Sameer Kochhar | Recommendations Tax digital MNCs – software majors, social media, search engines etc – including e-Commerce players. Capitalise cash burn, tax Inheritance, asset monetisation and speed disinvestment to generate revenue. Structural reforms necessary to do higher than 6 per cent and to reach the $10 trillion target set by @narendramodi.1 Benefits of large…

16 December, 2019 Special Reports, Economy
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Sameer Kochhar | Recommendations

  1. Tax digital MNCs – software majors, social media, search engines etc – including e-Commerce players.
  2. Capitalise cash burn, tax Inheritance, asset monetisation and speed disinvestment to generate revenue.
  3. Structural reforms necessary to do higher than 6 per cent and to reach the $10 trillion target set by @narendramodi.1
  4. Benefits of large expenditure on welfare schemes should be captured in statistics.
  5. Statistical reports must be released with necessary explanations and caveats. SDGs and development goals need to be met, poverty line needs to be established. Cannot be done without data.
  6. NITI Aayog and domain ministries must support independent research including action research. Independent assessments bring credibility.
  7. Move DDT to shareholders, abolish capital gains, rationalise GST, create GST refund wallet for paying and refunding government dues.
  8. Credit to MSME is a huge problem. GST based bill-discounting backed by government guarantee fund must to provide immediate relief.2
  9. Government must adhere to GST refunds to small companies within 30-days.
  10. Increase money supply, enhance MGNREGA wages, converge health schemes.
  11. Capture high IP value in India, review trade agreements to make them fair, make specific products for India.
  12. Operationalise through the Direct Benefit Transfers (DBT) payments public-private partnerships for extending coverage of schemes such as Ayushman Bharat to disbursement of rh-Insulin, with the government bulk-procuring it from low-cost biopharmaceutical manufacturers.
  13. As part of its negotiations for bilateral and plurilateral economic and trade agreements, the operation of the UPI and RuPay should be a must in our trade partner countries, especially where there is a sizable diaspora of Indian expatriates.
  14. Corporate India to step in to make offerings for making Indian agri sector more efficient – starting from GPS driven crop mapping to IT based demand planning.
  15. Deregulating labour law restrictions can create significant number of jobs.

Rohan Kochhar | Recommendations

  1. A committee must be constituted in the Prime Minister’s Office with full powers to identify the viable infrastructure projects from stalled one’s and then resolve the bottlenecks needed to bring them to completion.
  2. A medium term strategy is needed to use policy push to select high-value sectors so that ICOR improves.
  3. Government policies must be focused to capture the high value generating segments in global business.#
  4. To bring the real success to Ease of Doing Business program, the legal framework needs to be simplified, clogged courts and judicial pendency needs to be improved.
  5. The data localisation rule should make it mandatory for foreign companies to store personal data of their users and customers of India within the Indian Territory.
  6. The glitches in the GST’s collection systems and rates structure needed to be ironed out immediately.
  7. There is a need to set tone for discourse in technology and foster a research culture in Indian education system with the help of corporates.
  8. High potential industry segments needed to be identified and National Innovation System Hubs focused on key sectors should be set up in collaboration with the premier research institutes.

Arvind Virmani | Recommendations

  1. Government should clear all dues of vendors/contractors/service providers at one go. This will help stimulate investments.
  2. Structural part of Direct Tax Code should be introduced in the upcoming budget. Tax rate part could be done later. 
  3. GST needs to be drastically simplified. The focus must change to supporting the white economy instead of just suppressing the black economy. 
  4. Agriculture de-control and land & labour reforms are essential. It needs to be done on a priority. 
  5. Education and skilling are critical. Curriculum should be realistic and focus on solving the problems around us.   

K V Subramanian | Recommendations

  1. Press the paddle on structural reforms. GDP growth slowdown could act as an opportunity to push forward structural reforms pending for years.
  2. Push public and private investments. Investments are the key driver of growth. 
  3. Enhance rural wages. It will help boost consumption and demands. Anticipation of demand is what the companies use for investments. 
  4. Rationalisation of corporate tax is critical. The loss incurring due to the cut in corporate tax would be made up by the resulting increase in personal income tax.

