Business & Investment

Budget 2021: How to procure resources for your budget without tax increases or financial slippage

Nyle Shah

Kotak AMC Co-President and MD

Shah has over 25 years of experience in the capital markets. He has managed equity, fixed income and real estate funds. He studied at the Institute of Chartered Accountants of India. Shah also co-authored a book called “A Direct Take.” His dream is to go backpacking with his better half someday.

from now on Union budget We should aim to put India on an accelerating growth trajectory in the post-Covid-19 era. This can be achieved by raising resources without raising taxes, spending money to stimulate the affected sectors of Covid-19, and staying on the path of fiscal prudence.

This seemingly difficult Trinity can be achieved by innovative means. In the first half of 2009, government spending was slightly lower than the previous year due to lack of revenue.There is no luxury to grow tax Fee. Sufficient resources need to be procured through innovative means such as:

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  • Over $ 2 trillion in Indian savings have been frozen in gold. Unfortunately, most of it is in the dark / dark economy. A well-structured disclosure scheme will bring taxes to the government, bring equity to the hands of businessmen, and generate domestic savings to fund the investment to build the Aatmanirbhar Bharat. Sovereign rating upgrades may be an additional bonus if gold is purchased by RBI. Encouraging jewelers to market these schemes is important to their success.
  • Monetization of assets such as surplus defense land, railroad land, roads and transmission towers REITS INVITS can procure resources at competitive rates in a world of excessive liquidity and low interest rates. Monetizing real estate under the control of enemy assets can raise more than 100,000 rupees. If Pakistan can liquidate its share of the enemy’s assets in 1971, India is confident that it can do so in 2021.
  • Integrate underground activities such as gambling and betting to bring taxes, increase jobs and block funding for criminals. These activities should be encouraged to adopt responsible industry practices.
  • Introduce a program equivalent to ethical hacking to close tax loopholes. Instead of finding loopholes, work with the best brains in the country to close the loopholes. For example, a tax loophole on a listed bond can help convert interest income taxed at 43% into LTCG taxed at 10%, resulting in a loss of thousands of rupees.
  • Smuggling / illegal tobacco is a big waste of tax revenue. The rule of law must be prioritized to reduce the leakage of such activities and clogging.
  • Choose PSU’s Strategic Withdrawal / Public-Private Partnership instead of selling the market. PSU Stocks are traded at a price below book value with a discount of 60% or more over the place where the market is traded. This sharp downgrade of the PSU is primarily due to the predictable supply of market sales. If there is no supply, the PSU will help you get a rerating. Sales such as Hindustan Zinc / Maruti Suzuki will maximize the government’s holding value in the PSU, with business management remaining in the private sector and a minority investing in the government. Resources procured by such means should be used to stimulate the sectors adversely affected by Covid-19 and create a multiplier effect on the economy.
  • Households’ share of total capital formation fell from 16% to 11% of GDP between 2012 and 2020. As real estate prices have risen and interest rates have risen, Star is currently adjusting to recover household investment in GCF. Down, RERA has created a fair competition between developers and buyers. The budget should encourage household investment in real estate by increasing deductions for mortgage and mortgage repayments.
  • Due to the high cost of electricity and logistics, manufacturing is not as competitive as its peers. Agricultural electricity subsidies burden industrial electricity. Passenger fare subsidies burden rail freight. The budget needs to create a roadmap to remove the subsidy burden on agricultural electricity and passenger fares and make manufacturing competitive with its peers.
  • Most countries in the world are significantly increasing their budget deficits to manage the negative effects of Covid-19. India can look like a desert oasis if it continues on the path of fiscal prudence by funding the stimulus needed for innovative resource procurement.

The budget needs to lay the foundation for accelerated growth from 2010 onwards, while emphasizing government social spending for the benefit of rural India, farmers and the poor.

Budget 2021: How to procure resources for your budget without tax increases or financial slippage Budget 2021: How to procure resources for your budget without tax increases or financial slippage

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