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Current Financial Year 2016-17 is not a conventional year as major reformative decisions have been taken: FM

Current Financial Year 2016-17 is not a conventional year as major reformative decisions have been taken: FM

India Blooms News Service | | 20 Dec 2016, 08:00 pm
New Delhi, Dec 20 (IBNS): Union Finance Minister Arun Jaitley said that the current Financial Year 2016-17 is not a conventional year as many major reformative decisions have been taken during the year.

He said that there is need for out of box thinking as series of steps are required about what the Government can do and what the banks can do.

The Finance Minister Shri Jaitley was making his Opening Remarks at the Pre-Budget Consultative Meeting with the representatives of Banks and Financial Institutions.

The Finance Minister further said that the banking sector is the backbone of our economy.

He said that he doesn’t see any serious challenges as far as structural changes are concerned.

After that number of suggestions were given by the representatives of the Bankers and FIs for consideration by the Government. Some of the major suggestions are as follows-

It was suggested that there is need for recapitalization of banks in the Current Financial Year 2016-17 as well as in the next Financial Year 2017-18. There is need for Full Tax Exemption for NPA provisioning by the banks keeping in view their profitability.

Post -demonetization, liquidity in banks have improved. This may impact saving deposit rates. This makes senior citizens more vulnerable as their income is adversely affected. So, some sort of exemption need to given to them under the Income Tax Act so that they have a decent income through their deposits.

In  case of GST,  there is need for Central Registry for GST compliance by the banks which have branches on pan India basis.

After demonitisation, the Budget should focus on boosting the consumption to create demand. Urban Local Bodies should be encouraged to collect Property Tax and Utility Tax through online means. Finance Bill should mandate that all wages should be paid by the employers through banking channel or digital mode.

Many shopkeepers don’t sell using digital means as they do not want to pay taxes. So there is need to give some tax rebate to these shopkeepers to use digital means and for better compliance.

Same way, consumer may also be given a tax rebate at the year end if  his digital purchase is more than a certain amount.

Micro Finance Sector has seen a little increase in default as most of the people pay in cash. Also in SME sector, employers are waiting for the withdrawal limits to be raised to start paying their workers.

Axis Bank representative specifically listed out the steps taken by bank management against some erring officials and assured the Finance Minister that as a bank, they are fully committed to highest level compliance of banking and Government prescribed norms and standards.

To kick start demand in the economy, low cost housing need to be encouraged. Ownership of a plot or land is required to avail finance for housing. Some customers do not own land in their own names, hence this norm may be relaxed.

In digital payments, issues of internet connectivity are there. Hence, each district may be allotted to a particular telecom company to improve internet connectivity.

Mutual Funds and Life Insurance Companies provide employment to a large number of youths through their distribution network. Some sort of incentive should be given to them.

To fight unemployment, a provision should be made that if a firm, that employ a certain number of people, increases the number of jobs by a certain degree, then 2-3 per cent tax relaxation would be given to it.

This directly links tax rates with job generation.

As far as the Government’s Financial Inclusion drive is concerned, a Venture Fund for members of Scheduled Caste was launched with Rs 200 crore. Under this, 71 proposals have been screened so far. So the Government should continue to provide Rs 200 crore more in next budget. And a similar fund for STs should also be created.

Skilling of the personal for ongoing digitization drive is an imperative. Also revenue model for business correspondence model to be revamped as many of these business correspondents are struggling and leaving the companies after some time.