From GST to Startups to SSIs; Industry wants FM to Deliver

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Industry leaders and experts speak about the challenges before Dr. T M Thomas Isaac, State Finance Minister, as he is about to present the 2017-18 Budget

Vinod Manjila, MD, Manjilas Group

All of us in the industry are eagerly awaiting the implementation of the GST in its true spirit. In this budget, we look forward to a tax structure that aligns with the GST. This would help the industries to have a smooth transition. Kerala should have a Vision statement; where should Kerala be in 2030? Our core competencies are in tourism, waterways, IT, food processing, Ayurveda, deep-sea fishing and service sectors. We should have strategies to strengthen these. Value addition and innovation are the way forward. We should introspect why our rating is low in the ‘Ease of doing business.’ It is high time Government took some hard decisions on loss-making public sector units and have time-bound strategies to revive them or the will to close them. We have a twin problem. On the one end we are having rising unemployment and on the other, poor infrastructure. We need to bridge the two. Our resources may be modest, but I am sure this Government has the will to bring about a positive change.

Adeeb Ahamed, MD, Lulu exchange

Remittances from Non Resident Keralites (NRK) form an integral part of the State’s economic stature. It is imperative that more efforts at incentivizing such NRK/NRI remittances are made. Ascertaining the end-use of such remittances, if it is deployed for infra-structural developments and tourist promotion efforts in the State, possibility of granting a token subvention, pro-rata the volume of inward fund remitted, may be considered. In the era of Globalization, our State cannot afford to remain an island jettisoning international brands all together. We should think of customizing to Indian tastes and cultural needs, world class brands and make available to the common man here in the State such products at reasonable prices. If an acknowledgement of this thought by extending tax breaks or other incentives are provided by the government, then it will be great boon to investors as well as the consumers and the State exchequer (by bringing more revenue by way of taxes) – a real win-win-win situation.

Jose Dominic, CEO, CGH Earth group

We need to have new policies which can support sustainable tourism development. The budget should increase allocation to destinations, especially backwater tourism and Munnar, and take proper measures to boost the brand to demand size. All the barriers we have created, particularly the excise barrier, including the timing and all other regulations, should be reworked. We expect there would be an increase in allocation for domestic and international tourism promotions. A food craft institute – an institution for excellence in hotel craft and culinary craft – is the need of the hour. More budgetary support is required to make Kerala Institute for Tourism and Travel Studies (KITTS) a world-class institution. The Technopark and Infopark have been successful because the government has appointed CEOs of repute to head them. Similarly, the same has to be tried in the tourism sector. Considering the competition from neighbouring states and countries, we should focus on sustaining our growth giving importance to Responsible Tourism (RT).  Waste management, renewable energy and water conservation should go hand-in-hand with the RT.

Dr. Harish Pillai, Cluster Head – Kerala, Aster DM Healthcare and CEO, Aster Medcity, Kochi

There is need to activate Universal Health Insurance Scheme. Now people depend only on Karunya. We should closely study the Tamil Nadu scheme pattern. Electronic Medical Record system should be implemented from primary healthcare centres to district hospitals. The last budget gave importance to generic drug manufacturing. The present one should devise a plan to streamline supply chains. The Government can propose a cadre of hospital managers for public hospitals to put in place a scientific system of hospital management. People with Masters in Hospital Management should be appointed in hospitals. We should make Kerala a healthcare hub by 2020. Sufficient funds need to be set aside for NABH accreditation of public hospital. We have to invest in developing an indigenous medical equipments and consumables service. A good model is the bio-engineering division of Sree Chitra Thirunal Institute for Medical Sciences and Technology. We need to set up more such institutions in collaboration with engineering and medical colleges as well as R&D institutions and bring in policies which allow more Public Private Partnership (PPP) projects. In states like Rajasthan, the government has implemented dialysis programmes on PPP mode. We can also think about introducing tele-consultation services of medical practitioners using our fibre optic cables. We would like to see some attention given to the area of geriatric medicine. Support to ageing population is very much important and mobile applications for home care is the need of the hour. App-based resources for chronic disease management can also be introduced.

Rajesh Nair, President, TiE Kerala

There were a number of schemes for entrepreneurship in the last three years’ budgetary allocations. I hope that some of these things like the support schemes for startups will continue in this budget, too. The schemes for KSIDC also need to be intact. There is a need to develop funding ecosystems for startups. This time around, I am hoping to see interesting policies to support traditional sectors like coir, which are dying. I am also keen to see what will happen to the liquor policy. Sector-wise, industries have carried out proper campaigns seeking renewal of the policy. The tourism industry, especially, is looking forward to the government’s decision on the same. There are many infrastructure projects which have been announced in the recent past. But announcements should not remain on paper; we need to see to it that they are implemented. It is good that the current Government is not changing decisions of the previous Government or reversing them. Let’s hope for a budget which favours the industries.

Damodar Avanoor, President, Kerala State Small Industries Association (KSSIA)

State Government should increase the budgetary allocation for small-scale industries. It is our long-pending demand that allocation be made in proportion to the income contributed by the SSIs. Secondly, we request the Finance Minister to support the Kerala Social Security Fund (KSSF) managed by KSSIA to offer relief to entrepreneurs. Launched in 2008, the scheme provides medical assistance to the members as well as financial assistance of Rs. 10 lakh for the family in case of a member’s unnatural death. We also request the Government not to initiate any action to collect retrospective tax from SSI units which supply materials to exporters.

