Department of Posts are being upgraded, diversified and new services being introduced in consonance with customer expectations.

The major IT Induction and Modernization Project is currently being implemented in the department with focus on business process re-engineering and improving operational efficiency of the department.

This aims at transforming the Department into a "technology enabled, self-reliant market leader", which will result in increased market share and revenues, launch of new products and services, improved service delivery system, motivated workforce and enhanced customer satisfaction.

Meanwhile, the Core Banking Solution (CBS) Project is bringing in facilities of ATM banking, Internet Banking and Mobile Banking to Post Offices Savings Bank customers 24x7 along with the facilities of National Electronic Fund Transfer (NEFT) and Real Time Gross Settlement (RTGS).

Under the Digital India Programme, a flagship programme of the government launched in 2014 with a vision to transform India into a digitally empowered society and knowledge economy, the Department of Posts has been entrusted to transform the post offices into multi-service centres and is digitizing all the 1,54,965 post offices including 1,29,380 post offices in rural areas.

The multi-service centre will become the nodal centre for the dissemination of information vis-a-vis government policies, disbursement of social security benefits, and for financial inclusion, while also offering a digital means of communication, carrying physical goods and money transfers.

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Chennai, June 29 (IANS) Focus on UDAN scheme; reduction or removal of aviation turbine fuel (ATF) tax; a single Goods and Services Tax (GST) rate for hotels and tourism sectors; tax rebates for people; higher allocation for tourism industry and infrastructure status for hotel sector are a few things on the budget wishlist of hotel and travel industry players.

Union Finance Minister Nirmala Sitharaman will present her maiden budget on July 5.

"We look forward to increased focus and sustained delivery on key initiatives like UDAN aimed at enhancing the regional connectivity and affordable air travel, Heritage City Development and Augmentation Yojana (HRIDAY), integrated development of pilgrimage destinations through Pilgrimage Rejuvenation and Spirituality Augmentation Drive (PRASAD)," Mahesh Iyer, Executive Director and CEO, Thomas Cook (India) Ltd told IANS.

He also said the proposed Union budget should increase allocation to extend the e-Visa initiative to more countries, develop new tourism circuits as well as create better infrastructure - roads, railways, airports, waterways and sanitation - to catalyse growth.

"There is no great private airline success story in India. The government should look at removing the tax on ATF. Air connectivity has become extremely important for government programmes like PRASAD as elderly pilgrims cannot reach distant places travelling several hours in a train," Iyer added.

According to him, the government should check the arbitrary fare hikes by airlines and work on passenger compensation like hotel stays by Low Cost Carriers (LCCs) in case of delay beyond 4 hours or cancellation of flights.

Rationalisation of various GST rates is one of the demands of the hospitality/tourism sectors.

"Now there are three GST rate slabs, as a result of which four and five star hotels are losing out to three-star hotels. A single rate structure would also be beneficial for the people," Yangya Prakash Chandran, Founder and CEO, Crossway Hotels & Resorts told IANS.

According to a report by credit rating agency CARE Rating's, rationalisation of GST rates on premium segment hotels (from 28/18/12 per cent) can boost investments while also increasing demand for the category.

"Industry wants the government to announce measures in the budget to promote investment in the tourism sector. We expect the allocation to the Tourism Ministry to be higher in the budget 2019-20 vis-a-vis last year," CARE Ratings said.

"The hospitality industry should also be given the infrastructure status to attract increased investments. The infrastructure status would reduce our cost of funds," Chandran added.

Iyer also expressed hope that Finance Minister Sitharaman would provide necessary impetus to develop cruise tourism in which Indian travellers are now showing interest.

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By Peeyush Naidu

New Delhi, June 28 (IANS) Transportation infrastructure and allied services are critical growth engines for propelling India's rise as an economic superpower. While the public sector has played a dominant role in investing in infrastructure creation, the government will need increased private sector participation to supplement the rapidly growing industrial demand for a modern and robust transportation and logistics network at par with developed countries.

