Q: What specific steps have you suggested to the Finance Minister for generating demand in the market?
 
Dr Gupta: We have given some specific suggestions. I'll give you one example. Housing and Real Estate is one sector that generates maximum job for people. Housing isbneeded by everybody. When the interest rate was 6%, everybody was trying to buy a house, because instead of paying rent, they preferred to buy a house of their own. Today, with interest rate of 11-12%, housing EMI has become so high that the consumer can't afford it.
 
Now, government can't reduce interest rate on housing alone because they'll have to do it for every sector. Therefore, we suggested to the government that in order to boost the housing sector, let's increase the exemption limit on loan Interest from Rs 2 lakh to Rs 5 lakh. If the government does this, they will reduce the burden of EMI on an individual to a greater extent.
 
The government will certainly have lesser collection from Income tax because of this exemption but it will benefit more indirectly in terms of higher excise duty andbservice tax. So, the government will actually not lose anything. Instead, this step will revive the housing sector and once the housing sector is revived, it will leadbto more job creation. It will result in the whole economic activity getting revived. Therefore, we would like to see more and more similar steps so that people could start buying.

 
Q: What are the major suggestions that you have given to the Finance Minister on behalf of MSME sector for inclusion in upcoming union budget?
 
Dr Gupta: First of all, loan to the MSME sector should become easy. At the moment, banks give loan to MSMEs by mortgaging properties. No medium or small entrepreneur gets loan unless he mortgages his property. This is Sahukari . No loan is given either on the basis of the viability of the project or the credibility of the entrepreneur. If this condition is not there in organised sector then why should it be there in MSME sector? MSME sector is the least defaulter compared to the other sectors. Why should MSMEs be punished all the time? We would like the MSME sector to have easy access to the funds.
 
Second, we would like government to bring MSME sector into defence sector purchase. A new purchase policy, offset policy, is going to come up. In that policy, we would like certain percentage of production to be reserved for the MSME sector because worldwide the MSME sector makes significant contribution to the defence sector.
 
Third, we would like public sector to make large purchase from MSME sector.
 
Fourth, we would like the research being done by CSIR laboratories to be made available to the MSME sector. MSME sector should be offered projects saying the nation needs these products. If these technical offers start coming to MSME sector, it will certainly get revived.
 
Q: What are your expectations from the Finance Minister on corporate tax?
 
Dr Gupta: The government has decided to bring down the corporate tax from 30% to 25% over a period of three years by taking out a lot of deductions. It should be clearly defined what all deductions will be made and what will be the corporate tax. But first and foremost, let's remove the surcharge. There is no need to have surcharge in Income tax.

Indian Economy: Is it really growing?

Q: What is your reading of the health of Indian economy given the fact that exports are declining, manufacturing is underperforming and private investment is not happening?
 
Dr Gupta: It's true that the three areas you mentioned are not performing. But we should not forget that the Indian economy is still growing by 7.5%.
 
Let's understand why these three areas are under stress. Is it because of poor health of our economy or it's a worldwide phenomena? Today, the whole world has become one family. You can't keep yourself insulated from what is happening in the world. If something happens in China or Europe, it affects us.
 
Today exports are down not because India can't export. It's down because there is no demand in the world market.  Every country is suffering. Oil prices have come down so immensely that people in middle-east have no buying power. Europe is still struggling on account of bad debts. Chinese economy is slowing down. Under such severe circumstances, it's difficult for an Indian exporter to find a market.
 
Manufacturing is down because there is no demand in the market.  
 
Investment is not coming forward because if manufacturing is not happening, how can Indian investor go and invest funds? Today the problem is not of growth but sustainability. When we are finding it difficult to meet the salary requirement of our staff, how do you expect industry to borrow funds and invest? These are interrelated problems and part of temporary phenomena.

New GDP Series: What's driving Indian economy?

Q: There is a lot of scepticism over the new GDP series that the government has introduced. Even the RBI governor has said that we should be more cautious in measuringour GDP. The problem is that the GDP growth figure of 7.4% is not corroborated by other indicators like factory output, bank loans, corporate profitability etc. What is your perspective on the new GDP series?
 
Dr Gupta: Let's understand where does the GDP numbers come from? It basically comes in from 3 sectors – agriculture, manufacturing and service. Why is India's GDP growing when manufacturing is down and agriculture is not growing? It's growing because of service sector. Initially, service sector was not counted for measuring GDP growth. It started a few years back. Now more and more services are getting taxed today and all this is getting reflected in the GDP. This is how the GDP is growing.

GST stalemate: Why play politics?

Q: Coming to GST bill, how essential it is for the MSME sector?
 
Dr Gupta: It's most important for the MSME sector. I will tell you how. Suppose, you are a large company, you can get yourself registered in different states for sales tax and then you can ship your goods on 0% stock transfer and sell in that state.  So, big companies are actually not benefitting from GST.  It basically affects MSME sector because these entrepreneurs can't sell their products all over India because they can't register themselves in every state for sales tax.
 
Therefore, GST will be most helpful for the MSME sector for which the market will expand overnight and entrepreneurs will be able to sell their products all over the country.