A few days ago I was part of a meeting and interaction with the chief economic advisor of India Dr Shri Anant Nageswaran. The interactive session was convened by Swadeshi Jagran Manch. The main agenda of the conference was to discuss on the achievements and a projection of where the economy is going.
It appears, that do we live in a volatile world but India's fundamentals so far are relatively strong. The first world economies also have their challenges of hyper inflation and far too much import dependence. Europe is dependent upon Russia for gas and the United States for many other things. Relatively India seems much better placed with manageable cuurent account deficit under 3% manageable inflation around 7.5 % and a very strong demand.
The base line assumptions for numerical projections for India were wrongly assumed and the CEA said that we have asked the World Bank team to correct them. The various schemes announced by the government like productivity linked investment scheme are motivating private businesses to invest as the government is investing in infrastructure too ,the CEA said. The food support program the success of vaccination during the times of corona have greatly rescued the Indian economy the CEA said. This is in light of sharp increase in global oil prices which cannot be taken lightly.
Therefore the margin for error is thin. If we as citizens understand what our government is trying to do help the government in managing the subsidies balance income and expenditure this will see a huge positive impact to our economy which then can reach five trillion dollars by 2027 he said. The chief economic advisor also talked about the formalization of labour force which is today at 30% and increasing. The purchasing managers index and the services index he said are both above the golden number of 50, which means that the fundamentals are strong. Our banks regulatory capital are in the region of 16.4% comparable with the capital adequacy ratio of the first world banks. This indicates the strength of the Indian banking system after a major cleanup that happened years ago according to the chief economic advisor. He also said that there is very little room for additional tax breaks in the economy and I agree.Our current account deficit is well under 3% mandated by the fiscal responsibility management act. Therefore when I asked the chief economic advisor if we have room to borrow further he said maybe we will not borrow further. Our current account deficit is at 2.6%. Even at 77 Rs to a $ he said our currency is stable compared to many other economies . Our digital goods like Aadhar, UPI, Rupay and now country owned e commerce network ONDP have and will continue to strengthen our commerce backbone.
My view is that It is because of this India did will not be handicapped unlike Russia where one fine day Apple,Google pay , Visa and MasterCard stopped functioning.Our Rupay is accepted in Singapore and now in France.Let us all pay the taxes and well within the time, because be it the effective tax rates for most of us Indians which is in the 15% range or corporate taxes which are in the 25 % range, this is close to global normal. Our GST collections have gone up from 85,000 cr per month in 2016 when GST was launched, to 1,35,000 Cr per month to today. It has happened because of formalization of economy, growth, better governance of GST and GST technology. There will always be black sheep who will abuse the system, as in case of GST by bogus claim of Input credit of tax, but the difference is today they are being caught .GST numbers are made available today within 5 days of application. The credit of tax after collection appears within a short time to the payer. The refunds happen within 2 years for most folks. If this trend continues, in my opinion corporate taxes and GST alone are enough to manage our revenue inflow. There might be no need to have personal taxes well until one earns 12 lakhs annual income . We must also consider taxing well to do farmers and rich farmers atleast with a small rate, since they get enough subsidies, crop insurance , Minimum Procurement Price etc.Actually we need to ensure effective collection of taxes and citizen co-operation is needed. If we pay our due taxes in time the government will be able to reduce our total debt from 84% of the GDP to a managable number. We need to use renewable energy for our cars and scooters and save ourselves from pollution and oil dependence. India's carbon emmission is less than many first world countries. We have started blending ethananol in petrol , this will save us precious oil import cost. Please remember that economies like US have debt that exceeds GDP by 1.34 times. This is my take.
As our prime minister said Jan bhagidari is an effective method of governments and a must need.
CA. Aditya Sesh