The infrastructure sector was one of the major focus areas in the FY19 budget and saw massive spending on roads, railways, water, irrigation and urban infrastructure. With all eyes on the upcoming Union Budget to be presented on July 5, the government should focus on not only allocation of funds, but also on setting up a road map for clearly outlining the private and government sectors' role in infrastructure creation and operations over the next year.

Some interventions which may be considered by the government for boosting the transportation and logistics sector in the country are proposed below:

Railways
* With the elimination of level crossings and other measures, the Railways' track record of safety improved last year. However, there is still a long way to go for Indian Railways. Replacing walking inspection with automated inspections, upgradation of track management system into a dynamic asset maintenance and management system, improved mechanisation of track maintenance organisation across zones and greater use of RCM/CBM and IoT for real time monitoring and predictive maintenance of assets are a few steps which would go a long way in ensuring safety.

• Introduction of semi high-speed trains (such as Train 18 and Talgo) on more routes as well as fast tracking station redevelopment programme for key metro cities would go a long way in meeting passengers' needs as well as aspirations.

• Indian Railways should judiciously invest in track creation to strengthen stressed routes and also open up intrinsically remunerative routes. The government should attract private sector investment in various areas such as station development for effective passenger management and unlocking non-fare revenue, freight terminals for common use mainly through redevelopment of strategic goods sheds, construction of PFT terminals, and owning and maintenance of rolling stock.

• There has been heightened focus on increasing the modal share of railways for the movement of inland freight. Improving network capacity through signalling projects, upgrading loop line infrastructure to enable running of longer trains (2x-4x of current size) and completing ongoing line expansion projects on time would go a long way in improving average speed of freight trains.

• The government should create an effective ecosystem for the Dedicated Freight Corridors (DFCs) to become game changers in freight logistics. Apart from speedy completion of the eastern and western DFCs as well as sanctioning additional DFCs already planned, there is a pressing need to focus on developing the enabling ecosystem such as marketing, commercials and operational strategies to optimise utilisation of all this new infrastructure.

  Aviation

• To bring down the high taxation on aviation fuel, which is among the highest in the world, the government could consider bringing aviation turbine fuel (ATF) and other related fuels (used for commercial scheduled/non-scheduled operations and training purposes) under the Goods and Services Tax (GST).

• To provide a fillip to its marquee Regional Connectivity Scheme (RCS) to improve air connectivity to remote areas, the government should provide incentives/budgetary support in terms of promoting the use of smaller aircrafts under the scheme, providing additional funds for VGF support under the scheme, and developing airport and seaport infrastructure in Tier-II and Tier-III cities of the country.

• High taxes have led airlines to outsource 80-85 per cent of the country's $1.4 billion MRO (Maintenance, Repair and Overhaul) business to international providers. The government must focus on reducing the tax burden impacting the growth of the MRO industry by reducing GST rates and removing instances of tax on certain items which attract an import duty as well as a GST over and above that.

  Logistics

• There has been a thrust on development of multimodal logistics parks (MMLPs) in the past few years to boost multimodality and integration of logistics services in the country. In addition to the proposal for developing 35 MMLPs across the country, the government has also drafted an MMLP Policy to serve as the guiding document for the development of MMLPs in the country.

• Issues such as regulatory overlap between multiple agencies for MMLP development and acquisition of land for the construction of the infrastructure, among others, have been impediments to the development process. Some measures that may be undertaken by the government to foster logistics infrastructure development include:

  i) Setting up and empowering an independent department for logistics and trade/ freight facilitation. Instead of the present context where multiple agencies undertake development of MMLPs -- leading to inefficiency in infrastructure planning and regulatory delays in approvals -- this department should act as the nodal agency for providing approvals for all kind of terminal infrastructure, including MMLPs, ICDs, CFSs, PFTs, and logistics parks.

  ii) This new department should develop perspective plans and vision documents for development of such facilities at non-competing locations to bring in efficiencies in the infrastructure planning and development process.

  iii) Delineation of a dedicated land bank for logistics facilities could be considered across all states to streamline and speed up the land acquisition process.

  iv) There is a need to boost private sector participation in logistics infrastructure creation. The focus should also be on developing and operating common user terminals with the government playing a facilitative role for easy access to land, providing road/rail connectivity to the facility, and supporting infrastructure in terms of water, electricity and fuel.

