Considering that the resource availability would be insufficient, the Finance Minister has done a fairly good job with the current budget. She has addressed rural distress by way of announcing an allocation of Rs. 2.83 lakh crore that would double the milk production to 108 million tonnes by 2025, fish production to 200 lakh tonnes by 2023.
Together with the allocation for rural rewards, this should spur the rural economy. She has also announced the concept of a farmer’s train totally dedicated to transportation of refrigerated farm output, paving the way for the missing link of a cold chain at affordable prices for the distressed Indian farmers.
Proposal for 112 medical colleges on Public-Private-Partnership basis would certainly help reduce the shortage of doctors being faced by the country.
Her announcement to fulfil the promise of the Prime Minister to provide piped water to all Indian homes at an outlay of Rs. 3.6 lakh crore and a current year allocation of Rs. 11,500 crore is a move in the right direction.
She has clearly identified over 6,500 projects that would total to an investment of Rs. 103 lakh crore across the next five years which industries were waiting for. It will be very important for the government to very quickly take these projects off the ground to reverse the dropping trend in GDP growth.
Two specific moves announced in the current budget should have a positive impact on the consumption growth that has been challenging in the recent past.
Firstly, abolishing Dividend Distribution Tax (DDT) should entice companies to declare more dividend. Though this will be taxed in the hands of the shareholders, smaller investors will certainly have more money to spend.
Secondly, reduction of income tax for assessees who earn between Rs. 5 lakh to Rs. 15 lakh (the scheme is not very clear at this point) will benefit the younger crowd, who are predominantly at the early stages of their career and are the main consumers of affordable/ low end housing, consumer durables and automobiles. Even an additional income of a few thousand rupees per month will support the growth of these industries since the youngsters buy mainly through EMIs rather than down payment purchases.
She has very well articulated the need to support start ups in our country and has increased the definition of start up upwards from the current Rs. 25 crore turnover to Rs. 100 turnover. She has also extended the tax relief for them to a longer period, fully recognising the fact that the jobs of the future will come more from start-ups than from conglomerates.
I am sure that the market was expecting big bang announcements. But considering the difficult fiscal deficit, she has attempted to do a good job with whatever she could manage with the constrained treasury of the government.
(The author is MD & CEO of Thermax)
