Cover Story

Sustainable economic stimuli is the need of the hour

November 2019
- Pratap Padode, Founder & President, FIRST Construction Council

Affordable housing, mining, railways have gained prominence and the all-time favourite roads and highways sector is waiting for wings (in terms of finance) to fly. The world is in the throes of a recession but we have enough of a small base of exports that can grow. Our budgets maybe strained but we need to build the project pipeline and clear the tax and legal hurdles so that FDI can flow in.

Here is a further list of actions the Government can take to kickstart the economy:
Save Rs 1.85 trillion by not buying land: Instead, provide a stake to the owner with a minimum rental guarantee (that takes care of ongoing sustainability) and an alternate marginal land parcel (for occupation). According to recent estimates, the capex for land alone for road projects is Rs 1.85 trillion.

Save money allocated for PMAY (affordable housing): Use government land for BOT affordable housing projects where builders collect rent to offset their investment, akin to a toll offsetting the capex on a road project. (There has been a proposal of this kind of PPP, as announced by the Minister of Housing & Urban Affairs 18 months ago. Even the new rental act can fast-forward this.)

But the Government also needs to raise animal spirits in the economy. So what can be the kick-starter for demand? So far, the government and experts have not suggested a single demand-creating scheme. Here are some that are sure to jump-start demand:

  • Raise GST exemption limit to Rs 10 million from Rs 4 million
  • Release Rs 3.75 trillion from the dispute table
  • Raise the levels of income-tax returns exempted from scrutiny.
  • Fast forward PSU divestment
  • Clear stalled projects with a deadline

  • But where to invest the funds?
    First, incomplete projects must receive full attention where investments have taken place but returns are stuck owing to red tape. Change the contractor, transfer the administrator and use the power of the law where small patches of yet-to-be acquired land are stalling completion.

    Then, improve sentiments.
    No appeals should be filed by government departments against judgements awarded by official arbitrators. This defeats justice and clogs up the legal system. Accountability of officers issuing refund of taxes needs to be stepped up. (Exporters are a harried lot, among others.)

    Water and waste management projects seek the lowest capex and yet are the least among all infrastructure projects, even within the smart cities mission. They require a special thrust and deserve tax incentives.

    City municipalities must relax entertainment taxes on restaurants and hotels that can spur job growth too.

    If the campaign to penalise black money was carried out nationally with such aplomb, why not a campaign to incentivise honest tax payers and honest business houses! Why not offer a bonus to honesty? Introduce a loyalty point credit system for those who comply. Let those points accumulate to gain certain advantages that offer prestige and esteem. Let them be treated with a level of dignity by government organisations and bureaucracy just as first-class passengers are treated by an airline. It is time to bring back the class system where the divider will be honesty, not wealth.

    Sustainable economic stimuli is the need of the hour and there is an urgent need to rationalise stringency in legal, banking and finance provisions relating to contracts.

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