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Monday, 31 January 2022

Budget 2022: MSMEs need much more than easy credit

Micro and Small enterprises, who constitute the bulk of MSMEs in India, have a very little economic cushion to withstand a prolonged period of economic uncertainty or market deterioration. The COVID pandemic is only the latest in a series of shocks this exceptionally important sector has had to bear, with demonetisation, GST, and the credit squeeze post-ILFS, preceding the pandemic.  It is a testimony to their resilience and temperament that so many MSMEs have managed to survive this tough period.  But spirit alone can only ensure short-term survival; If MSMEs are to thrive, they need a lot more help.

Silver linings, but clouds still loom large

There are enough green shoots to indicate that the economy will come back to pre-COVID levels by this fiscal.  Several, macroeconomic indices corroborate this positive outlook, and the third wave is expected to be only a brief setback.

However, a deep dive into sectors, geographies, and especially into the size of business, makes it apparent that the impact of the rebound is not being uniformly experienced. While the top 10-15 per cent of MSMEs can be optimistic, there are lakhs of micro-enterprises (turnover < 1 crore) that remain in acute distress because of factors mentioned earlier.

Creating an enabling, inclusive, nurturing playing field, where even the smallest of MSMEs can flourish, is the biggest help the government can provide now.

Think beyond credit

Most discussions on MSME growth tend to focus on helping them with easier access to finance. While the importance of credit and liquidity for a small business is not in doubt, we often ignore the more structural obstacles that need to be urgently addressed at a policy level – e.g. the ease of doing business, supply chain availability and cost escalations, the impact of climate change etc. In fact, assuming that there will always be something that threatens small business survival, could be a useful starting point for any policy.

Therefore, all eyes will again be on the Finance Minister’s budget speech next week, given that in India we treat the presentation as a statement of policy intent, rather than as only a statement of account.

Here is a wish list:

Make ‘business as usual’ easier

Getting approval to start a business is certainly easier than before, but the real problems lie in the day-to-day running of it. While laws and compliances are getting rationalized, these need to be structurally enforced at the state level. States that are still demanding archaic and unnecessary compliances must be called out publicly and ‘transparency-driven’ competition among states must be encouraged. While some states are making progressive changes, this needs to become consistent and ubiquitous.

GST as carrot, not stick

There is no doubt that the One Nation, One Tax principle embodied in GST has made indirect taxation simpler. However, there is a lot more to be done if we need to get micro and small enterprises to embrace it willingly. Given that data analysis is sophisticated to detect frauds, the policy itself should focus on simplicity rather than an excessive focus on reducing abuse. A case in point - ITC rules especially should be made simpler with buyers depositing the GST amounts and claiming entire ITC rather than depending on suppliers to deposit the same.

Driving consumption

The Indian GDP growth imperative will need more consumption and Direct taxes both for MSME’s and individuals need to be viewed as an important lever to achieve the same.

Affordable credit

The ECLGS scheme was a big relief during the pandemic and should be extended with additional borrowing limits. This scheme has helped many, but we must remember that this was available only to MSMEs with an ongoing lender relationship.

We also need to think of structural initiatives to help the micro and small enterprises to get affordable credit. A re-imagining of micro finance principles to trade associations (formal and informal) along with credit insurance will incentivize lenders to direct affordable credit without requiring state intervention.

While some of these may be outside the scope of a Budget statement, the intent of creating an environment that is comfortable for each stakeholder – buyer or seller, small or large, lender or borrower – should be the guiding force of policy.

 The author is Founder and CEO, Vayana Network- Supply chain finance platform. Views are personal.

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Budget 2022: Circular economy will help transition to sustainable economic progress

The temptation to fill this article with numbers and make a case for higher budgetary allocations to help conserve India’s wildlife and natural habitats in the upcoming Union budget is irresistible. Especially, given the scope and geographical coverage that the Ministry of Environment Forest and Climate Change (MoEF&CC) has to operate in, making it difficult to work within the given Budget.

The monetary policies to support economic growth in the pandemic ravaged years and to deal with bottle-necks, demand-supply mismatch leading to rising inflation, and with general elections not far… the finance minister like always has a very crucial role to play. In these times focusing on the environment would be the most prudent step.

The Union Environment minister speaking recently at the South Asian Consultation meeting said that “we need to encourage investment for sustainable use with necessary regulations to increase ABS (access and benefit-sharing) fund, which can be used for conservation of biodiversity and betterment of the local community”. This was said referring to The Biological Diversity Act, 2002. Further, he said that India subscribes to the theory and practice of green infrastructure development and ‘Development and Design’ particularly in the linear infrastructure sector that “we build to promote economic development, conservation and connectivity”

In the current consumption-based linear economic model, human well-being will always be compromised for “economic growth”, this needs to change. The prime minister in one of his speeches stressed the need to move towards a circular economy and the upcoming budget would be a good start to his intent. A circular economy means moving away from our current linear economic models of taking materials from Earth, making products from them, and eventually throwing them as waste. A circular economy allows economic well-being while tackling issues such as resource management, waste and pollution, biodiversity loss, and climate change to name a few.

India’s move towards renewables is a commendable start; however, this will also have to keep in mind the impact it may create if not done well. Renewable energy plants or farms at the wrong places can destroy critical natural ecosystems and threaten endangered species. Thus, bringing down the net benefits significantly if not irreversibly.

The Budget can help tackle this by incentivizing installations in the right locations. Economic activities need to promote regeneration of natural systems and move away from take-make-waste processes, this can be driven by the right budget allocations. Principles of the circular economy if incorporated in the Budget will help transition to sustainable economic progress.

The prime minister’s vision for development and design can be boosted by smart allocations; for example, the Budget must make provisions for mitigation measures along linear infrastructure be it roads, canals, railway, or transmission lines. This will in all likelihood save lives of endangered species such as the Great Indian Bustard, Elephant, Tiger, and Rhinoceros more than any other measure while quickening the completion time.

The Budget must increase allocations for both fundamental and applied research. There is evidence to show that investing in research positively impacts economic well-being. Research in fundamental sciences, biomimetics, natural resource management, biodiversity, and the environment will not only help come up with potential solutions to the most complex issues but will also help arrest the brain drain from our country.

The Prime Minister at World Economic Forum, Davos said in keeping our goal of 'Global good' we commit to a net-zero target by 2070. India's growth will be green, clean, sustainable, and reliable. Further, he said that the country is 100 percent committed to mitigating climate change impact. Increasing budgetary provisions significantly for the MoEF&CC will enable the realisation of this vision, as sustainability is the core of this ministry.

Budget 2022 is a great opportunity to lay the foundation for a new paradigm. Incentivizing circular economy, making provisions for mitigation measures, investing in research, investing in regeneration, and maintenance of natural systems hold the key. It will empower 1.3 billion of us and our country to build resilience, create wealth, prosper, bring economic well-being, and be a leader.

The author is Head, The Habitats Trust- not-for-profit working towards the protection and conservation of India's natural habitats.Views are personal.

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Budget 2022: Higher allocation for logistics sector likely given its strong linkages with economy

The growth of the logistics sector is critically linked to the growth of trade and economic activities in the country. In India, road transportation dominates the logistics sector, with a dominant share of 60 percent, followed by Railways with 30 percent and the remaining by freeways.  The first wave of COVID-19 severely disrupted the road logistics sector as business activities came to a standstill and thereby road transportation of goods. Consequently, Q1 FY2021 revenues and earnings were severely impacted. The sector witnessed sequential recovery over Q2-Q4 FY2021 with the improved transportation through various modes such as rail, road, port, etc.; post relaxation on lockdown-related restrictions and as the needs for essential goods and economic activities recovered.

The road logistic sector revenues witnessed Q-o-Q growth of 53 percent in Q2, 19 percent in Q3, and 9 percent in Q4 with select few players reporting historical levels of quarterly revenues during Q4 FY2021. Industry revenues grew by 4 percent Y-o-Y, amidst expectation of subdued performance during FY2021.