C E Chakkunny, President, All Kerala Consumer Goods Distributors Association

State Government should ensure that GST would not lead to further harassment of traders. Earlier, when VAT was introduced, there were promises that taxation would become hassle-free. But the situation only got worse. Besides, it should ensure that all other tax components are on par with that of neighbouring states. Government should set up a Grievance Cell at the State level with Finance Minister as Chairman and Tax Commissioner as Convenor to address tax disputes. Appropriate measures should be taken to ensure basic infrastructure facilities at various offices of tax departments. Parking facility with basic amenities for goods vehicles should be set up in each district.

Vivek Krishna Govind, Senior Vice President, Kerala Management Association

The expectations are high from the Kerala finance minister Dr. Thomas Issac to deliver a people-friendly budget. The unfortunate situation is that there are minimal funds left in the state treasury for capital expenditure including construction of roads or bridges. The finance minister should consider the possibility of raising long-term funds for infrastructure projects in the state. Like any other state, Kerala’s revenue comes from three major streams – tax revenue, non-tax revenue and central funds. The pace of growth of the state’s revenue has been falling but the higher Central funding received in the last few years because of the devolution of funds for states as per the 14th Finance Commission has been beneficial for the state. High levels of tax collection are actually what sustains the coffers of Kerala and they constitute the major share of the state’s own revenue mobilisation. Certain rate changes are expected in the tax structure to align it with the proposed GST regime.

Dr. B Govindan, President, All Kerala Gold and Silver Merchants Association

We hope that the Government would take steps to rectify the anomalies in the Finance Act 2014, which led to the Commercial Sales Tax Department imposing a purchase tax in addition to the compounding tax with retrospective effect from 2013-14. A Gold merchant, who has a stock worth Rs. 40 lakh, has been slapped a notice of liability to the tune of Rs. 87 lakh. The accumulated liability of all gold and silver merchants would come to around Rs. 2500 crore. It has to be noted that the total sales tax paid by gold merchants in the last fiscal was around Rs. 473 crore. Former Minister K M Mani and present Minister Dr. T M Thomas Isaac are aware of this issue and everyone has admitted that it was a mistake. We request the Government to either restore the original provision by an amendment or necessary directions may be issued to officers to withdraw the notices to levy purchase tax.

Capt. Thomas P Kurian, State President, All Kerala Tiles and Sanitaryware Dealers Association

We hope that with the introduction of GST, taxation process would become more transparent and dealers will be free from various modes of harassment by the officials. However, the fact that the same administration will be enforcing GSTN remains a major concern. Our repeated requests to address the anomalies in Kerala Value Added Tax Information System (KVATIS) and ensure ease of doing business have fell on deaf ears. GST being a national system, we believe that the rules and regulations will not be interpreted according to the whims and fancies of the officials here.”

G Vijayaraghavan, former member of Kerala State Planning Board

“I hope the Budget will reflect the spirit of the deliberations at the CPM Study Congress held prior to the Assembly elections. It should have an outline about how the Government is going to implement those projects effectively. If it is going to be the typical Government office attitude, then nothing is going to happen. How is the Government going to gain the confidence of bureaucracy and technocrats to take forward its proposals which demand an extraordinary approach? So, the need of the hour is a motivated team. KIIFB projects are huge projects. Does the Government have enough people who have the vision to think of such large scale projects? If not, how is the Government going to rope in the service of people outside the system?”

“The GST, to be implemented from July 1, is going to bring substantial income to the government. As always, the Left Government’s focus will continue on the social sector. This time, the Government may invest in social infrastructure to create better quality education or healthcare. At the same time, the mechanisms for monitoring the projects will have to be strengthened. Since the first budget, I do not think there has been enough follow-up at the Chief Ministerial or Ministerial level on the expenditure of individual departments. The other factor is regarding how the Government is going to build capacity in local self-governing bodies for them to spend the money efficiently.”

“KIIFB is definitely a positive initiative of the Government. There is no doubt about the KIIFB model. However, there are two challenges. The first one is to bring about projects of that size which will create the impact and offer justification for repayment of the money that you are picking up. Secondly, the biggest challenge would be the capability to implement big projects.  If the projects are not successfully implemented in the first two years, KIIFB will not be able to mobilise funds for new projects after that. So, the credibility of KIIFB will depend on how the projects are being implemented now. Actually, it is a good time for mobilisation of funds if the Government can come up with good projects. Today, banks do not know what to do with the money that they have post demonetisation. It is the biggest opportunity before the Government in this crisis. You need to have good officers coming out with good projects which are in line with the Government’s political vision.”

“I still believe that the Centre’s demonetisation initiative was good and I do not think Kerala has a problem. Anybody who has been doing clean business does not face a problem. The allegations being raised by the State Finance Minister is purely political. Certainly, the business has come down, not because of demonetisation but due to the sudden decline of black money in the market. If the Government continues to act strictly against black money, real estate prices will fall.”