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Stimulus packages - a road half trod
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Bikky Khosla | 13 Jan, 2009
Despite what we might say, one has to accept the fact that the fiscal stimulus packages recently announced by the Government and the Reserve Bank of India will provide greater incentives to exporters, infrastructure, and the textile sector only if their implementation is speedy and sans any delays.
How much these packages will impact the Indian Industry will depend how well the States, Centre and the public and private sectors coordinate towards smooth implementation of these incentives. I feel the government will now have to give priority to the implementation aspects as it had done during the formulation of the packages.
I have seen it happen on many occasions and perhaps all will agree that various reliefs given by the Centre eventually did not benefit anyone because state governments played a passive role during their implementation.
State Governments will now have to be proactive in implementing the fiscal stimulus packages. The additional funds that the two fiscal stimulus packages are expected to provide will be rendered useless if the State Governments do not perform their share of duties with utmost sincerity and competence.
Industry stalwarts too are of the opinion that they (state governments) need to adjust their "tax levels to cater to the needs of the various individual sectors and not countervail Central tax relief. It should not be a case of the States taking away (by way of additional taxes) what the Centre gives."
Having said that, India Inc. too needs to do its bit, especially SMEs. The Reserve Bank of India (RBI) has reduced interest rates and cleared the way for banks to lend to SMEs. However SMEs need to understand that they need to come up with projects that are viable and have growth prospects. Banks will take only legitimate risks and without a good business plan it will be unjust to blame the banks for not lending.
Now the two stimulus packages will have to pass the litmus test with their implementation. A couple of months hence we will have a clear picture - whether we succeeded or we faltered as in previous cases.
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Stimulus packages
Nagendra Beladakere | Wed Jan 21 06:11:10 2009
Dear Mr. Khosla,
India and Indians can be the best if the system is less corrupt and stops harassing SME operators. Recently, I sent some samples from Australia to an aspiring collaborator in India. The Customs did not allow the samples despite all the paper work and repeated transmission of all paper work from here via FAX. After the tragic Mumbai terrorist holdup incident, it seem sto me that getting guns and incendiary devices is easier thru our Customs! When is India going to wake up and stop being corrupt. Put faith in people and encourage good capitalism. Until this happens, I agree with the sentiments of few readers here and say that nothing is going to change. A good and clean administration is more important than stimulus packages. India has a long way to go.
Stimulus packaegs
keshav aggarwal | Wed Jan 14 11:57:32 2009
Mr Khosla,
Sorry to say, nothing is going to change in India. When I was exporting from India and helped country earn Crores in foreign exchange, could not get any benefit of incentives as I would not bribe the B's and last benefits, C&F agents seem to have appropriated conniving with customs and other officers.
After coming here and trying to import - as I wrote U sometime back - never got what was sent as samples and what was finally exported and above all never was sent in time. Few months back One Mnfrr. mnfrg. Ceremic products - printed mugs changed - enhanced prices within 2 days - when we wanted to place order - and changed their tune like a GIRGIT. Time and again it happens no matter whether they are SMEs or big Giants. Unless mindset, character both private and Govt. is changed, no amount of incentives will help and certainly not till the present set up of politicians and bureaucrats remain. There is of course - some ray of hope by some individuals. During my last visit, I explained to one Leather goods manufacturer the problems and later sent/gave them imported samples from far east and glad to say they came up not only in almost quality but did not change their commitment/s. I/we are doing best to do most with them. But it is one rarity in 10 Long years.
Thanks for your continued efforts and hope some day country may wake up.
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Re: Stimulus packaegs
keshav aggarwal | Wed Jan 14 12:17:37 2009
as above
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Re: Stimulus packaegs
Ashwin | Wed Jan 21 05:50:28 2009
I second what Mr. Aggarwal has said, we have worked as Importer of Indian goods while staying in Norway, and now we are Exporters of the same to Norway. During the last decade in India, things have NOT improved esp the bureaucratic hassles and red tape for SME's. You can take any Government department or State Dept like the medieval OCTROI in Maharashtra, Or Sales Tax/Excise, the amount of energy and time we spend on stupid nitty gritty is mind boggling. In a progressive State like MH?, one has still not found a way out of this evil Octroi, despite all Trade BODIES BEING OPPOSED TO IT. Why? Because this fills the coffers of many in the rotten line up, from the clerk and upto the Political parties. Same is with tax people, how many people have NOT paid up when there is a tax assessment ? The stranglehold of the Babus and the rest of the hierarchy on everything is far too strong in all spheres of life, it can not be dismantled, not in my life time at least. That is the holy truth, and we are not big enough to 'butter' the palms of these chaps. India can never rise to its actual potential in the present circumstances, sorry to say that.
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Re: Re: Stimulus packaegs
Diarmuid Hannigan | Thu Jan 22 06:18:15 2009
What Mr Aggarwat has said also describes the false rhetoric in other former colonies of Great Britain. The problem is found in these roots where a colonial structure was put in place to rule over the inhabitants of a nation in order to benefit the colonial power. Corruption of officialdom is part of the process. We have a similar problem in Australia where taxes, bankers and lawyers get rich off the backs of hard working exporters leaving very little for reinvestment into the businesses that will progress our own communities
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