The logistics sector was once again affected in Q1 FY2022 upon the resurgence of COVID-19 cases. However, this time around the impact was moderate compared to the corresponding previous quarter (last fiscal) due to the continuation of industrial activities and less-stringent lockdowns. Nonetheless, moderation was witnessed in freight volumes sequentially across different segments - road, rail, and sea in Q1 FY2022.

The economic recovery that had been visible across most sectors during H2 FY2021 got stalled with the resurgence of COVID-19 cases by the end of Q4 FY2021. The freight movement was affected given the impact of the second wave on most end-user industries.

In Q2 FY2022, industry revenues peaked to a multi-year high with a strong recovery in industrial activities and favourable outlook for several sectors. With declining COVID infections and the situation moving towards normalcy, monthly FASTag volumes ramped up to their highest level since the pandemic in October 2021. It now remains to be seen how the new Omicron variant impacts the logistics sector in Q4FY2022, given its overall vulnerability to economic activity.

The industry volumes are expected to remain stable in FY2023 on optimism of steady business activities and formalisation of the sector.

Another challenge faced by the sector is rising diesel price and related inflationary scenario, since H2 FY2021. Fleet operators hiked rates given the rising fuel cost environment (diesel prices increased by 30 percent Y-o-Y during FY2021) upon the gradual opening of the economy during H 2 FY2021. This along with an increase in volumes and fleet utilisation significantly eased the pressure on cash flows as the year progressed. Subsequently, crude oil and diesel prices witnessed some correction in November 2021. But with a further rise in crude in the current month, January 2022, it remains to be seen how this affects operators’ margins and how much further rate hikes they could implement, given some near-term cash flow pressures going forward, more so for the smaller fleet operators.

In view of the given backdrop, ICRA expects adequate budgetary allocation for the logistics sector, as it is directly linked to the economy in general. The Budget is expected to strengthen its focus on the faster implementation of projects like Bharatmala for improving connectivity for the road logistics sector, Dedicated Freight Corridor(DFC) for the Railways; and Sagarmala for the Waterways.

To provide relief from the rising diesel price inflation scenario, any possible reduction in duties on the same will be welcome.

The Budget should also push for higher digitisation and automation to lower compliance costs through policy support as this is a key area, wherein industry players have been demanding higher incentives/subsidies for higher absorption of EVs (Electric Vehicles) particularly for last-mile connectivity for the sector.

A push towards the creation of a skilled workforce for the sector as well as reforms towards the upliftment of livelihood of the workforce is also a need of the hour, given that the sector employs a large number of the unorganized workforce - primarily for the driver and helper segment for the vehicles. Finally, the Budget should spell out clarity on the finalisation and implementation of the National Logistics Policy which has so far remained a work-in-progress. This is from the perspective of continued reforms in the sector in order to reduce inefficiencies and improve global competitiveness for the sector.

The author is VP and  Sector Head – Corporate Ratings, ICRA Limited, Views are personal.

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Budget 2022: Incentivise tech adoption among small and medium businesses

 The Small and Medium Business (SMB) sector is among the most important sectors of the economy. They are a significant contributor to the GDP, accounting for 45 percent of total industrial production, 40 percent of total exports, and 30.5 percent of services. Being a large employment generator, this sector deserves major attention in the budget 2022-23. With various COVID waves upsetting the sector, an impetus for growth is much needed.

While the government did offer some stimulus last year, problems remain and the sector is yet to come out of the woods. Technology could be a great enabler for growth among SMBs. In fact, technologies such as AI, ML, and cloud solutions could lead to massive benefits for small businesses. This could be in the form of efficiency in processes, leading to a reduction in costs. However, the biggest barrier to the adoption of technology today is the huge upfront cost associated with it.

Incentivise tech adoption among SMBs

 

The Budget presents a good opportunity for the government to incentivise tech adoption among SMBs. With a favourable environment that promotes the usage of technology, the right kind of tax policies, and support for upskilling, the government can bring SMBs on the path to progress.

SMBs are a great example of ushering in change through local enterprise, wherein these small companies are building in India and making a positive impact on the livelihoods and economy. The government should look at strengthening local production and supply chain with budget allocations and dedicated programmes that will address the need of Atmanirbhar Bharat.

Loss of jobs during the pandemic has meant that individuals will be looking to start small businesses. The government should encourage them by empowering them with capital and by making it easier to start a business. As migration happened during the pandemic, SMBs have also been struggling with manpower crunch. It's an opportunity for the government to bring a formal structure to this form of employment, along with social security benefits. This will not only benefit the SMBs but the industry at large.

Ease of credit and fund flow has been a perennial demand from the sector. Thanks to the pandemic, this problem has become more acute. The government should tap into digital channels for better distribution of credit. Today, a lot of SMBs have come online and OKCredit itself has a reach across 2800 locations. The startups working with SMBs can not only execute with speed but will also implement last-mile delivery.

Reduced compliance, paperwork needed for SMBs

FM should also look at doing away with mandatory GST registration for businesses with a turnover of less than Rs 40 lakh. The reduced compliance and paperwork will bring productivity gains for these businesses, making them up and running faster. There is a case for an overall reduction in compliance burden for small businesses.

Today, a number of startups are working with SMBs digitising them, bringing them into the mainstream.  Besides SMBs, this Budget should look at supporting the startups as they are bolstering the economy with jobs, innovation, and solutions to pressing problems.

Govt should assist startups

Despite a great performance, the Indian startup industry faces two major challenges: (A) many unicorns in India lack a compelling revenue base and require fund infusions to survive; and (B) the need to speed their digital transformation using technology and platforms.  As a result, the government should consider assisting startups in 2022 through policies and support mechanisms that encourage domestic capital participation, a favorable investment climate in tier 2 and tier 3 cities, incentives to establish incubators in every state, tax exemptions on foreign direct investments, and a strong focus on startup infrastructure development. This will also assist Indian startups in their globalization efforts.

Relax tax burden on startup sector

It is important for the government to relax the tax burden on the startup sector which is already grappling with the onslaught of the COVID-19 crisis. M&A for retail and service startups carries a significant tax burden. Following a merger or acquisition, the Ministry of Finance may look into allowing startups to carry forward losses, allowing them to offset earlier losses against revenue and unabsorbed depreciation under Section 72A of the Income Tax Act. We are optimistic because retail and service are now a significant part of the economy in India and around the world, and they are increasing on a daily basis.

The PM recently announced National StartUp Day which is another feather in the cap for our country.  It is a validation of the important role startups have played in furthering the innovation quotient of the country. From solving challenging problems faced by society to being job creators, Indian startups have attracted attention from the world. Dedicating a day to celebrate this achievement is a welcome step.

ESOP tax standards result in outflows

A major issue the startup sector faces is foreign investment. Foreigners investing in startups are taxed at half the tax rate applicable to native Indian investors. Our ESOP tax standards result in outflows of funds that do not have a corresponding inflow, so employees are required to borrow to pay taxes at the time of vesting. SaaS companies are steadily jumping out of the country as Indian startups cannot accept regular foreign currency payments from global players.

This needs to be relaxed so that the Indian entrepreneurs get the same choice of capital markets. India's intellectual and entrepreneurial capital is transforming the digital world. Securing India's intellectual property is just as important as securing its physical borders. Indian companies migrating abroad for capital, market access, or business ease not only pose financial risks but also threaten India's digital sovereignty.

Simplify listing criteria for startups

Simplifying the listing criteria for startups will further encourage investment. The government can create a central fund for small start-ups with innovative ideas.   Lastly, the government could allocate some amount of the Budget to redefining employment and maintenance policies for companies across India. They could initiate government-run training and qualification centers, focusing on employment opportunities in professional industries, and mandating minimum wage policies. This will ensure that every individual is skilled and would provide the startups with great professionals.

The writer is CEO and Co-Founder, OKCredit. Views are personal. 

