Hero Corporate Service chairman Sunil Kant Munjal said the upcoming budget can be a landmark one if the government is able to address the new challenges which may slow down the growth momentum.
"There is a need to harness growth potential and the forthcoming budget can give a new direction," said Munjal, who is also the president of All India Management Association (AIMA).
He said that going forward, the government should focus on improving the ease of doing business and monitor tax rates.
"Tax rates in the bigger and progressive countries is between 12-18 per cent. If not, then they are trying to come in that bracket. Government has said that they have room to accommodate the lower tax rates if they reduce number of exemptions. Hoping that the government would work on reducing the exemption and tax rates (corporate tax and personal tax) in the upcoming budget," said Munjal.
At present the government is facing two challenges - slowdown in demand due to demonetisation and a possible delay in the crucial Goods and Services Tax (GST).
The upcoming Union budget, which is scheduled for February 1, will be a test for the government as expectations from stakeholders is higher than previous budgets.
Munjal said the government is trying to implement the crucial GST on April 1. "If they are able to do it, it will be good for economy, if not they should work on doing in the next few months," he said.
Munjal is reportedly working on expanding Hero Group's business portfolio and planning to enter the defence and energy sectors.
On the impact of demonetisation, he said that though many forecasts show a dip in economic growth but recent government data also shows that tax collections in November and December, 2106 has increased from the corresponding periods of last year.
On the decline in auto sales in December and the push the sector requires in the budget, Munjal, former joint managing director of Hero MotoCorp, said there is a break in every consumer facing business due to cash crunch. When the liquidity improves, these businesses will see growth.
He added that at present the auto market doesn't need a sectorial push.
"We need an overall economic push. There is a hold back in every sector. We need growth in R&D, incentive them, improve infrastructure, build roads. These things will automatically improve demand," he said.
BW Reporters
The author is Senior Correspondent with BW Businessworld