• The availability and adequacy of storage infrastructure across different commodity groups, especially for industrial goods, is a constraint in the country. Also, the lack of minimum quality standards prescribed by a government agency has led to mushrooming of facilities across the country with sub-optimal utilisation. There is scope for prescribing minimum standards/norms for the establishment of quality facilities, ensuring ease of seeking approvals through a single window mechanism, etc.

  (The writer is Partner, Deloitte India)

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By Mahesh Iyer

New Delhi, June 28 (IANS) The travel and tourism industry is a crucial contributor to the growth of the Indian economy with a powerful multiplier impact on employment generation and we are hence confident that the Union Budget introduced by the government will strengthen the industry with continuity of its tourism friendly policies to give a fillip to India's inbound, domestic and MICE segments.

We look forward to increased focus and sustained delivery on key initiatives like Ude Desh ka Aam Nagrik (UDAN) aimed at enhancing the regional connectivity and affordable air travel, Heritage City Development and Augmentation Yojana (HRIDAY), integrated development of pilgrimage destinations through Pilgrimage Rejuvenation and Spirituality Augmentation Drive (PRASAD), increased allocation towards enhancement of the e-Visa initiative to include additional countries, development of new tourism circuits and attractions, along with increased focus on infrastructure - roads, railways, airports, waterways and sanitation to catalyse growth.

Given the recent developments and challenges faced by the aviation sector, we believe there is an urgent need for a holistic view and corrective measures to be taken in the interest of the larger tourism, hospitality and business environment.

Our wish list also includes clarifying the issue of Air Travel Agents being subject to Tax Collection at Source. The amendment of the proviso to section 16(2) in claiming input tax credit on the tax charged by the airline will also help in providing for the specific scenario of payment made by corporates or registered passengers to a travel operator.

And finally by focusing on Corporate Tax for the FY 2019-20, we look forward to a reduced corporate tax structure of 25 per cent across the board.

(The author is Executive Director & Chief Executive Officer, Thomas Cook India Ltd)

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New Delhi, June 28 (IANS) The government should ensure adequate liquidity into NBFCs, provide investment incentives and cut corporate tax rates for revival in the economic growth and creation of new entrepreneurial opportunities, industry body Assocham has said.

Assocham President Balkrishan Goenka and Senior Vice President, Niranjan Hiranandani sought specific measures to address the liquidity issues being faced by NBFCs.

"It could be a special window, one-time roll over or any other step. Rushing companies into National Company Law Tribunal (NCLT) because of liquidity shortages is not the solution," Goenka said.

He added: "We demand 100 per cent depreciation in the first year of new investment. A five per cent cut in the corporate tax will revive investment."

Talking about the significant potential in India's tourism sector, Goenka said, "There are more than 1,200 islands which need to be developed with purchasing power parity (PPP) model. These could be handed over to developers for 20-30-40 years to develop the infrastructure for better connectivity. Besides, visa on arrival facility should also be extended to ensure hassle free visit of foreign tourists."

Certain segments like automobile, construction, housing, NBFCs, aviation and exports are facing rough weather owing to multiple factors and require a delicate handling in terms of policy and fiscal measures.

Along with these measures, the GST Council may be impressed upon for rationalising taxes on vital sectors like automobiles and cement to lower slabs of 18 per cent for demand generation while sectors like jewellery making may be helped with lowering of import duty on gold, as prices of the yellow metal are shooting up in the international market.

Revival of the NBFCs with the help from the RBI and the banks, is key, Goenka said.

For boosting consumption demand and investment, the Assocham has made a recommendation for raising the personal income tax exemption to Rs 5 lakh and reduce the corporate taxes to 25 per cent to spur consumption and investment. FDI threshold for some key sectors like defence and insurance may be revised upward or eliminated.