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Budget 2022: Progressive impetus needed to create a cohesive Edtech ecosystem in India

2021 was yet another great year for the edtech sector with huge capital inflows, and consolidation underlining the mammoth opportunity and value it presents for consumers and edtech companies. Edtech has played a significant role in ensuring continuity for learners even during a time of disruption in the traditional ecosystem. The year has also reinstated the dire requirement to reskill and upskill in a world where lifelong learning is the new mantra to address the evolved industry-led challenges for survival and success.

While edtech companies are playing a vital role in making quality trans-national education accessible and affordable for millions, it’s equally contributing towards creating a skilled workforce, thus accelerating the country’s GDP.  Therefore, with the Union Budget 2022 set to be announced soon, there are a few critical elements that can certainly enhance the online education sphere for further propelling radical change in the sector at large.

Need tax-saving education scheme to encourage skilling

Rapid digitisation has certainly taken over the industry and every sector is witnessing evolution to an extent where employers are keen on hiring skilled talent with requisite knowledge around industry-driven skills. Given the current circumstances, it’s important that professionals are updated with the evolving domain knowledge, and it’s only possible when they are constantly upskilling.

However, in the current situation, professionals are hesitant in investing to upskill themselves, since it does not offer them a tax-break privilege. Unlike a variety of tax-saving mutual funds, there’s a need to introduce a tax-saving education scheme within the country to promote the upskilling culture at large. Also, there are certain tax benefits that one gets against the education loan for graduation/post-graduation – the same can be replicated for upskilling programs. Such opportunities will encourage millions to invest in their education and, will help them to claim tax deductions/benefits at a later stage.

Union Budget 2022 could be an opportunity for the government to introduce such a progressive initiative which in turn, can have a two-fold impact on the economy – skilled workforce, and an enhanced GDP.

Such evolving circumstances can also introduce collateral benefits like more qualified teachers, upskilled educators/Subject Matter Experts (SMEs) for driving an immersive learning ecosystem, thus also accelerating India’s ambition of becoming the teaching capital of the world.

Attracting talent to startup ecosystem

ESOPs are a popular device in the corporate world, deployed to attract and retain talent. In today’s day and age, early ventures are frequently using the currency to balance CTCs against allotted ESOPs and generate wealth-creation opportunities for the employees. However, employees are liable to pay taxes at the time when the allotted shares are sold without any option to set off the gains against any future investments. Also, ESOPs are not treated the same way as listed equity.

For many early employees, they risk their career to build a startup, and even after holding ESOPs for 4-5 years, the taxation on ESOPs is very high. On the other hand - holding listed equity may get taxed at LTCG rates. The Government can help improve the ecosystem by revising the taxation on ESOPs and making it at par with listed equity taxation. The risk for the exercise remains the same as it is for normal stocks. The tax reduction on ESOP will help in making ESOPs an attractive tool to attract and encourage employees to enrol for the same.

The writer is Co-Founder & MD, upGrad. Views are personal.

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Budget 2022: Make investments in P2P lending tax-free to solve ‘access to credit’ challenge

In last year's Budget, the finance minister announced pillars on which the proposals would be based – creating financial capital, improving human capital, kickstarting innovation and R&D, etc., to name a few. As the COVID-19 pandemic is crawling its way back into the lives of Indian citizens, the Union Budget 2022-23 is an opportunity to streamline various sectors that need the government's attention. Though 2021 was a positive year where we witnessed a steady recovery despite the pandemic, we expect the measures to sustain the growth momentum of the fintech industry to be part of Finance Minister Sitharaman's budget bag.

Since the Reserve Bank of India has created a new department to regulate and oversee fintech companies, there's a good possibility that the government will emphasize the sector in Budget FY22-23, providing incentives that could help the industry usher into a "FinTech Revolution". The fintech sector can promote financial inclusion and generate significant employment opportunities with suitable measures. Within the fintech industry, Peer-to-Peer (P2P) Lending has an enormous potential to expand as a vital part of the sector, with more encouraging steps to invest in it. P2P lending space can solve the concerns of credit accessibility for the country's citizens.

Encourage investors to invest in tech-backed asset class

One way of doing that would be, the returns from Peer-to-Peer (P2P) Lending investments could be tax-free under Section 80C of the Income Tax Act, or special provisions could be introduced to lower tax rates, such as a tax exemption for earnings under Rs 20,000. It will encourage investors to invest in a technology-backed asset class that offers better returns when compared with traditional assets. Additionally, it would increase the purchasing power capacity of individuals and fulfill one's dream or get access to funds during emergencies. In India, P2P lending is emerging as a crucial segment to empower small enterprises. Further, the sector will witness accelerated growth that contributes to the country's economy.

The formation of the fintech department by RBI is a positive move. We wish the Budget comes up with a policy framework to protect the lenders' interest and enhanced procedural aid to recover their money from digital borrowers. A specialized government vehicle to manage fintech might not only help companies run more efficiently while adhering to compliance rules, but it could also assist fraudsters to be eliminated and boost investors' confidence.

Need for technical, financial competence through educational institutes

There were significant job losses during the pandemic. The primary reason was various industries' inability to keep up with the evolving technology. In India, fintech education is the need of the hour. The government has been spreading awareness about the technology skill-building initiatives, which is a significant step, but it will positively impact our economy if additional actions are taken. Setting up avenues for advanced technical education is necessary to affect the employability of the country's population. Presently, India requires professionals with technical and financial competence to conduct the Fintech revolution. More institutions that provide formal education and certifications in fintech are needed to create a skilled group of individuals required to grow P2P lending platforms and the other sub-sectors in the Fintech industry.

P2P lending, as a significant component of the larger finfech sector, is quickly becoming the most popular alternative investment option. There is a need for policy to help the industry evolve and more innovative fintech enter the space of digital lending or P2P lending.

Treat fintech, startups equally in policy framework

Fintech firms and other startups should be treated equally in the policy framework. Sharing technological advancements with fintechs and startups can help to accelerate the objective of financial inclusion. These are only a few of our expectations from the upcoming budget, and now it's up to policymakers to develop a practical growth and development strategy. Until then, we wait until February 1 with great anticipation.

The author is Co-founder and CEO of LenDenClub-Peer to Peer (P2P) lending platform. Views are personal.

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Budget 2022: Give incentives to manufacturers of digital equipment to ramp up supply to schools, educational institutions

 As a population, we have a lot going for us right now. In fact, the term ‘upwardly mobile’ is starting to include more people each year than it did before. A lot of this has to do with the fact that we are a young population. But like all good things, this will not be forever either.

 The number of people below the age of 24 comprised over 50 per cent of the population in 2011. This figure is going to look very different in 2036 - that’s just 14 years from now. India’s Sub-24 population is going to make up less than 35 per cent of the total population, and that’s going to render a very different reality for us collectively.

Last year, around Rs 93,224 crore was earmarked for education with 2020’s National Education Policy, but with no allowances for upskilling of an already educated population. This year’s Budget could be a step to change that.

Educating and upskilling are the only ways to ensure that an ageing population becomes an asset in the future. So, how can the 2022 Budget help?

Improve digital infrastructure

Much has changed in the education landscape since the pandemic. If nothing, the growth of the edtech sector stands testament to this fact. Even in non-urban sectors, there’s been a marked digitalisation of education. Manufacturers of digital equipment like laptops, phones, webcams, and internet service providing hardware could be given incentives to ramp up their supply to schools and other educational institutions.

Grant concessions on GST for education sector

The average price of laptops between 2016 and 2021 has gone up by nearly 50 per cent. Subsidies on these new-age essentials for education might ease the strain significantly.

Auxiliary services like rent, food contracts, housekeeping, security, and transportation services for higher education constitute around 20-30 per cent of the cost of education. An additional 18 per cent GST on these costs brings up the overall cost by 6-7 per cent. Should the Budget exempt educational institutes from this, the benefit will be passed on to the students in the form of reduced fees, making higher education even more accessible.