The Macroeconomic Essentials


Narratives are key determinants of economic trends. When signs of an economic slowdown emerge, people begin postponing consumption purchases and investment decisions, further weakening consumer and investor confidence. Recent measures announced by the government to reverse the economic slowdown, especially tax cuts, will improve the sentiment and support growth and jobs creation. But more needs to be done, as the Reserve Bank of India (RBI) has revised its GDP growth projection for this year to 6.1 per cent from 6.9 per cent it made in August. The RBI’s Consumer Confidence Index shows a slowdown in consumption demand.

The aggregate capacity utilisation has declined. More worryingly, while bank credit to commercial sector turned negative at Rs 1,287 billion in the first six months of the financial year (April-September 2019) against Rs 1,850 billion in the same period last year (April-September 2018), non-bank credit to commercial sector declined to Rs 2,197 billion against Rs 5,510 billion in the same period. In good news, the current account deficit is expected to decline to below 2 per cent of GDP from 2.1 per cent of GDP in 2018-19. Ratings agencies expect that growing foreign direct investments, foreign portfolio investments and banking capital inflows will tip the capital account into surplus – of $70.0 billion – this year.

Key issues

  1. How to put Indian economy back on a high growth trajectory?
  2. How to ensure that the growth is job generative and spatially dispersed? 
  3. What measures should be taken for lifting business and consumer sentiment and reviving animal spirit?


K V Subramanian, Chief Economic Adviser, Government of India
Arvind Virmani, Chairman, EGROW Foundation
Sameer Kochhar, Chairman, SKOCH Group
V Anantha Nageswaran, Part-time Member, Economic Advisory Council to the Prime Minister
Shubhada Rao, Chief Economist, YES Bank
Gopal Krishna Agarwal, National Spokesperson – Economic Affairs, Bharatiya Janata Party
Dharmakirti Joshi, Chief Economist, CRISIL
Subhomoy Bhattacharjee, Consultant, Research & Information System for Developing Countries (RIS)
Rohan Kochhar, Director, Public Policy, SKOCH Group


  1. Increase investment for enhancing productivity that eventually will improves wages, create job and enhances exports.
  2. We need to press the pedal on structural reforms to reach the goal of $5 trillion.
  3. Government should lay special emphasis on investment with consumption that will speed up growth.
  4. Switch to expansionary fiscal policy, especially in the form of an investment push in the infrastructure sector to reduce logistics costs for private companies.
  5. Raise non-tax revenue through asset monetisation and strategic disinvestment and put that money in the hands of the people through MGNREGA, PM-KISAN and construction centric government expenditure schemes.
  6. Further resources can be raised by an overhaul in the taxation system to make sure tech giants don’t get away without paying their fair share of taxes. The OECD is also debating how global MNCs can be taxed in those countries where they generate profits.1
  7. Quickly clear and disburse all dues of private companies pending with government departments.
  8. Create an electronic marketplace on top of GST wherein all the cleared GST invoices can be electronically discounted by FintTechs and banks and be backed by a government credit guarantee.2
  9. Strictly adhere to the rule that promises GST refunds to small companies within 30-days.3
  10. Create an online digital tax wallet for payment of tax and other government dues by taxpayers and refunding of tax refunds by government. This will prevent funds from getting locked up. For instance, even as GST refunds are awaited, income tax has to be paid.2
  11. Simplification of the direct taxes in the upcoming budget, as recommended by the Task Force on the DTC.3
  12. Cut direct tax rates in a phased manner over the next three to four years, starting with the upcoming Budget, as recommended by the Task Force on the Direct Tax Code.

1 Also recommended by Sameer Kochhar and Panel on Completing Tax Reforms
2 Also recommended by Sameer Kochhar
3 Also recommended by Panel on Completing Tax Reforms
4 Also recommended by Sameer Kochhar
5 Also recommended by Panel on Completing Tax Reforms

Completing Tax Reforms


Responding to slow growth, the government announced cuts in corporate taxes and the taxes for new manufacturing companies. This path-breaking reform will boost corporate profitability and improve the sentiment, which is a necessary condition for reversing the economic slowdown. After the cuts, the Indian tax rate is now competitive with other economies including Vietnam, Singapore, Thailand and China. The timing of the move is excellent, given that many companies are looking to relocate their manufacturing base out of China in the wake of rising US-China trade tensions. The move can act as a big catalyst to attract fresh investments from foreign and domestic players over the medium term.