In his remarks, Assocham Senior Vice President Hiranandani said: "The sectors like housing, real estate, construction have a huge multiplier effect on the economy, creating millions of jobs, adding immense wealth to the exchequer and lifting the consumer sentiment. So, there is a great expectation from the Finance Minister, particularly with regard to these sectors."

Hiranandani said the Narendra Modi government had done a commendable work in affordable housing during its first term.

"The focus on affordable housing is expected to continue with further refinement in the scope of the scheme for interest subvention. Besides, the issue of redevelopment of land and making land available in the metro cities for bringing prices in the affordable range would require the urgent attention," he said.

He also said with retail trade being the backbone of the economy, commercial real estate is critical for growth of organised retail which must come up manifold in malls and specialised complexes.

The suggestion for creating a stress fund for the stalled housing and real estate projects should be pressed for as with not too large a corpus for short term, projects worth lakhs of crores of rupees would come to fruition, providing a big relief to the home buyers and revival of sentiment in the sector.

Goenka said: "We are fully with the government for boosting the agriculture sector; while the aim of doubling farmers; income by 2022 may sound ambitious, it is doable if massive investment is made in agri and the entire rural infrastructure like irrigation projects, cold storage, supply chain, road and rail connectivity."

"Linkages with the food-processing industry would make a huge difference along with the technology enabled aggregators. We expect the Budget to give a major boost to this sector by fiscal and administrative measures, taking states on board," he added.

Along with the agriculture, social infrastructure of education and health, would also require immediate intervention and indications suggest that the government is fully committed. We would request the government to make further ease for enhanced role of the private sector in both these sectors through Public-Private-Partnership mode.

"The Insolvency and Bankruptcy Code is an effective tool, but we need broader approach to even avoid companies landing in the IBC process. A clearer approach would be available in the budget and even afterwards. Speedy disposal of IBC cases and lesser litigation can make a big difference to the resolution process," Goenka said.

The focus on infrastructure is expected to continue and that is a big plus.

Under the Bharatmala Project, road construction/upgradation for 35,000 km of national highways by 2022 would have a great multiplier effect.

Investment in Railways for over Rs 1.50 lakh crore would also create great opportunities and scale up the country's infrastructure.

However, with no development financial institutions and the banks; inability to lend for long-term projects, a specialised funding apparatus for infrastructure projects need to be created with the help of government and multilateral agencies like the World Bank.

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New Delhi, June 27 (IANS) Raising concerns over the survival of solar modules manufacturers, the All India Solar Industries Association (AISIA) in its pre-Budget recommendations has called for providing incentives, such as subsidies for power, capital, interest and depreciation to the industry as well as allowing duty-free import of manufacturing equipment.

The association recommended raising export incentives from 2 per cent to at least 10 per cent for the Indian solar modules manufacturing sector to reap the benefits of 'Make in India' initiative.

AISIA is an apex association comprising over 18 domestic solar module manufacturers and has been endorsed by Ministry of New and Renewable Energy (MNRE) for its initiative in enhancing the capabilities of Indian solar sector.

The recommendations come in the backdrop of the last fiscal year with major issues of imported modules, as well as components, at 'dumping' prices, from China, Malaysia, Singapore and Taiwan, and bypassing the safeguard duty tariff, apart from issues of GST and SDG.

Several unimplemented items, such as the KUSUM and SRISTI schemes, and additional capacity creation, could move at a faster pace, as the Finance minister has strongly pitched for making solar energy as the "third crop for the Indian farmer".

"All this hope would come to naught if the basic tariff issues are not resolved in the Budget. It is time India took a definitive step in the anti-dumping war that is currently raging in the solar energy sector. A potential solution could be to create a high trade value against cheap imports from countries like China and/or a countervailing duty, to offset the huge subsidies offered by China to its solar manufacturers or offering preferential tariffs to domestic solar equipment manufacturers," said AISIA.

The industry estimates that the minimum safeguard duty to ensure sustainability of this sector should be 45 per cent to enable it to achieve the nation's goal. The need of the hour is a set of favourable policies that will foster rapid growth for the solar power industry.

