Taxman as hassling as rates
This refers to column “Doing Business Indicators: The data is plain wrong”. Some inaccuracies may have cropped up in the data or possibly the IFC may have used different methodology to work out these data. The official tax rates, even if on the higher side elsewhere, would only dilute the incentives for business but don’t much impact the ease of doing business. Businesses in India have to humour the rent-seeking tax and regulatory officials by catering to their greed, whims, fancies and perversions. Quite often, not only the regulatory obligations are tough to comply, these are spelt out in complicated and convoluted manner, thereby vesting the enforcement machinery with huge nuisance power. Even otherwise, the enforcement officials are ingenuous enough to derive nuisance power even from the simple and innocuous rules and procedures. Ask any vegetable vendor or a small tea vending kiosk, one would know how difficult it is to run even micro-enterprises. Businesses, small or big, are all treated as the geese that regularly lay golden eggs. Thus, the tax and regulatory burden on economy in general and business in particular is very heavy, both in terms of money and the hassles. Therefore, the quantitative comparison of official tax rates doesn’t tell the full story of the complexity of doing business in our country. Therefore, rather than trumpeting our lower tax rates, we need to put our house genuinely in order.
Nand Kishore
Delhi
Fixing PSBs’ loan problems
This refers to the editorial “How do PSU banks grow” (June 12). Public-sector banks, being the main growth engine of the economy, are currently the worst-affected on the account of the rapidly deteriorating asset-quality. This will finally lead to bottom-lines being in the red and, in turn, will negatively impact the growth in capital and disbursement of credit. The steps taken by RBI, such as strategic debt restructuring (SDR) and the 5/25 scheme, would certainly go a long way in improving asset quality of the banks in general and the government-owned ones in particular, due to the latter’s higher exposure to the infrastructure sector. Currently, public-sector banks needs to look for mobilising household savings. Skill development and a change in the attitude of the human resources of PSBs is needed to accelerate the pace of growth. The main hurdle in banking is the unmanageable level of bad loans, which needs more radical reforms in the legal system to make it proactive in supporting the banks while dealing with borrowers. An appropriate mechanism should be in place to speed up the disposal of cases relating to recovery of defaulted loans. The government and RBI should be more concerned with the recovery of big-ticket bad loans.
VSK Pillai
Kottayam
