India needs structures like the Goods and Services Tax Council to push through reforms in land, labour and energy that lie in the domain of both the Centre and states, newly elected Confederation of Indian Industry (CII) president Sanjiv Bajaj said.
In an interview with ET, Bajaj also pitched for a cut in taxes on petroleum products to cool down inflation, saying the measure will dent government finances in the short term but can help the economy in the long term, and said the Reserve Bank of India (RBI) should take a calibrated approach while raising rates.
Bajaj, who is the chairman and managing director of
Bajaj Finserv Ltd
NSE 0.23 %, said a combination of confidence, capability, capital and a conducive environment by the government is creating a whole new set of opportunities for business.
He suggested widening production-linked incentive schemes and pushed for further ease of doing and cutting the cost of doing business.
A body like the GST Council is quite effective and plays a balanced role between the Centre and the state, if you see the kind of changes that are made in the last two years… In the same way, land, labour, and energy, which are state and central subjects can be dealt with similar councils,” the CII president said.
This would help in bringing alignment in local issues of states as well as central priorities.
On macroeconomic challenges, Bajaj said the economy is in a “period of a significant amount of uncertainty” and batted for a cut in fuel taxes. “We need to bring respite on the ground and that’s why at CII we suggested that the Centre and states should work in a collaborative manner to cut taxes on petrol and diesel,” he said.
In the last few years, when oil prices went down, the government raised taxes and built a buffer zone over there. “We believe that addressing taxation on fuel can play a significant role in cutting down inflation,” he added.
Bajaj said though consumption has gone up, it is uneven between rural and urban India, and with the interest rates cycle going up, the domestic demand will start slowing down. He hoped that the Reserve Bank would calibrate the tightening.
“So, while we expect some rate hikes, we hope that it is more calibrated. What we hope to hear from the RBI is how they are seeing the next year…what are the triggers on which they will make further rate hikes. Because it sets a path for the industry to align itself,” he said.
On private capital investment, he said there is a big uncertainty of war though the pandemic was in a more liveable kind of situation. “Fortunately, demand is there and capacity is at a level where it is triggering (capacity enhancement and investments)… That’s why some sectors are investing,” he said.
Source-https://economictimes.indiatimes.com/news/company/corporate-trends/cii-president-sanjiv-bajaj-for-gst-council-like-bodies-for-energy-labour/articleshow/91626269.cms