The budgetary decision to increase taxes was a wrong one and more taxation on higher income group had an impact on foreign investments also, says Adi Godrej, Chairman, Godrej Group. During an interview with Swati Khandelwal, Godrej said, “The government must bring the entire corporate world under 25% tax bracket as 80-90% of corporate income has been left out its purview despite 98-99% corporates having been brought under its bracket.”
Our economy is going through a difficult phase and the latest GDP numbers stood just at 5%. What is your take on it and what is your hope amid all this gloom and doom?
There is a difficulty in the economy and two things are responsible for it. The first is related to our own country. But the global economy is also facing major pressure mainly due to the US-China trade dispute. Similarly, European economy is also feeling the heat of Brexit. We will not be able to see any improvement in the Indian economy if there is no improvement in these two global events. Our government should provide a stimulus package. The budgetary decision to increase taxes was a very wrong, in fact, one of the decisions in which they have increased taxes on higher-income payers had an impact on the foreign investment and the government did not even know that it affected there. However, they have decided to withdraw it, but it had a negative impact. I feel, taxes should be reviewed. Former finance minister Arun Jaitley had announced the maximum corporate tax of 25% and implemented it on 98-99% corporates, but 98-99% corporate income was left out from its purview. It should be implemented at the earliest. The government should implement the recommendations of the commission which was constituted to look into income tax and provide recommendations.
What is your opinion for the case where the government doesn’t take immediate steps and how worse the situation can become?
It will not worsen more than these levels, but it should be improved at the earliest or else the Indian economy will have to face major difficulties. The government should take immediate steps. The government has a false notion that high taxes will help them in increasing their revenues, however, it doesn’t imply anywhere. High taxes hurt the economy as it reduces tax collection.
What should the government do for realty sector?
First of all, permissions should be granted at the earliest as taking permission is a painstaking task in India at present. Secondly, it should have a look at taxation. I don’t t think that reviewing it or bringing it down will decrease the revenues, but it may increase it.
Have you put any of your expansion plans on hold?
No, we are running our investments. We are investing a lot especially in our real estate business and have taken over several projects, which were not completed by other builders. We are investing and will continue with it.
Do you think FMCG demand had declined?
Demand has been hit, especially in rural areas, which reported good growth earlier. It has come down. Demand has decreased in a true sense. However, FMCG is not based on government policy it has decreased just because the economy is not in good shape.
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