Expectations of a stimulus are running high. The wishlist is long. People are adding their own tail to the already extended list. A drop in GST for automobiles, cheaper loans, more aggressive scrappage policy (for automobiles), waiver of super-rich tax, relief for FPIs, the abolition of LTCG, and many more. Every sector is seeing it’s business leaders lament publicly. Clearly, the intent is to pressure the government as much as possible. The government has also backed itself into a corner with poor anticipation of public sentiment.
Indians definitely want a stronger tax regime. But, we want the government to tax those who aren’t paying. Milking the same cows to death is not a great idea. The government simply got its constituency wrong. Now, everybody affected is making a ruckus. The solution may not really need structural tax concessions on GST. It needs sentiment boosting measures like simpler credit norms, the better transmission of interest rate cuts, lower corporate taxes for a year, limited period tax cuts on GST, and better global positioning of India as an investment destination. Private capital must be the biggest driver of growth now.
The government must get down to making its slogan “Minimum government. Maximum governance” deliver speedy growth. After all, without growth, more people will depend on the government. And, the government cannot meet their needs by depending on fewer & fewer people – The Rich.