Is there is scope for relief on taxes on individuals now without bringing revenue under too much pressure? On the indirect taxes side, the Goods & Services Tax (GST) needs to become simpler, stable and predictable quickly. Its weaknesses are proving to be a drag on GDP growth, especially for the exports sector and the MSME segment. Plus, its collections are falling short of targets and potential. Perhaps a source of boosting revenue and making taxes more fair and efficient is the area of taxation of global companies in the digital space on which the OECD has proposed a major overhaul of the international tax system.

Key issues

  1. What immediate corrections are needed in the GST rates and collection system?
  2. Can GSTN based bill discounting be leveraged for better availability of credit?
  3. How can digital MNCs be taxed more efficiently in India? Why OECD model doesn’t work for India?


M Govinda Rao, Member, 14th Finance Commission, Former Director, NIPFP
Arun Goyal, Former Secretary, Government of India
Ved Kumar Jain, Chairman, Ved Jain and Associates
Anil Sharma, Founder, A Sharma and Co
Sharad Sharma, Co-Founder, iSpirt Foundation
Suranjali Tandon, Assistant Professor, NIPFP
Ravi Kant Gupta, Author and Additional Commissioner of Income Tax, HQ Administration, New Delhi


  1. Tax digital MNCs in India.1
  2. The GST framework has knocked down informal businesses and demands. However, it has failed to create formal demands. The system has to be made conducive to promote formal businesses.
  3. Fundamental of GST is lost in the initial stage itself with technology failure. The GST technology needs to be fixed. A robust and simpler technology needs to be put in place.
  4. Tax slabs should be brought down to three – 0 per cent, 12 per cent and 18 per cent.
  5. Tax exemptions should be eliminated. It would help broaden the tax base.
  6. GST refund wallet: Genuine tax payers suffer due to delay in refunds. They should be allowed to use the refund money to pay other tax dues.1
  7. GST Bill Discounting: A large number of MSMEs suffer due to delay in payments from customers, often big companies and MNCs.1
  8. Through GST Bill Discounting, such delay in payment can be automatically flagged and penalised.
  9. The onus of bringing the buyer to book lies with the supplier (MSME). Through the GST bill discounting process, it can be done by the regulator.1
  10. Digital MNCs must be made to pay tax on all the revenue generated from India.1
  11. Cash burns by e-Commerce players should be tapped for taxation.
  12. There is a need for a comprehensive reform in direct tax system. Frequent and unpredictable tinkering with direct tax rates negatively impact business and investors’ sentiments.2
  13. The reforms should ensure consistency and predictability.
  14. Direct Tax Code must be simpler with fewer tax slabs, preferably three, reduced rates and fewer exemptions. In fact, the exemptions should be phased out gradually.

1 Also recommended by Sameer Kochhar
2 Also recommended by Panel on Macroeconomic Essentials

Strengthening Federalism


Prime Minister Narendra Modi, as was visible during his tenure as chief minister of Gujarat, is an advocate of greater autonomy for states in terms of how they want to design their development programmes and spend their share of taxes. In fact, he has even argued in the past for state governments to be given the right to collect income tax. Against this backdrop, the new terms of reference communicated to the 15th Finance Commission suggest to consider carving out a separate fund from the divisible pool of taxes to be specifically earmarked for internal security and defence-related spending—something that is constitutionally a central government responsibility.

Already, the RBI’s latest report on states’ finances shows, there is an increase in states’ indebtedness, with inter-generational consequences and sharp retrenchment in development expenditures. Debt has risen persistently since 2015-16, led by schemes like UDAY. Non-development expenditure rose sharply during 2017-18 in a break from the past, led by committed expenditures such as salaries, pension and interest payments.  Financing via market borrowings is slated to go up. Debt liabilities rose through 2016-19 and are likely to remain around 25 per cent of GDP in 2019-20, making sustainability of debt the main fiscal challenge.

Key issues

  1. Impact of current GST on state finances.
  2. What is the impact of the new terms of reference for the 15th Finance Commission on centre-state fiscal relations?
  3. Inter-governmental fiscal transfers and local services delivery. 
  4. Handling regional disparities.


