Experts have advised the government to focus more on the economy which has hit for a big time and impacted the growth resulted decline in the economic growth. Hundreds of entrepreneurs and start-ups in the manufacturing and services sectors are looking towards the central government with the hope that it will act to reboot the economy.
Industry experts say the government will have to ensure stepped up spending, particularly in sectors like infrastructure, education, healthcare, Services sector and connectivity, to revive the growth.
“As the custodian of the country, the government has to initiate measures to revive the economy and spur growth. If it responds to the needs of the manufacturing and services sectors that account for over 80 per cent of the country’s GDP (Gross Domestic Product), it will change the sentiment for good and mood for spending,” industry analyst S. Vishwanathan told news agency IANS.
He said sudden demonetisation in November 2016 and introduction of the Goods and Services Tax (GST) regime from July 2017 had a cascading effect on the economy by denting investments, spending, fund-raising and job creation.
Growth got derailed because the shadow or parallel economy that was fuelling the GDP growth rate over the years was nipped, resulting in the elimination of black or unaccounted money and prevention of tax evasion by the dodgers, Vishwanathan said.
“The government has to focus more on the economy to fix the problems holding back growth, spending, investments, savings and job creation than doling out freebies,” Vishwnathan added.
“Though the government may claim that the economic fundamentals are strong and over a billion people spend for their livelihood, education, healthcare and travel, unemployment, rural distress, negative sentiment, lack of capital and fear of being caught by the authorities (tax terrorism) is preventing faster growth that will create market for entrepreneurs and start-ups to consolidate and grow,” said Vishwanathan.
The government’s recent decision to exempt the start-up community from angel tax scrutiny if requisite declarations were made has given relief to promoters and entrepreneurs, as they will be able to raise funds from angel investors and venture capitalists, without the fear of being haunted or hounded by the tax sleuths.
Finance Minister Nirmala Sitharaman’s announcement in the Union Budget for fiscal 2019-20 on July 5 and the Central Board of Direct Taxes (CBDT) clarification through a circular last week on exempting us from tax scrutiny is a breather for our fledgling industry, as the prospects of raising angel funds will be brighter without the fear of being taxed on premium or revised value of the investment made in a start-up.
As part of the government’s commitment to the growth of start-ups, the CBDT also clarified that their pending assessments would be made by the department.
Till now, start-ups were not required to justify the fair market value of their shares issued to certain investors including Category-I Alternative Investment Funds (AIF).
On the downturn in the $100-billion automobile industry, resulting in loss of a whopping 3-lakh jobs and slump in July sales, a Society of Indian Automobile Manufacturers’ (SIAM) member said the alarming numbers indicated that the slowdown was not cyclical but secular, impacting the economy, as the sector employs nearly 370 lakh people directly and indirectly and contributes 12 per cent to the national GDP.
Lastly, the industry is eagerly waiting for the government to initiate measures that will check this downtrend and revive the industry ahead of the festival season,” the member added.
