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'Don't compete within India, but with the world'
Sheela Bhatt in New Delhi | February 27, 2006
Nimesh Kampani, chairman of JM Morgan Stanley, told rediff.comin an exclusive interview that his expectations from this year's Budget are not high.
"I just wish the FM [Finance Minister P Chidambaram] doesn't do anything in excess. Let him continue the status quo," he said.
Asked how he foresees the Budget, Kampani said, "The finance minister will emphasize on agriculture, infrastructure development and on ways he will adopt to raise resources."
He said Indians should not make a fuss about issues like fringe benefit tax. "Now that it's there, just live with it! Think positively because in the past, we were in the region of 70 per cent tax net but now we are paying just 30 per cent."
"Although the Budget is important, one need not sensationalize it because the importance of the Union Budget is greatly reduced. The future growth of India will come from the private sector," he said.
"After the reduction of import duty in previous Budgets, the government's influence has reduced. The government is not going to reduce import duty to 0 per cent, so why the exaggerated noises about the Budget?
"People should shift their attention from the Budget because India is now becoming a world-class economy. One should compete with the world. Don't compete within India, think what Japan, China, the EU and the United States are doing."
Kampani said the government's real investment in infrastructure is the only criterion for assessing the Budget.
Asked what will be his most important decision if he was asked to frame the Budget, Kampani answered rather reluctantly, "I'll go to Parliament and request them to give me permission to create fiscal deficit and allow me to spend $50 billion on India's infrastructure as China did. Because, I am spending on creating assets and not spending on wasteful expenditure. I will build power plants, roads, schools, hospitals and airports. It will create employment and also a modern India."
He however added, "In democracies like India, this is not possible. Also, it requires huge political guts and courage. Many people will argue that it will increase liquidity, inflation and without any tax increase it will increase the deficit but it will all depend on how you plan and implement the spending. You will need world-class finance management by manipulation of liquidity and tie-ups with private funding."
"The FM should spend with love on improving Hyderabad, Bangalore, Nagpur, Ahmedabad, Kochi, Goa, Pune and all the four metros."
Kampani says when domestic labour starts to move freely within India, it will change the country dramatically. Like, the Bengali labourer should know he can go to Kochi anytime and get a job easily and can settle down safely along with family in other states.
He also said the FM's move of removing capital gains tax from the secondary market helped in a big way when he introduced the security transaction tax to tap foreign investors who came via the Mauritius route. The government is earning around Rs 3000–4000 crore from the creation of this level playing field.