Recently, a moneycontrol article (dated 8th April 2012) has stated that India is expected to grow at 6.1% in calendar year (CY) 2012, similar to the pace recorded in Q4 2011
The Government and RBI may not be able achieve reduction in inflation through their policies, but definitely they know how to achieve reduction in India's growth from 10% to 6% levels.
As Financial Thoughts mused earlier in this blog, with the kind of high interest rates in India, the cost of capital shoots up impacting business confidence
Not only RBI is trying to hamper the growth, but a recent report in Indian Express has shown that Income Tax department has also joined the wagon. Their duty is to scare the FDI away (imagine the impact on India's current account balance & employment of its educated youth).
In a thought-provoking article in the Indian Express, Jaithirth Rao tells about the harassment that the income-tax department has heaped on the BPO industries which have caused a shift of BPO businesses from India to the Philippines and other more ‘reasonable’ Countries.
The income-tax department is raising tax demands on captive units of global companies using their global profits as the basis and points out that this one decision alone would cause several of these companies not only to stop growing their Indian subsidiaries, but actually start winding them down.
The income-tax department is reportedly making frequent and arbitrary changes in rules and says that this has resulted in vicious harassment of Indian IT and BPO industries.
No wonder these things happen when we have a 1980 Finance Minster (Pranab Mukherjee) presenting 2012 budget. In 1980, income tax department was like a vicious mother-in-law for the business community. For a period, from 1991 there were progressive FMs. (i.e. Manmohan Singh, Yashwant Singha and Chidambaram), irrespective of whether it was BJP or Congress.
Hope they will make Pranab Mukherjee the next Indian President and bring back Chidambaram as FM so that Indian businesses can breathe and the confidence in Indian Economy is retained such that FIIs and FDIs continue to flow into the nation.
1 comment:
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