The Hindu Business Line : Bollywood bet to get big business out of the woods

Story so far: The Finance Minister is busy listening to suggestions from various groups and industry bodies. Company captains, including my company chief, voice their views on what they expect from the next Budget.

Episode 81

As in school, where we are asked to write an essay on "If I were the PM... ," my poser last week was on what you would like to say if you were asked for suggestion by the FM. "Dear Swati," writes Thangavelu. "Giving suggestions to an FM like PC is like carrying coal to Dhanbad." A diffident note, but the Newcastle shift should be flattering for our Bihar Minister.

"Do not appease government servants or middle class," continues my correspondent. Why? "They can never be satisfied. Raise the price of cooking gas, because the middle class spends more on cable TV than gas. Eliminate import duties on kerosene, so that it is freely available to the poor at their doorsteps (considerable time is wasted by them to obtain kerosene from ration shops). Insist on service providers, such as tax consultant, auditors, lawyers and so on (doctors?), to file counterfoil of original receipts given to their clients, which contain clients' complete address and PAN. These receipts should be checked at random in select cases if necessary.

"Eliminate Excise duty on agricultural inputs and machineries to boost the mechanisation and modernisation of agricultural sector. Fix a slab rate taxes for each filled up seat in engineering and medical colleges in `payment seat' category. This amount should be clubbed to new educational cess. Impose emigration tax on students (on deferred payment basis) when going abroad for higher studies; it will be cancelled once they return home and stay here for five years. It can be in the form of bank guarantee. All inventions for import substitution should be exempt from any tax for 10 years.

"Completely computerise and modernise the tax collection system. No tax should be levied on day-to-day products used by ordinary people. All export income should be taxed at least moderately. Give tax incentives to banks, which modernise 100 per cent of their branches and exceed loan targets on agriculture sector and export sector but penalise heavily who do not meet the target. Allow foreign banks to open branches in semi urban and rural areas."

Thangavelu has more ideas: "Instead of raising the basic exemption rate, the following further deductions may be allowed: 50 per cent of the educational expenses for the first two kids; complete interest paid on educational loan; pensions should be tax-free; to make employees opt for VRS, entire gratuity and other compensations should be exempted from any tax. Companies that spend considerable amount for development of housing colonies for employees should be given as additional incentive." Looks like a full-scale budget!

"Hi, have nice time, sorry for intriguing, just I want to know you please give me something details about you. Myself bapi, from Hyderabad, a student of mass comunication. Please... I am waiting ur reply. thanking you," is a mail I choose to ignore.

"The main agenda would definitely be decrease in tax rates and abolition of surcharge," suggests Kamal Anil Kapadia, CA from Mumbai. "Decrease of tax for salaried employed people will result in more spending and saving power, which will boost industry. Tax rates should be rationalised. Emphasis should be given for clearing old cases which are pending for hearing and where crores of rupees have been blocked for years on end. Electronic mode of filing returns should be adopted and proper systems should be in place to clear the scrutiny of the returns and raise demand of tax, if any, or refund the amount via ECS.

"Black money should be wiped off completely from the system. Agriculture income should be bought into the tax net. Senior citizens should be given additional rebates and deduction. The list would go on and on but let me keep my fingers crossed on how the stock market would swing to the tune of FM's speech." I think you're too ambitious about clearing black money from the economy.

J. Ravi Chander has sent in his `thoughts on Budget': "Dear Swati, I have been reading your article quite regularly, and find it very stimulating. As a youth and freshly graduated student, I perceive infrastructure development and employment to be key issues that need more attention this time, specially with globalisation and more MNCs heading towards India for setting up their bases.

"The focus should be on developing systems for better water management, food resources, land resources, air/rail/road network, cheaper communication systems, and electricity. Concept of free/subsidy should be removed, there is very little accountability and more scams with every subsidy. On attracting NRI capital, we should encourage them to invest in India, but at the same time should keep interest rates at par with the residents, in addition to making the interest accrued on the principal taxable.

"However, 100 per cent or more tax-exemption should be given on amount invested by them in any public/education/healthcare/government institution. A good way to generate employment would be to provide tax exemption to companies recruiting fresh graduates, thereby retaining our intellectual capital. Government should also have soft policies and financial aid/loans to help set up R&D labs within companies and universities, that way retaining more talent back home and generate more employment." Quite progressive, Ravi, especially your plan for employment generation.

"Dear Swati," writes R. Subramanya Sivam ACA, DISA. "The question raised by you has made every reader (including me) think in the perspective of our nation, giving our own personal demands a second priority (if not forgetting them totally)." You can call that enlightened self-interest because when everybody is prosperous, it can rub off on you too. Now, Sivam divides his suggestions into two: "Objectives of the Budgeting exercise; and

suggested steps to achieve the objectives." What are his objectives? "Make India a developed Nation by 2020. Achieve a double-digit growth rate. I feel if we are talking about 8 per cent growth we will not achieve even 7 per cent. So, only if we aim at double digit we will at least achieve 8 per cent or 9 per cent." And how to achieve the objectives?

"Step-up governmental spending on capital (such as infrastructure) rather than current expenditure. Funds can be raised by reducing expenditure on defence. Enforce fiscal discipline, avoid populist measures, ensure subsidies are minimal and they reach the deserving. Tax revenues can be boosted, by making tax laws simpler, expediting long-pending disputes and expanding the tax base. Confidence among investors in capital markets should be boosted. This is important because, capital markets are an important tool of wealth creation.

"Try to minimise the risk of loss of principal invested in capital markets and make the tax regime benign to dividends. To reduce our import bill for petroleum, we should explore for oil, and switch to alternative fuel sources. Take very, very strict measures to control our population explosion." Quite detailed.

*********"

One afternoon, a few days back, a classmate of mine working as the PR man in an FMCG major called up, "Hey, Swati, want to see a shooting?" I was puzzled, "What, Panju?" He explained that his company was making a new commercial with Aishwarya and Oberoi, and if I could spare an hour I could see the process `on location'. Went, I did, and spent more than an hour.

In a hush, I asked Panju what their budget was. "2 c," he said. I began wondering if for my company, with strengths in pharma and biotech, there could be any mileage to be gained by having these stars do a commercial. Do you think Bollywood can make a difference for business? Send in your thoughts by Friday.

Swati_CA@hotmail.com

For archived episodes of this column click on: http://www.thehindubusinessline.com/nic/swati/index.htm

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