Kochi, February 2, 2016: Focus on agriculture, encourage household savings, abolish income tax, bring back black money, bring
financial transparency, enhance penetration of medical/Life insurance, explore PPP for healthcare, indigenization of medical equipment – these were some of the items on the wish-list of eminent panelists who participated in a
pre-budget analysis session held at the Indian Institute of Management Kozhikode (IIMK) Kochi Campus.
The session's keynote speaker was renowned economist, senior BJP leader and ex-MP Dr. Subramanian Swamy. The panelists
included the likes of Dr. VK Vijayakumar, an investment strategist with Geojit BNP Paribas; Dr. Venkatachalam Shunmugam, a Senior Financial Markets and Risk Professional; Dr. K. Hari Prasad, President, Hospitals Division, Apollo
Hospitals Group; Mr. V George Antony, Managing Director of UAE Exchange, India and Mr. George Korah, Managing Partner of M/s Korah & Korah Chartered Accountants, Kochi. Dr. Rudra Sensarma, Associate Professor in Economics at
IIM Kozhikode, moderated the discussion.
Mr. Subramanian Swamy, at the session, said, "The government has been taking many positive steps for the Indian economy, since the last two years. I hope that the Union Budget 2016 is
growth-oriented and proves its commitment to the Indian middle-class by taking steps to alleviate their concerns." Dr. Swamy suggests reforms to accelerate export of agriculture produce. He attributed much of the stress in
financial institutions to loans advanced to large companies. This budget should focus on measures to improve access of funds by Small and Medium Enterprises (SMEs). He strongly suggested an enhancement of investments as a
proportion of GDP and at the same time reduction in the capital used to produce a unit of output. While the former can be achieved by: (i) improving the household savings rate, which can be achieve by increasing the term deposit
rates as well as by abolishing personal income tax with a caveat to invest this money in the banking system and (ii) reduction in lending rates. To address the later, Dr. Swamy suggested measures to curb corruption and
Dr. Rudra Sensarma said, "The panel discussion brought forth diverse perspectives on a wide-range of issues. It will be interesting to see what the Modi government does this year to address the demands of
corporate and the burgeoning Indian middle class."
The panel discussion touched on a variety of themes such as the balance between Startups v/s Large Infrastructure Projects, the 'Make in India' initiative, Public Private
Partnership as a tool for sustainable growth, poverty alleviation through financial inclusion, Universal Health Coverage in India among others. Prof. Rudrasen Sharma provided a brief overview of how an economy is analyzed from the
view point of a macro economist. There are four macros for economists-(i) GDP growth rate which currently is at 7.5%, (ii) Inflation which is currently at 7-8% CPI, (iii) Fiscal deficit which is currently at 3.9% and (iv)
Current account deficit which measures the vulnerability of a economy to external shock, is estimated to be 1 to 1.5%. However, there are concerns on the reduction in industrial growth rate, reduction in bank credit disbursal and
stalled economic reforms. The new challenges as per Prof. Rudra are the same old acronym LPG which now stands for Land acquisition, Privatization and GST.
Dr. Vijayakumar suggested fiscal consolidation even if it comes at
the cost of growth being capped at 7-8%. The current slump in growth is primarily driven by a crash in global commodity prices and this recession which Dr. Vijaykumar coins as "Made in China" is probably not going to last long and
hence he is optimistic about future growth rate. Dr. Vijaykumar was of the opinion that a reduction in interest rates at a time when Fed is thinking of quantitative easing would result in a capital flight and hence
detrimental to Indian economy.
Dr. Venkatachalam argued that a sub 30 price of crude is not necessarily good for our economy since about 30% of our export revenues are actually due to petroleum products. Further, there is a
high probability of capital flight from emerging markets due to a reduction in investments by sovereign funds origination in oil rich economies. He expects a easing of FDI norms and processes to attract foreign investments.
Dr Hariprasad, regretted the neglect of Health sector in all prior union budgets. He despised the existence of luxury tax on admissions to ICU. Although medical tourists spend four times the amount normal tourist pays, their
visa process and fees are higher than normal tourists. Apart from addressing these issues, he also expects a comprehensive PPP policy in hospitals and incentives to indigenize medical equipments.
Mr. George Korah, suspects
that the high tax rates in GST may adversely impact the poor. He sought more clarity on the definition of a startup in this union budget. Mr. George recommended exemption limit on personal income tax to be increased to Rs 10 lacks
per annum and a super rich tax slab of 40% in addition to the existing three slabs.
Finally, Prof. Rudra summarized the discussion commenting that the focus of the current government is more about governance than on big bang
policy reforms. Hence, he expects this budget to be a non event.
About Indian Institute of Management, Kozhikode
Started in 1997 with its Postgraduate Programme (PGP), the Indian Institute of Management
Kozhikode (IIMK) is on a high growth trajectory today, offering widest range of academic programmes in the field of management education. These include Fellow Program in Management, Executive PG Programs, Management Development
Programs and Faculty Development Programs. IIMK set up a Satellite campus at Infopark, Kochi, in 2013 dedicated to Executive Education.
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