Keeping in mind the huge uncertainty on the global economic front, the FM has consciously crafted a budget with a strong focus on fuelling domestic demand.
In fact, it is a pragmatic move in the present context as the domestic economy has to be looked at as India’s insurance against any global downturn. The budget lays strong emphasis on agriculture and infrastructure, the two sectors which can absorb large number of semi-skilled and unskilled workforce. This budget has not only substantially enhanced the outlay for agriculture, it is also replete with many well thought measures that address almost each and every aspect in the entire agri value chain. Add to that, the outlay allocated for building rural infrastructure.
The rural sector will also benefit from the social sector schemes. This is very timely, especially keeping in mind the level of distress the rural economy. The measures will also open up entrepreneurship opportunities. The move to open up marketing of domestically produced food products to 100 per cent FDI is welcomed. I felt that the decision to adhere to the fiscal target is indeed a brave move, especially when capital has to be provided for the 7th Pay Commission, OROP and recapitalisation of PSBs. This should give the RBI a reason to lower interest rates. I liked the idea of an exclusive bankruptcy code for resolution of financial firms. We also need something for private financial institutions. Apart from the increased outlays, several proposals to revitalise PPPs have been mooted. Implementation is the key.
Measures to provide fillip to low-cost housing is a smart move. Reforms in FDI for ARCs and enabling a sponsor of an ARC to hold up to 100% stake is welcomed. The move to categorise budget expenditure as Revenue and Capital expenditures will help.
Introduction of an additional DDT beyond a certain amount of dividend, trebling of STT for options, the introduction of new cesses in certain categories are some of the steps that may not go down well.
The many small changes are of course welcome, but India Inc., was not looking for incremental signals. With the absence of GST, investors were all looking for something to promote private investment. Budget missed that. Tax proposals may not attract investment. All in all, a normal budget.
(The writer is president of Assocham)