The industry employs over 115,000 people and almost the same number in the support and ancillary value chain. The solar power industry across the globe is committed to 100GW in solar energy generation in the next 40-45 months.

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Sangita Reddy, Senior Vice President, Ficci, said on Thursday that the industry is looking forward to a clear and proactive policy in the upcoming budget including priority status to the health sector.

"Healthcare must receive a priority status so that it enables easier access to funding," said Reddy, who is also the Joint MD, Apollo Hospitals Enterprise.

In a video address on Ficci's Youtube channel, Reddy noted that India has done a "commendable job towards universal health coverage by undertaking Ayushman Bharat".

However, she added that private sector participation will be needed to scale up in areas like capability, number of beds, manpower and training.

"The industry is also seeking support to get investment towards the new age healthcare and in that, data sharing, digitalisation, electronic health record, personal health records - all are very important buzz points," she added.

Recommending steps to support startups, Reddy said that angel tax must be removed as it helps in spurring the entrepreneurial spirit, creating and nurturing innovation, and creating startups which can be the unicorns of tomorrow.

Highlighting the importance of the environment and water, she said that some important budget announcements for water conservation and preservation were expected.

On taxes, the Ficci official said that reduction in corporate tax will boost the mood of the corporate sector and support the economy.

Also, an upward revision in the individual income tax slabs will further boost consumption and enhance GDP growth. Reddy also said that there are a lot of opportunities for the banking sector.

"The banking sector needs further look whether in terms of promoting greater liquidity or innovation in terms of the enablement of more hands having access to low cost funding," she said.

Reddy stressed on strengthening the education sector.

"The education sector and the follow through of what happens to human resources is another very important area which I am sure the budget will focus on," she said.

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By Peeyush Naidu

Introduction of semi high speed trains (such as Train 18 and Talgo) on moreroutes as well as fast tracking station redevelopment programme for key metro cities would go a long way in meeting passengers' needs as well as aspirations.

Indian Railways should judiciously invest in track creation to strengthen stressed routes and also open up intrinsically remunerative routes. The government should attract private sector investment in various areas such as station development for effective passenger management and unlocking non-fare revenue, freight terminals for common use mainly through redevelopment of strategic goods sheds, construction of PFT terminals, and owning and maintenance of rolling stock.

There has been heightened focus on increasing the modal share of railways for the movement of inland freight. Improving network capacity through signalling projects, upgrading loop line infrastructure to enable running of longer trains (2x-4x of current size) and completing ongoing line expansion projects on time would go a long way in improving average speed of freight trains.

The government should create an effective ecosystem for the Dedicated Freight Corridors (DFCs) to become game changers in freight logistics. Apart from speedy completion of the eastern and western DFCs as well as sanctioning additional 4 DFCs already planned, there is a pressing need to focus on developing enabling ecosystem such as marketing, commercials and operational strategies to optimize utilization of all this new infrastructure.

Aviation:
To bring down the high taxation on aviation fuel - among the highest in the world, the Government could consider bringing aviation turbine fuel (ATF) and other related fuels (used for commercial scheduled/non-scheduled operations and training purposes) under GST.

To provide a fillip to its marquee Regional Connectivity Scheme to improve air connectivity to remote areas, the Government should provide incentives/budgetary support in terms of promoting use of smaller aircrafts under the scheme, providing additional funds for VGF support under the scheme, and developing airport and seaport infrastructure in Tier-II and Tier-III cities of the country.

High taxes have led airlines to outsource 80-85% of the country's $1.4 billion MRO business to international providers. The government must focus on reducing the tax burden impacting the growth of MRO industry by reducing GST rates, and removing instances of tax on certainitems which attract an import duty as well as a GST over and above that.

Logistics:
There has been a thrust on development of multimodal logistics parks (MMLPs) in the past few years to boost multimodality and integration of logistics services in the country. In addition to the proposal for developing 35 MMLPs across the country, the government has also drafted an MMLP Policy to serve as the guiding document for the development of MMLPs in the country.