Save on Capital Gains

Some people are contesting for the tax on long-term capital gains to be zero per cent to encourage long-term investments. Another way to achieve the same end and kill two birds with one stone would be to allow complete exemption from LTCG tax if these gains are reinvested in higher education.

This can be done if these investments in higher education are earmarked from the beginning. With checks and balances in place to prevent any misuse, this could help ease the burden of tax and encourage higher education in the country.

Upskill educated population

 There’s little doubt that upskilling has a positive impact on the country’s GDP. A 2021 study by the World Economic Forum hypothesized that India’s GDP could go up by Rs 40 trillion if upskilled.

Recent reports say that by 2022, about 54 percent of the world’s population will need upskilling or even re-skilling, in some cases. Seeing that 80 percent of our engineering talent stands unemployable at this point, according to studies, confirms this understanding that our educated population needs as much attention to get them job-ready.

The pandemic has also shown the importance of technology. In fact, fintech as an industry was the highest-funded sector in 2021, with ed-tech and health-tech following closely behind. This along with the sudden boom in demand for tech talent confirms its place in the future of this country’s workforce.

In this light, it becomes clear that even the unemployed population will need tech training in order for them to be job-ready in the decade to come.

Help from CSR

 Large corporations in India are already armed with the means and know-how to enable most of these changes through CSR initiatives. Corporates could make it a part of their initiatives to boost education infrastructure in less developed areas of the country, and by helping to upskill as many as they can.

In under two decades, we may be catching up with the West with an aging population as something to offset. An older population could simply mean declining productivity.  However, an aging but future-ready population might be far more agile, and ready for any economic conditions that the future may hold.

The writer is Co-Founder, Fi Neo-Bank. Views are personal.

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Sunday, 30 January 2022

Why 2022 Uttar Pradesh elections may mark the end of Mayawati’s illustrious political career

Political pundits appear to be surprised at BSP supremo Maywati’s low profile in the coming Assembly polls in her earlier bastion Uttar Pradesh. Yet for those who have followed her remarkable political career over the past several decades it had become palpable for quite some time now that Behenji was no longer a dominant factor in the politics of India’s most populous state. As a matter of fact, nearly five years ago in my third and final edition of her biography Behenji I had deliberately changed the sub-title from ‘The Political Biography of Mayawati’ to ‘The Rise and Fall of Mayawati’ despite the obvious risk of predicting the political obituary of someone who had in the early part of her career managed to overcome so many odds and setbacks.

My conviction that Mayawati and her Bahujan Samaj Party had reached a point of terminal decline was not merely influenced by her persistently poor electoral performances starting from the 2009 Lok Sabha polls that crushed her prime ministerial dreams, then losing the throne in Lucknow to Akhilesh Yadav of the Samajwadi Party in 2012, followed by the humiliation of not winning even a single seat in the 2014 Lok Sabha polls and barely five percent of the seats in the 2017 Assembly elections. What was more important than these successive bruising defeats was the fundamental change in the socio-political landscape of the state. Instead of reaping the advantage of her core Jatav voter base swelling considerably with the support of other social segments, Behenji like before now finds that even her own vote bank is fast dwindling.

File Image of BSP chief Mayawati. PTI

The rise of the BSP in Uttar Pradesh masterfully strategised by its founder Kanshi Ram and fiercely implemented by his protégé Mayawati happened in the specific aftermath of former prime minister VP Singh’s Mandal Commission gambit that gave a new boost to backward caste identity politics in the 1990s. This simultaneously propelled both the Samajwadi Party and the BSP in Uttar Pradesh and the two joined hands to defeat the BJP despite the latter’s incendiary Ram Janambhoomi politics fresh after the demolition of the Babri Masjid and decimating the Congress as well.

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Also Read

UP Assembly Elections: Mayawati set to chair crucial meet; Is it too little, too late for BSP chief?

UP polls: Is BSP chief Mayawati's muted campaign part of some grander design?

Mayawati's strategy for 2022 UP polls: Woo Brahmins, a promise of no parks and no bahubali candidates

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Realising the danger of the Samajwadi Party and its canny leader Mulayam Singh Yadav spreading their wings across Uttar Pradesh, the Brahmin elites of both the BJP and the Congress then in power at the Centre quickly struck back toppling the Samajwadi Party-BSP coalition government in Lucknow and installing Mayawati as the head of a minority government supported by both the BJP and Congress. Much against the wishes of local BJP leaders in the state, the Brahmin lobby in the party propped up three short-lived governments led by Mayawati, helping her to expand her base both among Brahmins and a whole slew of lower backward castes and non-Jatav Dalits.

File image of Mulayam Singh Yadav. Getty Images

In the 2007 state polls Behenji played her masterstroke that overnight turned her into the rising political star in the country. Using her now larger than life stature in the state to bag a majority on her stitching up a formidable alliance between Dalits and Brahmins, lower backward castes and a section of Muslims she was now poised to take over the national stage. However, it did not take long for her fortunes to go downhill. Brahmins were dissatisfied with not being allowed to run her government despite her close Brahmin aide Satish Mishra, the lower backward castes and non-Jatav Dalits felt that Maywati only favoured the Jatavs who in turn too feared that their interests were being constantly compromised.

The first indication that Maywati was in decline came in 2009 parliamentary polls when the BSP failed to get a sizeable number of seats to make a serious bid for power at the centre even as the Congress romped home to a comfortable majority.

This was followed by a comeback of the Samajwadi Party in the 2012 state Assembly elections. By the time the Modi juggernaut rolled around in the 2014 Lok Sabha elections the BSP had completely lost the confidence of the Brahmins and considerably eroded in lower backward caste and non-Jatav Dalit sections as well.

With her successive debacles in parliamentary and state polls in 2014 and 2017 Mayawati was increasingly cornered. Desperate to retrieve her position in the 2019 Lok Sabha she entered into an alliance with Akhilesh Yadav’s Samajwadi Party but although she herself gained by increasing her number of seats in Parliament from zero to 10, her ally got only half the number. Soon after she abruptly ended the alliance reportedly under pressure from Home Minister Amit Shah and since then there has been speculation that Behenji had sold out to the rulers of Delhi and Lucknow.

Mayawati herself has fuelled suspicions of a backroom deal with the BJP by being visibly inactive in Uttar Pradesh pointedly not intervening even in controversial atrocities on Dalits across the state apart from the occasional tweet. Her dogged refusal to jump into the poll fray on the plea of Covid appropriate behaviour is seen both as a tacit acknowledgement of her low expectations and playing along with the BJP. It remains to be seen whether a further downfall of Behenji will benefit the ruling party or its main opponent Samajwadi Party-RLD alliance.

The writer is a Delhi-based political analyst. Views expressed are personal.

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Budget 2022: Realtors seeks input tax credit under GST to boost housing segment

The real estate sector has been expecting a lot from budgets in the past 3-4 years. One of the most prominent asks and one that has been pending for a while is “industry” status for the sector. An announcement like this would of course be beneficial for all stakeholders and participants in the sector, for various reasons.

Therefore, like every year, this year too, almost all stakeholders including developers, home buyers, REITs, investment funds, corporate occupiers are looking forward to Finance Minister Nirmala Sitharaman’s Budget 2022 announcements, hoping for some positive changes/amendments that can impact the sector in a much needed, positive way.

Here are some of the key asks from across the real estate community:

Modification of the SEZ Act

A possible relook at the 2005 Act is much-needed after the government adopted the sunset clause and said that only those units that started production on or before June 30, 2020, would be granted a phased income tax holiday for 15 years. With the implementation of a sunset clause, the future development potential for SEZ is under the scanner. For obvious reasons, SEZ developers, as well as occupiers, are vociferously demanding a modification of some of the very stringent clauses of the Act like the inability to sell goods in the domestic market, accepting INR payments, replacing positive net foreign exchange (NFE) clause with some new criterion.

