To bolster revenue streams for crucial sectors like defense, social welfare, infrastructure, and space exploration, the central government must focus on optimizing existing avenues and exploring untapped potentials.
Firstly, while discussions on income tax reforms have been prevalent, there’s a need to swiftly implement a more equitable income tax law, broadening the taxable base without exemptions. This reform could significantly bolster direct tax collection, which currently rests on a narrow foundation and risks stagnation.
Secondly, enhancing the efficiency of indirect tax collection mechanisms, such as GST and VAT, is imperative. Formalizing sectors of the economy and tightening enforcement can curb tax leakage without stifling business operations, fostering a culture of compliance.
Lastly, leveraging returns from central public sector enterprises (CPSEs) presents a considerable opportunity. Despite their vital role in industrial development and employment generation, CPSEs often fall short in delivering dividends commensurate with government investments. To address this, a comprehensive evaluation of CPSE investments across ministries is essential, alongside setting performance targets for dividend yields.
Moreover, transitioning CPSEs to listed entities on stock exchanges could instill market discipline, transparency, and operational efficiency. This approach, as demonstrated by the recent LIC listing, encourages improved performance through market valuation and executive remuneration tied to performance metrics.
In redefining the management approach towards CPSEs, India can ensure optimal utilization of its resources, fostering a conducive environment for revenue generation while driving economic growth and development. By shifting the narrative from divestment success to effective management, the government can pave the way for sustainable revenue accretion and meaningful investments in national priorities.
