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Gyan Gurus - Organisational Effectiveness

Budget 2010: A paradigm shift  (View Comments)

Rajan Kaicker is the Executive Chairman of RCS SouthAsia and Franklin Covey South Asia. He is a Global Master Trainer with Franklin Covey as also a Columbia University Certified Coach.

Posted On Monday, March 08, 2010 at 02:40:31 PM

Most Indian governments are traditionally circumspect, restraint and cautious. But just this one time, there has been a change. In fact, the change is enough to have a long-term positive effect on corporate India. Economic prosperity and the aggressive approach in this budget will definitely put India on the edge of a major change.

India’s retail sector has seen much debate in the country, with many arguing that foreign players would kill the unorganised segment. But the truth is FDI in retail will offer several advantages. The idea is to close the gap between farm, wholesale and retail prices.

Another area has been the banking sector, which has received the frowning looks. However, the move to provide banking licenses to several private players and NBFCs will have a positive effect on this industry.  For years now, there have been no additions to the banking industry and this move by the government signals firms step towards liberalisation and privatisation.

For many, the change in the direct tax policy will be a thing to rejoice. With dynamic revisions in tax slabs, the budget has given a boost to the disposable incomes of the salaried person. The Indian consumer has been given the ability to go out and spend.

The vision is to see a future that is more consumption and investment oriented than today. Healthy wallets are likely to engage people into putting more money into various investment vehicles. With a wide range of asset vehicles available, this would do well for the economy.

Most analysts have identified that the benefit provided to individuals, by enlarging the tax slabs, has resulted in a tax payer with a taxable income of Rs 5 lakh to Rs 8 lakh gaining as much as 35 per cent. This coupled with an additional investment opportunity of Rs 20,000 in infrastructure bonds could provide further savings on tax and give a boost to savings in the economy.

For small and medium enterprises, it has been a mixed bag. The SMEs which are paying corporate tax will get a relief, as they will pay a lower surcharge of 7.5 per cent on their tax liabilities, but the burden of Minimum Alternate Tax (MAT) will go upto 18 per cent from 15 per cent from April 1. But overall, it seems the government has found a space between supporting growth and being fiscally responsible. It has introduced several reforms at a time when they are required and at the same time, kept fiscal deficit in check.

The concern that remains, of course, is the lack of a bold vision in building the infrastructure for tomorrow. For there to be larger capital inflows, we have to be able to bring much stronger and bolder public-private sector cooperation with regards to roads, water, electricity, etc and it was hoped that there would be a strong directional thrust towards the same in the budget. The other challenge is inflation and what happens if the price of oil goes beyond US$ 100 per barrel as this can single handedly derail virtually all the other initiatives the government has announced. The question remains as to how will corporate India respond to this dynamic vision put forth by the government in the budget. Will it be able to nurture its HR talent, share the vision and inspire them to contribute to the growing India? How will it measure success and put in place the correct metrics to succeed? Will corporate leaders and CEOs practice a leadership method that leads their firms to success and better bottomlines?

This will indeed be an interesting and transformational time for companies. As now is the time for leaders who have the vision and the foresight to really step forward. I am sure the country will see some great pathbreaking initiatives taking place and if I were you, I would buckle my seat belt and get set for a fabulous and stimulating ride ahead as India sets the pace for the world to follow!

The opinions expressed in this column are solely of the author.

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