N K Singh, Chairman, 15th Finance Commission
V N Alok, Indian Institute of Public Administration (IIPA)
Sudipto Mundle, Member, 14th Finance Commission
Charan Singh, Distinguished Fellow, SKOCH Development Foundation and Non-Executive Chairman, Punjab & Sind Bank
Renu Kohli, Independent Economist
Puja Mehra, Author and Economist


  1. There is need to holistically re-visit the Centre-State relations. It is desirable to constitute a High Powered Commission consisting of eminent lawyers, jurists and policymakers with administrative experience to examine the entries of List I and List II and List III of the 7th Schedule of the Constitution.
  2. Consultative mechanism between the Centre and states need to be made more transparent and robust.
  3. The Inter-State Council should not be treated as a central government body and its federal character should be maintained. The Council should be suitably empowered, through a constitutional amendment.
  4. There is need to bring symmetry in the functioning of the GST Council and the Finance Commission.
  5. Successive attempts to rationalise the Centrally Sponsored Schemes have met with limited success. There is need to have a holistic re-visit of all Centrally Sponsored Schemes.
  6. State Finance Commissions need to be strengthened. Their terms of reference should be decided in joint consultations between the central government and states.
  7. The 15th Finance Commission should allocate some fund to incentivise the formation of State Finance Commissions.
  8. NITI Aayog should be given constitutional legitimacy and suitably empowered to allocate non-FC transfers to the states.
  9. Empower local governments – Panchayati Raj Institutions and Municipalities – by giving them more financial powers.

Welfare Economics


Prime Minister Modi has secured voter trust through his agenda of welfare programmes. Among the programmes that stand out in the overall welfare bouquet are: One, Ayushman Bharat has improved capacity utilisation of healthcare infrastructure through better monitoring. Combining insurance and technology, the scheme has revolutionised delivery of free and quality healthcare services. 40 lakh poor Indians have availed free insurance benefits in less than a year, without having to do any paperwork. Two, Swachch Bharat is changing behaviour towards cleanliness and hygiene. India is now an ‘open defecation free’ country, as declared by Prime Minister Modi on the occasion of the 150th birth anniversary of Mahatma Gandhi.

It’s only a matter of time when this achievement will lead to improvements in health outcomes. And three, PMGSY, DDU-GKY and other rural schemes for low-cost housing, electricity connections, cooking gas connections, no-frills bank accounts and MUDRA loans. These schemes for skilling, physical and financial rural infrastructure will unleash entrepreneurial energies in the villages and unlock the economic potential there, reducing the India-Bharat divide.

Key issues

  1. Supporting systemic reform for ensuring there is no undue pressure on state and central government finances and future liabilities.
  2. Having got the key welfare schemes right, should the next logical steps such as convergence of schemes and a complete digital delivery be taken?
  3. If despite a host of welfare schemes rural consumption is slowing, then does the approach need a re-look?


Amarjeet Sinha, Secretary, Ministry of Rural Development
Vinod K Paul, Member, NITI Aayog
Sameer Kochhar, Chairman, SKOCH Group
Yamini Aiyar, President & Chief Executive, Centre for Policy Research
Dhiraj Nayyar, Director – Economy & Policy, VedantaN R Bhanumurthy, Professor, NIPFP


  1. A National Health Stack should be created. There is need for development of an integrated system for healthcare across the country.
  2. Ayushman Bharat has largely addressed the demand side issues. Supply side is yet to respond. There is need to build a large number of hospitals to address the demand.
  3. Ayushman Bharat could work as an umbrella organisation for delivery of the integrated health services across the country. This would make financing, monitoring and delivery of services inclusive, smoother and efficient.
  4. There is need to revamp and develop outcome-based statistical system. Technology can play a critical role in this endeavour.
  5. Evidence based policy making is critical for making an impact at the grassroots. The success or failure of the scheme should not be judged by the input but by the outcome. This will happen only if there is reliable outcome-based data.
  6. Market principles in welfare scheme. Introduce competition, accountability and innovation in welfare schemes. These terms are normally associated with the market economy. But they are now equally relevant for the implementation of welfare schemes.
  7. There is a need to develop a robust independent evaluation mechanism for effective and regular evaluation of welfare schemes.
  8. For-profit private hospitals can play a big role in creating the required healthcare infrastructure. Conducive environment needs to be created to attract private investments in the sector, especially in the rural India.
  9. Social welfare schemes in other areas like education, sanitation, poverty eradication and livelihood creation should also be integrated in respect to their focus area-wise.

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