View: Sitharaman’s budget is a blueprint for resurgence
While market reaction has been subdued, I believe the approach will result in longterm benefits.
Nirmala in Sanskrit means virtuous, clean and pure. And that is precisely what Union Finance Minister Nirmala Sitharaman has endeavored to do in her maiden budget. She has presented a wide array of proposals aimed at achieving a virtuous investment cycle and will help clean up many legacy issues in the national balance sheet. Her proposals are intended to attract more capital, expand the scope of digital in our economy and boost infrastructure development — steps that will serve as the backbone for growth over the next few decades.
While the reaction from the markets has been subdued, I believe the approach will result in longterm benefits for the country. A big ticket agenda emerging from this budget is the push towards infrastructure development with a sharp focus on railways. The massive Rs 50 lakh crore investment target to expand and upgrade the railway network by 2030 is by itself a game-changer.
The multiplier effect of large infrastructure investments and the building of roads will help increase employment and lead to higher capital flows. The finance minister’s intent on making India an environmentally sustainable and future-ready nation is clear from the thrust given to electric vehicles (EV). Import sops on EV parts, incentives to manufacturers and tax breaks on loans for EV buyers is a well-rounded strategy that will help propel the EV ecosystem. Not only will this lower the carbon footprint but also reduce the burden on the exchequer caused by oil imports.
What I particularly liked was that the economic imperatives have been wellresearched and studied to understand the levers that will move the economy. By adding depth to the debt and equity financial markets, strengthening the insurance infrastructure, targeting the liquidity crisis issue at non-banking financial companies and easing access to funds for corporates, the minister has prescribed meaningful measures that will drive liquidity and credit flows to corporate India. At the same time, these are measures that will give confidence to global investors. Ease of living is becoming an area of attention for the new government.
Bringing water to the parched hinterland, building homes in rural India and ensuring electrification are themes that are continuing to receive the necessary budget funding. With an ambitious target of 1.95 crore houses in the second phase, the ‘Housing for All by 2022’ mission looks to be on course. The government has done an incredible task of constructing 9.6 crore toilets making lakhs of villages open-defecation free and above all, protecting and restoring the dignity of women. Making the action plan comprehensive is the Har Ghar Jal initiative, which is the need of the hour to ensure hygienic water access to all.
The much debated issue of job creation for the youth has got the priority it deserves through various innovative measures. One such step is the out-of-the-box idea to launch a TV channel that will help create a knowledge sharing and networking platform for startups.
Easing angel tax — a major obstacle in attracting investment into startups — is also a welcome move. The other job-creation engine — the micro, small & medium enterprises — has also been given tax breaks along with indirect tax rate cuts, which will spur business investment further. The creative idea of upskilling the youth with globally relevant job skills in artificial intelligence, internet of things, 3D printing and digitisation will make them more employable, foster innovation and drive productivity.
Embedded within the budget provisions are several measures to simplify procedures in GST and income tax by reducing the complexity and volume of filings required. Eliminating the interaction between the assessee and the tax official by bringing in e-assessment will create transparency and do away with the scope for malpractices.
Further, the stringent limits on withdrawing cash for business should help drive adoption of e-payment solutions, even though it will cause some hardship in the transition period. Labour reforms have been a long pending area of intervention and I was glad to note the finance minister talk about streamlining multiple labour laws into four broad labour codes. Simplifying labour-related concerns is sure to augment India’s investment attractiveness and will help bolster ease of doing business.
In addition to labour law reforms, it was heartening to see that the government was mulling a revamp of our archaic tenancy laws with a model tenancy law to be shared with states. Harnessing foreign direct investment (FDI) and NRI money has received a lot of attention from the finance minister. By simplifying regulatory hurdles and opening up FDI in aviation, media and insurance, India’s ability to attract investments will gain several points.
Easing of norms for single brand retail can also hold a lot of potential in bringing new players into the country, adding to the employment potential. An understated element of this budget and one which can be a game-changer for coming generations was the articulation of a national education policy.
A special thrust on research through the setting up of the National Research Foundation will encourage a robust research ecosystem through focus on identified sectors. The finance minister’s focus on strengthening the economy systemically is clear — whether it is creating an ecosystem for startups, eliminating cash transactions, e-assessments or driving infrastructure growth, each measure clearly shows a long-term focus. Devoid of extravagantly populist measures and short-term fixes, Sitharaman’s maiden budget has laid a blueprint for a resurgent India.
The author is the chairman of RPG Enterprises