The Finance Minister has done a commendable job in presenting a balanced budget that neither focuses on garnering more tax money to the exchequer nor on opening up the government coffers that derails fiscal prudence. The Budget is in line with the overall trend of making it a predictable and incremental policy announcement, rather than a source for speculation and disruption in the economy. The focus will now move towards ongoing policy measures that the government will be taking through the year—the most important being the rollout of the GST. The industry will keenly watch the final rates and the time period the government finalizes on for the GST regime.
However, the budget still makes quite a few important moves towards strengthening the economy. The reduction in income tax rate for the lowest slab from 10% to 5% will provide a fiscal stimulus of around Rs 14,000 crore in the hands of over one crore people. Even though it is a small amount, it will have some positive impact on spending and consumption.
The food and agricultural sector is critical for the nation’s progress and with overall spends going up by around 24%, it will strengthen the faster growth we have witnessed in this sector during the past year. The fund to boost the dairy-processing sector, the plan to introduce modern law on contract farming, strengthening of agri markets and aligning the spot and derivatives market with the commodity market, will further modernise the sector.
Overall, the government’s intent on liberalising the FDI norms, strengthening governance and transparency, bode well for the industry and economy. This is a government that has been keen on digitization of the economy. Transactions made through digital channels don’t by itself lead to economic value creation. In fact, every digital transaction incurs a cost. It will be interesting to see how in the forthcoming months, the government proposes to defray the costs associated with every digital transaction.
The forthcoming fiscal is riddled with both challenges and opportunities that can emerge from global events and policy changes. We have to be prepared for external disruptions. More importantly, we have to bring in fresh thinking, imagination and innovation into policy making.
India’s strength lies in its strong entrepreneurial base that fuels both the formal and informal economy. India’s job providers are far larger and spread out than the few startups in the country. Entrepreneurs look forward to ease of doing business and simpler laws and able leadership. The Economic Survey stands out in terms of fresh thinking. Let’s hope that the country’s leaders continue to deliver on foresight and innovation in every area of policy making.
Kishore Biyani, Group CEO, Future Group
