Great expectations - but will the new govt. deliver?
The mammoth Indian elections are over and the people have decided on a stable and progressive government.
With the Left parties out of the coalition, everyone now sees the UPA government headed by Dr Manmohan Singh as reform friendly.
The Manmohan Singh government now needs to focus on issues like fall in industrial output, dip in exports and slowdown of the Indian economy. I get a feeling that if the government keeps up with the economic reforms announced earlier, the economic revival of the nation will be easier and faster. Already on the first day after the polls results, the equity markets gave a thumbs up surging to record levels.
From the exporters' point of view, it is a fact that they (the exporters) are working on thin margins. Thus reforms in income tax can help exporters modernize and expand their manufacturing.
Exemption instead of refund of service tax can be the order of the day. There are enormous delays in getting refund of service tax and a great deal of paper work is involved in making applications for refund. So giving exemption from service tax can help exporters and save a lot of precious time.
Issues like lowering credit rate, deduction on investment made in plant and machinery for expansion and modernization of manufacturing facilities, cut in transaction cost by simplifying procedures, introducing accountability among all agencies involved in exports, development of exports-related infrastructure like ports, airports, roads, and containers need to be addressed on a priority basis to ensure that the economy springs back to normal.
Meanwhile the Small and Medium Enterprise (SME) sector needs special attention from the new government. To develop the sector, the government needs to look into issues including interest subvention and credit availability which can take the sector to the path of growth and independence.
The industry has great expectations of the new government. But the question is: will this government deliver the goods?
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