Issues such as regulatory overlap between multiple agencies for MMLP development, acquisition of land for the construction of the infrastructure among others have been impediments to the development process. Some measures that may be undertaken by the government to foster logistics infrastructure development include:

Setting up and empowering an independent department for Logistics and Trade/ Freight Facilitation. Instead of the present context wheremultiple agencies undertakedevelopment of MMLPs - leading to inefficiency in infrastructure planning and regulatory delays in approvals, this department should act as the nodal agency for providing approvals for all kind of terminal infrastructure, including MMLPs, ICDs, CFSs, PFTs,and logistics parks.

This new department should developperspective plans and vision documents for development of such facilities at non-competing locations to bring in efficiencies in the infrastructure planning and development process.

Delineation of a dedicated land bank for logistics facilities could be considered across all states to streamline and speed up the land acquisition process.

There is a need to boost private sector participation in logistics infrastructure creation. The focus should also be on developing and operating common user terminals with the government playing a facilitative role for easy access to land, providing road/rail connectivity to the facility, and supporting infrastructure in terms of water, electricity and fuel.

The availability and adequacy of storage infrastructure across different commodity groups, especially for industrial goods, is a constraint in the country. Also, the lack of minimum quality standards prescribed by a government agency has led to mushrooming of facilities across the country with sub-optimal utilisation. There is scope for prescribing minimum standards/ norms for establishment of quality facilities, ensuring ease of seeking approvals through a single window mechanism, etc.

(The author is partner, Deloitte India)

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New Delhi, June 27 (IANS) The Federation of All India Farmer Associations (FAIFA) has urged Finance Minister Nirmala Sitharaman to correct an error in cigarette taxation under the new tax regime, which did not account for the cascading effect on excise duty that existed in the pre-GST system.

FAIFA is a non-profit organisation that represents the cause of farmers and farm workers of commercial crops across the states of Andhra Pradesh, Telangana, Karnataka and Gujarat.

In a letter written to the Finance Minister, which has also been submitted to various concerned Ministries including the PMO, Ministry of Health and Family Welfare, Ministry of Agriculture, Ministry of Commerce and Industry, Ministry of Labour, the association has highlighted that error in cigarette taxation has inadvertently increased compensation cess rates that has resulted in additional taxes of around 13 per cent above the pre-GST levels.

"Any additional burden caused by the increase in compensation cess rates will put further pressure on the livelihood of Indian tobacco farmers. As observed in the past that increase in taxes have resulted in the inflow of huge quantities of illicit cigarettes in the market," the FAIFA letter to Sitharaman said.

The legitimate cigarette industry size in India, which was at 110 billion sticks in 2011-12 as per industry estimates, has dropped by 25 per cent to about 83 billion cigarettes in 2016-17. In contrast, the illegal, duty-evaded cigarette segment has grown to about 26 billion cigarettes in 2017, i.e., almost one-fourth of the industry.

To ensure livelihood support for tobacco farmers, FAIFA has appealed to roll back tax increase so that taxes on the sector comes back to pre-GST revenue neutral rates. The federation has also said that government should have a tax policy that disincentives illicit trade of cigarettes. It has also urged for reinstatement of tobacco export incentives to boost the economy of Indian Flue Cured Virginia (FCV) farmers.

"... we would like to underline that the principle of revenue neutrality has been reiterated time and again by the government in respect of fixation of tax rates in the GST era," Javare Gowda, President, Federation of All India Farmer Associations (FAIFA), said making a case for restoring taxation to pre-GST levels.

The entire legal cigarette value chain is presently reeling under penalising taxation on account of continuous increases in excise duties and compensation cess on cigarettes, which have cumulatively gone up by 202 per cent between 2011/12 and 2017/18 leading to shrinkage of cigarette volumes by more than 25 per cent since 2012/13, FAIFA has said.