Housing loan-related tax incentives

A request for increasing the tax deduction limit on interest paid for home loans from the current Rs 2 lakh per annum (under section 24B) has been a long pending wish from home buyers before every Budget. There are multiple ways to provide this relief, including, increasing this limit to at least Rs 3 lakh per annum (under the same section), by providing separate tax deduction (outside of 80C) for principal repayments, or by letting the home buyer claim tax rebate on the entire interest amount paid. Either or all of these would reduce the cost of financing of units for home buyers, thereby giving a thrust to the housing demand, especially with the already attractive home loan interest rates being offered today.

Input Tax Credit for developers

The current GST rate applicable on under-construction residential units is 5 percent as well as GST on cement and steel is 28 percent and 18 percent respectively. With developers not allowed to claim Input Tax Credit (ITC) against these tax outflows, construction costs will continue to go with prices of these commodities only expected to increase. This tax incentive enforcement has also been long pending over the years and the developer community is hoping it gets addressed in this year’s Budget. This may be one of the major reforms given the large contribution of the housing segment to the overall market size of real estate in India.

Reduction in holding period of REITs for long-term capital gains

Currently, investments in REIT units turn long-term only on holding the investment for a minimum of 3 years as against a period of 12-months for investment in listed securities. To ensure a level playing field and thereby increase the retail participation in REITs, the government should consider reducing this holding period for REITs to 1 year immediately.

In case Budget 2022 can cater to some or all of these expectations from various stakeholders in the industry, the real estate sector can regain the much-required confidence and get the growth momentum that has been largely missing for the last 12-24 months.

The author is Partner and Head – Real Estate, Building and Construction, KPMG in India. Vies are personal.

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Budget 2022: Government should fast track Code on Social Security implementation to support gig workers

It’s that time of the year again: different industrial sectors are making Budget wish lists in the hope that the government will loosen its purse strings and provide an adequate impetus for growth. While infrastructure spending to boost the economy and increase employment is topmost on the minds of policymakers, the government should not overlook the need to focus on digital economy companies.

As India and the world look to loosen pandemic restrictions, the mobility sector will once again play a critical role in bringing growth back on track. As we move towards the new financial year, we are looking at a Union Budget that will give due importance to digital transformation and help sustain and create jobs and usher in investments, growth and economic momentum.

Implementation of the Code on Social Security to workers

The Code on Social Security (CoSS) passed by the Indian Parliament in 2020 marks India as one of the first countries to establish a framework for nationwide social security benefits and protections for gig and platform workers. It set a precedent by transforming what has been a binary choice between full-time and independent work. In light of the pandemic and the economic recovery process, we urge the Government to expedite the notification and implementation of the Code on Social Security (CoSS) to support gig workers. This will help provide timely support to workers with flexible work options aiding overall economic recovery.

Incentives and easy financing options

The pandemic has seen an accelerated shift towards digitisation of services, and the mobility sector is no different. With more people using their smartphones to get services, the ridesharing industry is poised for a sharp rebound. An incentives-driven strategy that enables easy access to financing and bank loans for vehicle purchase will not only support gig workers but also the auto industry. This will unlock economic opportunities for hundreds of thousands of platform workers.

Progressive EV policies

A sustainable mobility ecosystem needs to be shared, multimodal and electric. Mobility companies like Uber are a vital part of this picture. We are seeing that around the world people don’t switch to EV cars unless there is well-developed, accessible charging infrastructure. We must make sure that EV policies incentivise the development of charging infrastructure and don’t put impractical compliance demands on one side of the ecosystem, something which could crimp the overall growth of EVs in the country.

Level playing field for online auto rickshaws

In 2021, the government announced a levy of 5 percent GST on auto rides booked online. While we appreciate the need for the government to collect revenues, the newly announced tax has a direct impact on the earnings of auto drivers. This tax creates an uneven playing field between offline and online autos and goes against its vision of digitization of services, products, and payments. Reversing this GST will ensure riders, drivers and cities can keep benefiting from the growth in this nascent sector.

The writer is President, Uber India South Asia. Views are personal.

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Budget 2022: Bicycle Industry seeks ‘push package’ for growth

The COVID pandemic altered people's behaviour all over the world including India, resulting in a surge in demand for pedal and electric bicycles. As a result of the increase in health, green and sustainable consciousness, people were convinced/compelled to migrate to public transportation and fitness alternatives - which led to an increase in the number of people opting for bicycles.

Interestingly, bicycles are gaining vitalness world over by the global community, policymakers and multilateral institutions due to their incredible, inherent and indefinite benefits to cyclists, cities, counties and cosmos in terms of poverty alleviation; improving school dropouts; combating asthma/obesity/diabetes; redressing carbon footprints, traffic jams and rising noise levels; apart from providing affordable means of transport for a commute to the masses.

In India, currently, 20 million bicycles are made and sold. As India prepares for this year’s Union budget, we appeal to the visionary Central Government to consider “Cycling-Push package” as a part of the Budget to transform the Indian Bicycle industry @ 2.0 level and enable it to attain Atmanirbhar Industry level.

Challenges to industry

The bicycle industry is confronted with numerous challenges like material scarcity, premium component import - dependence, lack of cutting-edge technology, a higher GST, and a lack of safe cycling networks for pedal and electric bicycles are just a few of the issues plaguing the industry.

Furthermore, due to a lack of testing and R&D facilities for Pedal and Electric Bicycles, manufacturers are compelled to send them to say Hong Kong to meet the testing requirements of the European and UK markets. As a result, the overall cost of a bicycle increases.

On the other hand, Chinese bicycles currently cost 15 percent less than Indian bicycles due to inherent advantages (such as lower capital costs, freight subsidies, and energy costs). Even the average value addition of Chinese bicycles are three times more than Indian bicycles. This has a direct impact on Indian export markets and import substitution.

China dominates the majority of supplies in high-end bicycles and premium components to Europe, the United States, Latin America, the Middle East, and Africa (LAMEA). However, COVID-19 has forced them to halt imports, and with government support and favourable policies, India can easily tap into these markets.

Per capita bicycle penetration is merely 9 percent (as against the international benchmark of 110 percent in the Netherlands). As per TERI Study, merely 50 percent substitution from 2W and 4W to bicycles within the distance of 8 Kms can bring a total annual benefit of Rs 1.8 trillion (1.6 percent of India’s annual GDP).

As per the last censes, 48 percent of the rural population walk to work for 2-10 km distance as most of them can’t afford the upfront purchase of a Bicycle. Hence, seamless micro-financing schemes for Pedal and Electric Bicycles are the need of the hour.

The Bicycle industry is fully geared up to take up the challenges and prepare for much-awaited localization through aggregate demand and a long-term contract approach to overcome scale, quality, cost, viability. It, however, definitely requires initial push supports from the Central Government.

Cycling-push package

Bicycles are evergreen, ever-evolving and ever wondering products with promising future demands and hence a paradigm shift in the manufacturing class among scale is the dire need of the industry. Therefore, a one-time package to the Indian bicycle sector would enable the sector to register revolutionary growth (instead of prevailing evolutionary growth) and embark @ 2.0 level of hi - end bicycle era. This would eventually make India truly Atmanirbhar in premium Bicycles and E-bicycles. The package inter-alia includes the components.

A.PLI, FAME-II& testing and R&D world-class /scale Bicycle manufacturing

The manufacturing goal as per KPMG report is to position the Indian Bicycle sector @ 2.0 level while achieving 3x growth by 2030 (i.e., $3.51 billion) in high value-added bicycles - premium pedal and electric.

