Dear Members,
Greetings!
We had a wonderful 6th Residential Study Course (RSC) on IFRS and Ind ASs. Three papers for discussion and two papers for presentation took the participants through a number of facets of Ind ASs implementation. One key takeaway for me was an analysis where the speaker proved the impact of Ind ASs will be minimum and manageable. He demonstrated that in terms of number of adjustments and impact on Revenue Statement and Balance Sheet will not be substantial for most businesses. The excessive hype generally around implementation issues, impact and requisite changes should therefore largely prove to be just that.
It was also heartening to find people from non audit disciplines at the Ind ASs RSC. In recent times, we have seen a tilt towards specialisation and hyper specialisation. However the business universe is far more interconnected and dynamic than ever before. Often specialisation works in compliance arena, but when it comes to giving advice, the approach calls for sound knowledge of a number of facets of the issue. Perhaps there will be some balancing in the profession, and CAs will function as advisors who give comprehensive solutions and direction. Such turnaround, stepping out of compliance practice, would bring a larger part of the profession in a superior trajectory. A speaker did point out that out of what a CFO typically requires; only 9 % relates to tax and accounting which we CAs deal with. I hope as CAs we will step up to deliver the other 91% that market requires.
Make in India – Manufacturing and Job Creation
Global demand remains sluggish and seems to stay that way. Manufacturing in India does have serious disadvantages, from poor infrastructure to terrible regulatory mechanism. The simplest of things could be painful and the obvious could be crammed with unimaginable hurdles. Our advantage is the market. But whether serious value addition can happen in India or not is still a question. Unfortunately, we need urgently a whole ecosystem where an Industry can come, along with all its paraphernalia of suppliers and others and set up a base. The Make in India week seemed to have brought this in focus and now the Rs. 15 lac crores of investment commitment need to translate into actual investments.
What we need today is jobs, more jobs and better jobs. Statistically the correlation between Manufacturing and job creation has weakened. Between 2004-05 and 2009- 10, the employment in manufacturing fell by around 5 million. Presently the chances of high job creation look steep. Automation and artificial intelligence (AI) pose strong challenge to the man who created them. Industrial robots sold increased by 56% in the last year, driven by emerging markets. I heard that AI is being developed to an extent that even call centres will be driven by AI where you will be able to get responses by machines which are faster and in the right tone. Our government has been talking about all the right things, and bringing initiatives such as Digital India, Start up India, Skill India and so on. However, the level of urgency cannot be over emphasized and therefore the scale and pace will need a greater push.
New Leadership at ICAI
Our parent body, ICAI has a new leadership in place with the President Mr. Devaraja Reddy and Vice President Mr. Nilesh S. Vikamsey at the helm. It so happens that both are BCAS members and Mr Vikamsey has been an integral part of the accounting and auditing committee for many years. The Society conveys its best wishes and continued commitment to partner with ICAI in its endeavour of Nation building.
Parliament Functioning
Today, the parliament’s fascination to remain focussed on one or two issues at the detriment of larger problems faced by the nation is becoming rampant and serious. Where farmers commit suicide, where people cannot find meaningful and gainful employment, where investment proposals in industrial sector in value terms are at an 11 years low, where rupee is weakening, companies are over leveraged, banks are ridden with NPAs, should the parliament not focus on matters that have enduring positive effect on the lives of our people? Could we have more deliberations than accusations, can we expect normal functioning rather than pandemonium, will adjournments be replaced by extended hours of working to clear pending business?
Tax Policy
The FM announced the creation of Tax Policy Council (TPC) and Tax Policy Research Unit (TPRU) to make coherent tax policies and ensure independent, multidisciplinary analysis before decisions are made. This is a welcome move arising from the TAR C report. TPRU will carry out impact analysis of new tax measures on immediate state revenues and also the medium and long term impact on behaviour of economic agents and the economy as a whole. We can now hope that this unit will bring out the baneful consequences of issues such as retroactive amendments, and point out side effects of sudden changes, reversals, negation of lawful judgements, that discourage investments. The actions of bureaucracy to collect more taxes, has resulted in creating a perception of Indian tax system as predatory and unfair. Having a bad tax policy and administration is akin to killing the geese that lays golden eggs. We hope that TPRU will be fair, independent and vociferous and brings out projections that will inform formulation of tax laws.
Finance Bill
The Society started a new initiative to have short videos of about 2 minutes by some of our members practicing in tax laws and young professionals speaking about their Budget expectations under specific areas. We received good feedback and therefore we will post more videos after the 29th February on our You Tube channel, Social Media and also circulated via email.
As you read this page, the FM would have presented a Union Budget that we all were looking forward to. No one knows better than the FM that behind good looking macro indicators, lies over capacity, high debt, rancid bank loans, and slackening demand and much more. In the spirit of Holi, let us hope that the FM will sprinkle the colours of structural reform, controlled spending, and big bang tax reforms, if not more. Time is running out and destinies of a billion plus people are involved!