Murali Babu, General Secretary, Federation of All India Farmer Associations (FAIFA), said: "We have tried out various alternative crops and burnt our fingers. The chilli crop as an alternate to tobacco has miserably failed during last season. In fact, since 2013-14, the earnings of FCV tobacco farmers have shrunk cumulatively by more than Rs 4,000 crore due to drop in production (refer graph) of tobacco for the manufacture of domestic legal cigarettes. For the first time, 22 FCV farmers committed suicide and many are under huge debt in the states of Andhra Pradesh and Karnataka."

According to FAIFA, a steep increase in excise duty in the recent past has led to growth of smuggling of cigarettes in India due to the high tax arbitrage.

There has been a 32 per cent increase in illegal cigarette trade, increasing from 19.5 billion sticks in 2011 to 25.7 billion sticks in 2017, making India the 4th largest illegal cigarette market in the world (as per Euromonitor International) and further supported by an independent study done by FICCI.

It has resulted in revenue losses of approximately Rs 13,000 crore and is growing annually.

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By Arindam Guha

New Delhi, June 26 (IANS) Agriculture continues to be one of the largest livelihood and employment generating sector in the country, with over 50 per cent of the population deployed in it. Its contribution to India's 2017-18 GDP, however, was less than proportionate at 17-18 per cent. In a bid to remedy this situation, the government has set itself the target of doubling farmers' income by 2022.

Some of the key levers for achieving this include:

-- Diversifying towards high-value crops.

-- Increasing productivity through adoption of technology.

-- Increasing cropping intensity.

-- Securing better trade terms for farmers.

-- Redeployment of surplus manpower engaged in farming to non-farm and subsidiary activities.

The interim Budget 2019-20 has already provided for increased outlays on schemes like PM-Kisan, price support, agriculture mechanization, the Green Revolution, etc., which are targeted at these enablers, while total allocation across Central Sector Schemes and Centrally Sponsored Schemes in agriculture has doubled from Rs 67,800 crore to Rs 129,550 crore.

Some additional measures which may be considered as part of the final Budget 2019-20 are:

-- Suitable policies for ensuring convergence at the ground level, backed by suitable institutional mechanisms for coordinated implementation, of related schemes, run by other ministries, eg the National Rural Livelihood Mission run by the Ministry of Rural Development, etc

-- Extending the benefits of the Credit Guarantee Fund scheme (for collateral-free lending) to farmer producer organisations (FPOs), beyond those incorporated under the Companies Act and having a minimum of 500 individual shareholders, as a large number of FPOs are registered as cooperatives with fewer than 500 members.

-- With livestock productivity another lever with the potential of augmenting farmers' income, the interim budget's proposed Rs 2,200 crore outlay on such "White Revolution" may need to be re-evaluated.

Infrastructure financing

With an estimated Rs 50 lakh crore needed to meet India's infrastructure requirements till 2022, infrastructure financing is key to achieving the country's economic aspirations. With the interim budget 2019-20 allocating around Rs 4.56 lakh crore, but, given the need to meet fiscal deficit targets, the need to attract financing from non-government sources becomes important.

Key issues which need to be addressed include:

-- Reducing dependence on bank financing and increased participation of long-term financiers like pension, insurance, and sovereign wealth funds, thereby addressing issues of asset liability mismatches and increased risk of default.

-- Mitigating high risk profile during the initial period of a typical infrastructure project due to delays & uncertainties in procuring land, obtaining regulatory approvals etc. which impact credit rating and deter private investment.

-- Inadequate depth of the infrastructure/corporate bond market which, in turn, impacts the ability of infrastructure companies to raise resources, due to a variety of factors like regulations limiting investments from pension funds/insurance companies.

For strengthening initiatives like announcement of the Infrastructure Investment Trust guidelines by the SEBI in September 2015 and the Insolvency & Bankruptcy Code, 2016 and deepening the infrastructure finance market further, the final Budget 2019-20 may consider the following:

-- Mandating the Department of Economic Affairs to develop a consolidated strategy for blended financing of infrastructure projects in different sectors of the economy in consultation with the respective Ministries/Departments, and aligning it with key SDG goals.

