CGI-NY organize meet with USIBC, KPMG.
Bureau Report
NEW YORK: The KPMG and US India Business Council (USIBC), in collaboration with the Consulate General of India, New York, organized an interactive panel discussion on the Indian Union Budget at the Asia Society called India Prospective 2013.
The meeting was opened by Tom Nagorski, Executive Vice President, Asia Society. A brief introduction was given by John Veihmeyer, Chairman and CEO, KPMG on the Indian economy. The inaugural remarks were provided by Dr. Devyani Khobragade, Acting Consul General for India in New York.
Other speakers and panelists included Arun Kumar, Partner-in-charge, KPMGs US India Practice, Ron Somers, President, USIBC, and Arvind Panagiriya, Professor of economics at Columbia University and Non-resident Senior Fellow at the Brookings Institution.
Kumar focused on India’s growth priorities and said that Investments focused towards infrastructure development seemed to be the priority. He stated that coming just before elections, this budget was responsible and reasonable.
During her inaugural remarks, Khobragade introduced broad outlines of the Budget and the Economic Survey. She said that revival of growth and macro-economic consolidation was the main focus of the budget. At the same time, it focused on inclusive development and provided for uplift of the weakest section of the society by raising allocation for health education and food, and providing for all the flagship schemes of the government.
While doing so, it had steered away from being populist and profligate. She also mentioned that the finance minister P Chidambaram has clearly stated that foreign investment was an imperative, and the government would work towards creating a conducive environment for attracting them.
Vikas Vasal, Tax Partner, KPMG, in a Power Point Presentation said that by bringing down the fiscal deficit at 5.2% in FY 2013 and setting an even lower target for 2014, India had proven its credentials toward fiscal discipline. He also focused on the latest reforms in diesel pricing, increase in rail fare, direct cash transfer to be implemented and revised Land Acquisition Bill having been cleared by the Cabinet.
Vasal added that New Banking Licensing Norms have been announced and FDI has been liberalized in Multi-brand Retail, Aviation and Broadcasting. He said that the Personal Tax surcharge has been levied and only 10% surcharge on total income exceeding Rs. 10 million has been incorporated. He appreciated that there has been rebate of Rs. 2000 for resident individual having total income up to Rs. 500,000. He focused on Anti Avoidance (GAAR) Rules which are deferred to FY 2015-16, which he said, needs to be watched carefully. He also said that Buy Back unutilized shares are taxed at 22.66% now but there has been a lot of focus on financial sector taxes and incentives.
Somers said that the US companies were bullish on the Budget, but the areas of future cooperation to be looked at would be civil nuclear field after ambiguities on nuclear liability are cleared. Energy cooperation in general and defence would be other areas of interest to the US companies, as US becomes energy surplus and sequestration and budget lead to further financial squeezing.
He mentioned that it is a trillion dollar opportunity to do more investments in India but that other than finances, policy stability, issues such as land acquisition and other favorable factors for investments needed to be looked at by the government. He also emphasized on the investments in equity which will grow economies in both the countries.
Panagiriya also said he was bullish on India’s economy in the long run, although the budget was a non- event. What India needed to focus on was labor reforms, job creation and handling issues like corruption. He also felt that RBI should loosen the monetary policy in the short term.
The overall impression of the participants was that the budget was a responsive and responsible one. It shunned away from populism and it held the potential to reverse the economic growth story, provided the steps announced in the budget were followed through. Khobragade said that the government is committed to the promises made and also added that the finance minister would be addressing a Road Show for investors from the US in the coming month.