Apart from generating employment @ 3.3 per 100 bicycles in the supply chain, additional Govt revenue and stimulating boom in allied services.  In order to realise this goal, the industry seeks:

  1. Localization of around 25 critical imported parts (mechanical and electrical) having world-class quality and competitive cost for import substitution, exports and the domestic market is a prerequisite. For this, transfer of state-of-the-art process and product technologies are a must and hence for bridging the viability–gap, PLI support is necessitated under DPIIT.
  2. FAME-II: Inclusion of E- Bicycle in FAME -II scheme of Department of Heavy Industry, GOI for faster adoption of E-Bicycle to augment in lowering the cost, creation of demand and pushing Global E-Bicycle Supply chain.
  3. Common testing and R&D facilities
  4. Setting up of an advanced cycle technology centre  in Ludhiana (like ARAI Pune for automobile ) with funds from Ministry of MSME schemes is needed to complement R, D &D; testing and certification; capacity building; incubation /start-ups; and so on.

Rationalise GST to 5% with IT

Locally, the government should consider lowering the GST from the current 12 percent, especially on low-cost bicycles. Lowering it to 5 percent with ITC could make them more affordable to a wider range of consumers, particularly for the rural and urban poor base, where demand has slowed in recent months. Increasing bicycle usage through policy initiatives such as GST rationalisation for socio-economic benefits will boost micro-mobility, small earnings and ease of life to the underprivileged class.

The author is Chairman and Managing Director, HMC, a Hero Motors Company. Views are personal.

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Budget 2022: Opportunity for government to set strong technological foundation for education, skilling landscape

Over the past two years, all stakeholders of the education sector have been impacted since the onset of the pandemic. The last two Budgets have spoken about the reforms required by the sector. The main expectation from Union Budget 2022 is for a concrete execution plan for various elements of the New Education Policy (NEP), Skill India Initiate, and for the immediate challenges faced by the sector to be addressed.

While the New Education Policy provided a long-awaited framework for online learning and assessments, there is now a need to strengthen and elaborate the policy for implementation at the grass-roots level and provide the necessary budgetary allocation to support in terms of quality education as well as infrastructure.

Execution plan for skill development

An execution plan for the Rs 3,000 crore which was earmarked for skill development and benchmarking assessments is also awaited. This will boost the job market through effective corporate assessments and hiring, especially for the job roles most impacted during the pandemic.

The COVID-19 experience has led to a paradigm shift in promoting the holistic development of human resources for improving outcomes and raising productivity, rather than only boosting specific skillsets. In this regard, more focus needs to be laid on the Skill India Mission launched in 2015 to ensure that the world’s to-be largest working-age population is trained to be productive across industries and help boost the country’s economy.

More action awaited on teacher skilling, assessments

The initial drafts for the National Professional Standards for Teachers have been encouraging. It will be wonderful to see more action in this space with respect to teacher skilling and assessments.  This can greatly help bridge the shortfall of quality teachers within the country across the spectrum while maintaining consistency in delivering quality education across the length and breadth of the country.

The plan for National Testing Academy to offer biannual high-quality common, as well as specialised aptitude tests, needs to ensure that the rubber meets the road soon. The setting up of a National Recruitment Agency (NRA) for a common entrance test for all non-gazetted posts is a positive step for the job-seeking youth of the country. We look forward to scaling up these NRA tests starting in 2022.

Technology will play a key role in the efficient and effective conduct of these examinations through modern proctoring capabilities. Assessment platforms have evolved significantly over the past two years to provide best-in-class learner experience and proctoring capabilities.

Partnerships between formal education institutes, tech partners

The revamped assessment systems for school students incorporating modern pedagogy and tools are slated to be initiated this year, and we are excited about the possibilities that it will open up. This will initiate deep partnerships between formal education institutes and technology partners for a synergised play of delivering quality education and benchmarking assessments within the country.

The right steps and measures from this year’s Budget will go a long way in setting a strong technological foundation for the education and skilling landscape of India.

The author is CEO, MeritTrac Services. Views are personal.

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Budget 2022: Discouraging crypto assets will wipe out emerging investing classes, impact blockchain innovations

Crypto adoption in India has grown due to various national and global macroeconomic developments. Millennials and Gen Z are increasingly investing in this new digital asset, with the average age of a crypto investor being less than 28 years. It is no surprise then that India was ranked second in the Global Crypto Adoption Index by Chainalysis in August 2021.

India’s demographic is not only young but also tech-savvy — a foundation laid, in part, by the government’s Digital India initiative equipping younger generations with technological know-how that makes them future-ready for a digital age, characterized by digital assets, blockchain technology, and Web 3.0. There is an unmatched growing pool of talent interested in working with blockchain technology — the technology that powers crypto assets — and driving innovation in crypto and Web 3.0 in India. It is crucial to tap into this emerging workforce and engage them.

Regulatory vacuum

Despite the growing popularity of crypto assets and blockchain technology, the industry currently exists in a regulatory vacuum. In the absence of regulations, leading crypto exchanges today follow self-regulatory practices to ensure customer protection and operate in the best interest of all industry stakeholders. The industry is investing heavily to create awareness about the asset class, with an emphasis on the importance of doing one’s own research before investing. The idea is to build an informed and prosperous crypto ecosystem.

We were hoping for regulatory clarity when the crypto bill was set to be tabled in the winter session of the parliament. However, we support the government’s desire to take more time to have a deeper understanding of this new space. India is one of the few economies that is taking measures to standardise best practices in order to address misconceptions around this emerging asset class. A regularised environment born out of a progressive regulatory framework will encourage more Indians to start their crypto investing journey, promote financial inclusion in line with the government's vision and encourage new technology startups to build world-class products from India

Let’s not miss out on Web 3.0 wave

India missed out on the technological revolutions brought on by Web 1.0 and Web 2.0 that gave rise to giants like Amazon, Google, Microsoft, and Facebook. We cannot afford to miss out on the Web 3.0 wave. Discouraging crypto assets will not only wipe out the emerging investing class but will also grossly impact all crypto and blockchain innovations and set us back as a nation.

Indian entrepreneurs who want to build companies on blockchain will have to explore international prospects that will support their ambitions and that can lead to another round of brain drain. India has the potential to become the global leader in Web 3.0 that is a net exporter of technology, instead of a net importer. The next Google or Amazon might be built on blockchain and can emerge from India.

Clarity on taxation

Even as we wait for a comprehensive regulatory framework, from the upcoming Budget, we are hoping for clarity on taxation. This can greatly benefit the growing industry and in turn the exchequer.

Over the years, crypto has become a trillion-dollar industry that furthers the benefits of a safe, secure, and transparent digital economy to society at large. This evolution needs to be acknowledged. We hope crypto is categorized as an asset class that has the potential to open many doors to industry-first innovations and global technological leadership.

The author is Chief Business Officer, CoinSwitch Kuber-cryptocurrency exchange. Views are personal.

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Budget 2022: Will Nirmala Sitharaman provide much-needed booster dose to economy?

As India battles the prevailing third wave of the pandemic and its resultant strain on the economy, India Inc. expects the agenda for Union Budget 2022 to be dictated by measures to boost economic recovery and growth. Such policy-level measures are also anticipated as the government strives to achieve its ambitious goal of turning India into a $5 trillion economy by 2025. The growth of the domestic industry will be an essential chapter in that story.

Rationalise customs tariffs

A key facet of the roadmap for imparting thrust to domestic manufacturing and growth is rationalisation of customs tariffs. Against the above backdrop, one may recall that in the previous Budget, the government had already announced its intention to relook at the customs exemptions – a result of which around 80 exemptions were withdrawn. Further rationalization of customs exemptions is expected in this Budget.

In non-tariff changes, procedural relaxations are expected in Customs (Administration of Rules of Origin under Trade Agreements) Rules and Manufacture and Other Operations in Warehouse Regulations, to improve ease of doing business in India.