-- Extending the definition of CSR expenditure to include participation by corporates in augmenting or developing infrastructure related to health, education, etc., including projects/initiatives leveraging technology. A single window mechanism for granting CSR status to the contribution/investment made by the corporate should also be set up.

-- Exploring whether a sub-limit of, say, 5 per cent could be created for pension funds/insurance companies' investment in infrastructure instruments rated BBB, within the original cap of 15 per cent.

-- Augmenting credit enhancement facilities available for infrastructure projects beyond the facility provided by IIFCL through suitable fiscal incentives to large global infrastructure financiers.

-- Introducing regulatory and fiscal measures to incentivize setting up of sector-specific infrastructure financing platforms like NIIF-Roadis, which would help pooling projects of different sizes and different stages of maturity to improve overall risk profile and facilitate private sector investment.

Ease of Living

One of the key focus areas for the current government is increasing ease of living of citizens. To enable a clear identification of underlying issues, it is important to separately assess the two important constituents of the population - urban and rural. However, there are a set of common enablers which are likely to significantly impact ease of living across both these categories. These include:

-- Adequate physical connectivity in the form of road/railway network etc. both for external, and internal, connectivity of the city/village.

-- Dwelling unit/housing which meets minimum standards on ownership or rental basis.

-- Availability of basic amenities/facilities like electricity, water, sanitation, waste collection etc. at the household level.

-- Minimum standards of healthcare and education.

-- Access to livelihood opportunities for sustainable income generation.

-- Citizen-friendly and responsive governance & administration, with physical touchpoints only, when absolutely necessary.

Let us now look at the specific ease of living prerogatives for urban and rural India.

Urban

Apart from the measures in the interim budget on key urban sector schemes like the Swachh Bharat Mission (Urban), the Prime Minister Awas Yojana, and the Smart Cities Mission, the following additional measures may be considered in the final budget:

-- Separate budgetary support for fast-tracking adoption of city-level technology platforms and innovation eco-systems like the India Urban Data Exchange and National Urban Innovation Stack in other cities.

-- Launching a National Urban Mobility Mission to comprehensively address all related issues ranging from transit-oriented planning to facilitating set up of multi-modal mobility platforms to meet public transit requirements in an environment-friendly manner. This can leverage the existing allocation of Rs 18,000 crore towards MRTS/Metro projects in the interim budget 2019-20.

-- Extending the right set of fiscal concessions (like considering any investment in such initiatives as contribution towards CSR) to the private sector for involvement in leveraging existing platforms and eco-systems available with them for public good, backed by suitable regulatory safeguards.

-- Setting an urban infrastructure financing agency both at the state and city level, wherever it does not exist. Government assets like land can then be vested in this entity, supplemented by escrow of quality cash flows receivable for urban services, to enable it to raise external resources on commercial terms. The initial seed capital for this agency can be provided in the budget.

-- With the city-level SPV essentially being involved in discharging some functions of the city corporation/urban local body, requisite exemptions under the GST Act and other related provisions may be extended to it.

-- For financial sustainability, a suitable regulatory framework for transparently determining the cost of providing water together with a tariff structure which enables cross subsidization towards maximizing cost recovery may be considered. This would also necessitate separating the roles of service provider and regulator, as in the electricity sector.

Rural Development

Some key considerations for the final Budget 2019-20 are:

-- A specific scheme for providing piped water connections at the household level is an immediate priority. The outlay on any such scheme is likely to be in excess of Rs 30,000 crore annually

-- Leveraging the existing private sector health and education sector facilities/eco-systems through technology-enabled initiatives like telemedicine and distance learning to leapfrog implementation, particularly for Health & Wellness Centres under Ayushman Bharat, village level primary schools, etc. These can be covered as CSR efforts.

-- An immediate need for extending other technology-enabled initiatives like land record digitisation, etc., at the village, or the cluster, level for streamlining citizen services.

-- Suitable mechanisms for ensuring convergence of all the schemes at the village or cluster level and single-point monitoring for effective implementation.

(Arindam Guha is a Partner at Deloitte India)

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