More PLI schemes announcement likely

The government’s vision of ambitious economic growth through an ‘Atmanirbhar Bharat’ needed a radical policy and Production Linked Incentive Schemes (PLI) is exactly that. It is the government’s key initiative to attract investments and boost manufacturing. And in her own words, Finance Minister Nirmala Sitharaman called PLI schemes a ‘game changer’. The FM was always bullish on it, evident from the lavish outlay of Rs 1.97 lakh crores across 13 sectors set aside for PLI schemes. Expectations are that the PLI schemes alone can trigger Rs 2.5-3.0 lakh crore of capital expenditure, generate Rs 35-40 lakh crore of incremental revenue, and add around one crore jobs in the next five years. In fact, the government estimates indicate that introduction of PLI schemes alone would help us to grow our GDP to over $ 500 billion in five years.

PLI schemes have seen great participation from the industry as well. PLI schemes for IT hardware, mobile phones, drugs, and medical devices have already lured investments of over $30 billion. After seeing such a positive response to these schemes, the ambit was expanded to sectors such as automobiles, white goods, food, textile, and specialty steel. Given the success of the scheme, one can expect the announcement of PLI schemes for a few more sectors such as chemical, footwear, leather, renewable energy.

Continuation of COVID relief measures expected

In the past, the government has also taken other steps to aid India Inc by announcing COVID relief measures around compliances. These include a reduced interest on delayed payment of taxes, rationalisation of late fees regime, and relaxation around GST reconciliation (GST 9C). With its continued commitment and focus on ease of doing business, the industry is hopeful of additional relief measures such as allowing revision of GSTR 3B and relaxation of timeline for taking adjustments w.r.t issuance of credit notes, and availing input credit for the previous year - as per current law, the timeline for both filing of return for September.

Clarity on double taxation of ocean freight

The industry would also welcome clarity on some contentious issues, viz. double taxation of ocean freight - either by taxing such freight as goods (as part of Customs duty) or as a service, taxable under reverse charge under GST. Double taxation of ocean freight has been a bone of contention between industry and tax authorities, resulting in unnecessary litigation and cost to industry as well as government machinery.

ITC for CSR, other expenses incurred due to COVID?

Another aspect that should be clarified is on the admissibility of ITC for CSR and other expenses incurred on account of the pandemic, as the industry is of the view that such expenses are incurred in course of business and are mandated by the law.

The pivotal role played by technology in tax administration, is more evident now, i.e. in life 'after COVID-19' than it has ever been. To further strengthen the move towards automation and ease of doing business, the government should consider measures to reduce personnel visits for assessments or audit purposes. Faceless assessments and audits under GST, like in income tax, could be one such measure.

Technical improvements and changes in the indirect tax regime have necessitated reform of SEZ law, which was implemented 15 years ago. The Commerce Secretary recently stated that key revisions to SEZ policy are being examined for simplification of procedural, compliance aspects and alignment with GST law. Some of the expected measures include ease in compliances, lower custom duty on clearing goods into DTA, relaxation in NFE norms, accepting INR remittances, etc.

In conclusion, the Government of India is expected to provide a booster dose to the Indian economy by announcing the much-desired policy and rational measures through the upcoming Budget.

Achal Chawla is Tax Partner, EY; Divya Bhushan and Rachit Suri, senior tax professionals with EY have also contributed to this article. Views expressed are personal.

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Saturday, 29 January 2022

Budget 2022: Government should lay foundation for sustainable water management in India

The Union Budget 2022 is around the corner, and so are the expectations from the government across varied industries. For the water sector, Budget 2022 needs to chart a new vision of making India’s overburdened water infrastructure more sustainable and resilient.

The government has already laid special emphasis in this aspect with the announcement of flagship schemes such as Namami Gange, Jal Jeevan Mission, Atal Bhujal Mission, and more. Such projects have helped in building a foundation that will boost further planning and execution of policies to bolster India’s water infrastructure overall. While these projects will continue providing their benefits, there is still a long way to go.

India is already known to be water-stressed, the demand for water is expected to exceed supply by almost twice by 2030. This is truly an area of concern, which brings us to ponder over a crucial question – how are we planning to relook at building robust water infrastructure in India?

Budget should strengthen our water infrastructure

The upcoming Union Budget can act as a key instrument for the water sector in transforming itself with sustainable practices to achieve social, economic, and environmental benefits. The government must initiate and enforce policies that will help in setting up achievable goals, paving the way for sustainable water management in the country.

Installation of smart water meters

Budget 2022 should prioritise the installation of smart water meters across networks as part of sustainable water management to curb water loss and reduce Non-Revenue Water. While individual municipalities in cities like Pune and Chandigarh have implemented the installation of smart water meters, a national mission to install smart water meters will be a game-changer for India in improving water efficiency and energy savings leading to a positive climate approach.

In 2022, the government’s focus should also be on creating more investment opportunities in India’s water sector. Investments in India’s water and sanitation sector will augment the water infrastructure with key projects across various sub-sectors like irrigation, sewage treatment, wastewater management among others. With this, ongoing government initiatives such as Namami Gange, Jal Jeevan Mission, and Atal Bhujal Mission will also be enhanced, creating a sustainable water ecosystem. The need of the hour is to prioritize the country’s water infrastructure with equal importance as given to public infrastructure facilities.

Leverage PPP model for efficient, sustainable water network

With the right allocation and outlay in place, the Ministry of Jal Shakti can further leverage the Public-Private Partnership (PPP) model for establishing an efficient and sustainable water network system that will build upon each other's offerings. The Budget should also promote the reduction in inefficient regulations and formalities to ease private sector participation in India’s water sector. This will bring in the much-needed expertise, resources, and manpower while ensuring faster execution of ambitious projects.

Create National Tech Mission for water resources management

The Budget has a huge scope in identifying the role of technology for India’s water sector. A separate allocation to create ‘National Technology Mission for Water Resources Management'. The objective should be to provide smart planning and framework for the implementation of smart digital technologies across the water utilities in India for effective implementation of sustainable water practices.

Technology will prove to be an effective tool against various issues such as leakage detection, understanding water demand across districts, remote management of facilities among a host of other services.

Going forward, the government should also consider shifting towards a tender system that prioritises lifecycle costs over the lowest bid. With this, the focus will shift towards the implementation of sustainable technology, driving a positive influence on the climate and environment as overall cost savings. The amount of revenue and resources that will be saved through the lifetime of operating these efficient systems will be far more than the upfront cost of buying these products.

For example, in the Cambodian province of Takéo, the water supply company was supplying drinking water to the small city of Doun Kaev and the surrounding 45 villages of about 44,000 people. With a supply from Roka Khnong Lake, the plant used older models of pumps to distribute treated water out to the network, often resulting in pipe damage, non-revenue water (NRW) water losses, and wasted energy. To tackle this, high-efficiency pumps were installed along with network sensors to predict water consumption patterns. After one year, the plant achieved 20 percent savings in energy use, a 13 percent reduction in NRW water losses due to leakages, and a 29 percent reduction in pipe bursts.

Planning for a better tomorrow

With the Budget focusing on the various parameters of the water infrastructure of the country, integrating sustainable practices will not only benefit in creating a robust water ecosystem, but also for India to achieve its Sustainable Development Goal (SDG) targets. While India has already laid the groundwork for SDG 6 goal of ‘Clean water and Sanitation for all’, what we expect from Budget 2022 are action plans for the coming years that will determine India’s sustainable approach towards water management.

This also presents an opportunity for the government to meet the UN sustainable goals of SDG 13, that is, taking urgent action to combat climate change and its impacts. The Budget should also look towards providing subsidies on renewable and sustainable technologies for the water sector that will further in establishing the most efficient infrastructure for the country. The advantages of shifting to a sustainable structure will truly help in reduced energy consumption and waste generated, better management of water and resources, enabling a better ecosystem for communities to live in.

The author is Country President, Grundfos India—advanced pumps solutions. Views are personal

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Marital rape: Why time has come to remove exception in the rape law provision

I have often stated that I belong to the era where I believe in the institution of marriage. As a lawyer and a woman who has had a majority of work focused on and around issues regarding marriage and intimacy, I believe I am in a position to evaluate the situation objectively. Marriage, I believe, is the grundnorm of society, the bedrock upon which the fabric of the society is built. It is not to say that it is without its problems, and one such confounding problem is the issue of marital rape.

The issue surrounding marital rape has confounded India for centuries. The concept of immunity from marital rape seemed to have emanated from colonial legacy, right from the times of Chief Justice Mathew Hale in 1736. Chief Justice Hale stated in History Placitorum Coronae (History of the Pleas of the Crown) published posthumously in 1736: “The husband cannot be guilty of a rape committed by himself upon his lawful wife, for by their mutual matrimonial consent and contract the wife hath given herself up to her husband, consent which she cannot retract.”

Recently, the Kerala High Court observed that marital rape is a good ground to claim divorce. A division bench of the Kerala High Court comprising A Muhamed Mustaque and Dr Kauser Edappagath held that husband and wife in a marriage are equal partners and husband cannot claim any superior right over wife either concerning her body or concerning individual status. The court further stated that any intrusion, physically or otherwise, in marital space would constitute cruelty. Nearly just because the law is not recognising marital rape under penal law, that does not mean that the court cannot recognise the same as a form of cruelty to grant a divorce.

There are several theories on why marital rape should or should not be a crime.

The traditional theory that confronts one appears to be that the social construct and the sanctity of the institution of marriage advocates that marriage is a private space, therefore there should not be intervention or criminality built into the construct. The counterview is rather clear that this appears to be the extension or perpetuation of the power dominance theory and ultimately today affirmative action needs to be taken to rectify the historical wrong.

There is no gainsaying in the fact that simply because a practice has been prevalent for a considerable period, the same should be permitted to continue and we continue to perpetuate malpractices even though it is antithetical to all concepts of humanity, human dignity, gender equality and constitutionality. Once we accept this narrative, the rest very quickly falls into place.

Another compelling reason is more practical: It will be almost impossible to either prove or disprove the factum of rape. When we look at crimes behind closed doors, we look for certain clues, for example in cases of rape, medicinal evidence, bodily injuries and whether the accused and the victim were there at the same time. These parameters will not exist in the cases of marital rape. The disadvantage will be on the person, on whom the burden of proof lies. The act of law and practicality is very often a precarious balancing one. On one hand, we have women whose right on their own body and bodily autonomy is absolute, on the other we have the very practical issue of how to prove an attack, in an intimate setting. There is no question that a balance has to be found.

The issue surrounding marital rape has confounded India for centuries. AP

The discrimination between married and unmarried women is fatal to the understanding of gender roles. A woman remains a woman whether married or unmarried and whether married or unmarried she has a right to say no. The argument that there is no violation of married women right under Article 21 of the Constitution since she has other remedies (remedies of lodging a complaint about domestic violence, grievous hurt, or get divorced on the grounds of cruelty) is fallacious and hollow.

The questions that we need to address and the answers that may be self-evident are the following:

1. Is the exception to rape in the form of marital rape inconsistent with Articles 14, 15 and 21 of the Constitution of India?

2. Is the classification between married and unmarried women in the context of rape rational, or is it completely arbitrary therefore cannot withstand constitutional scrutiny?

3. How do we adjudicate the concept of consent — if in the present case there is a lack of consent, would it not fall within the clear domain of rape?

4. Is there any rationale for granting immunity in case of marital rape, when it is a classified crime under Section 375 of IPC?

5. How do we treat the individual autonomy of a woman?

Since 2015, the Delhi High Court has been seized of this issue. However recently the same has gained considerable impetus. This issue can no longer cause any delay. On a broad surface, the National Family Health survey 2005-2006 demonstrated that out of 80,000 women interviewed 93 percent said that they had been sexually abused by their current or former husband. We can’t be putting this issue on the back burner and have a blind eye towards it. Needless to say, India has been rapidly progressing in the dimension of gender equality and gender dignity.

Several anachronistic practices have been either struck down or the law amended ensuring a rightful place for women, most importantly human dignity. We have brought into place several criminal laws, including making cruelty a criminal offence under Section 498A IPC; dowry misappropriation has been deemed to be a criminal offence under Section 406 IPC; Domestic Violence Act has come into place in 2015 addressing the concerns of the women facing cruelty, harassment and various other forms of violence, to ensure their protection. All this has reflected a sea change in the landscape of the age-old concept of privacy in the domain of matrimonial relationships.

Simultaneously the judiciary has been moving forward in protecting the rights of women. In the recent judgement Independent Thought Vs. UOI (2017 (10) SCC 800) by Justice Justice Lokur and Justice Deepak Gupta of the Supreme Court read down the exception in the case of statutory rape and held that the age of consent must be read to 18 and not 15 for the purpose of exception 2 to Section 375. The court observed that the exception was creating an artificial and unnecessary distinction between unmarried and married girls without any rational nexus thereby the court held it arbitrary and discriminatory under Articles 14 and 15 of the Constitution. The court noted that the exception was contradictory to the other scheme developed by the government for the protection of children POCSO, and POCSO being special legislation would prevail.

The judgement paves the way to take a step forward in this direction. Of course, it is never an easy task considering the social construct and the sectional societal opposition. Nobody wants displacement of power; perpetuation of power is always a heady cocktail. If you look around, you will find more than 100 countries have made marital rape an offence including Pakistan. England, from where this colonial legacy emanated, made marital rape an offence back in 1991. The house of lords held common law is capable of evolving with the change in social, economic and cultural developments, since that time the status of women has evolved. The court stated that “Hale's proposition involves that by marriage a wife gives her irrevocable consent to sexual intercourse with her husband under all circumstances and irrespective of the state of her health or how she happens to be feeling at the time. In modern times any reasonable person must regard that conception as quite unacceptable.”

The government has also taken a progressive approach on this matter. The government in the Delhi High Court stated that this process is going through a consultative process. It now remains for us to see whether the change would come in through a legislative process or the court. Either way, the immunity granted to marital rape cannot withstand the scrutiny of criminal law. Two of the arguments made by the opposition include: One, that the law has the potential of misuse; two, that the court cannot create an offence.

There is not much substance in these arguments.

The law is an instrument to define what is right and to punish what is wrong. It sets the narrative for society.

I might also add that constitutional morality itself which is the very root of the Constitution has started the ethos of Indian society. In the Vishakha case in 1997, the Supreme Court relying on the international convention including UN-CEDAW held that sexual harassment of women at the workplace requires to be addressed and set out detailed guides which ultimately got translated into law in 2013.

It is not the creation of offence but striking down of an exception that is artificially created. Regina’s case paved the way for such an interpretation. The Supreme Court in Independent Thought Vs. UOI (2017 (10) SCC 800) has already answered this argument by stating that by striking down the exception to Section 375 IPC, no offence is being created. The offence already exists in the main part of Section 375 IPC. Cutting down a part of the exception is only bringing the law in consonance with the Constitution.

Historically, women were subjected in law and society as objects or goods. Justification for this treatment was found in these three ideologies.

1.Chattel theory: Wherein a woman was the property of her father until she married to become the property of the husband. Marrying a woman or buying a woman were synonyms.

2.The feudal doctrine of coverture: Wherein a woman had no identity upon marriage. She had no political power or protection under any statutes. The husband had the right to beat his wife or chastise her in the ahem of bringing order within the family.

3. Marital unity theory: The women upon marriage become one with the husband. She had no rights. She could not enter into any contract, sue another, make a will or even have a property.

It has been a tough road for women for the past few decades; we have fought long and hard for our rights not just to be recognised but also to be implemented. Marital rape is a direct attack on a woman’s bodily autonomy, the kind of attack that reduces her being to an object. Men having immunity for marital rape perpetuates that notion, creating a mindset that wives may be treated as a commodity or for their own fancies and nullifies the concept of consent. It is a menace that should be removed not just for the present generation, but as a signal for the future to treat women as equals, whether in a marriage or out of it.

The author is a Senior Supreme Court Advocate and former Additional Solicitor General of India. Views expressed are personal.

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