Our Finance Minister Arun Jaitley can be referred to as the modern day Chanakya, since he has a tough task at hand when it comes to this year’s Budget. The whole world is slowing down, and concerns about the global recession loom large.
Despite all this, India remains a beacon of hope. India, for the first time, has surpassed China in GDP growth rate, owing to our growing middle class population and high domestic consumption. However, the GDP growth is still lesser than the desired rate of 8-9 per cent. The fall of oil prices to record levels of $28 a barrel meant that our fiscal deficit was kept in check to 3.9 per cent. But will it be sustainable, given that the burden of the seventh Pay Commission will soon be on Jaitley’s balance sheet?
Jaitley’s task now is to analyse macroeconomic variables, internal structures, legal processes, and the tax structure, and come up with a Budget that not only meets aspirations of the rising middle class, corporates and start-ups, but also of the lower strata.
High hopes from Start-Up India
As a part of ‘Young India’, I have huge hopes from the Start-Up India initiative. The Prime Minister has already launched the action plan with 19 key points which focuses on policy reforms. The initial corpus fund which has been proposed (amounting to ₹2500 crore) should be allocated. Additionally, incentives should be given to financial institutions and banks to be part of this initiative.
However, one key change which should be carried out is to divide sectors and allocate funds according to the requirement and scope. Start-ups which are not dotcoms and e-commerce platforms can also be covered. This will ensure diversification of risks. Start-up India should be complemented with Skill India, and it is high time the Government pushes Skill India with vigour. Once again, Jaitley has to clearly delineate the roadmap and include higher education premier institutes like the IITs and NITs to be a core part of the mission. This can also be linked to industry–academia collaboration. For example, graduates can impart training to registered candidates, and in the process, improve their core skills. Funds can be distributed based on specialisation and past performances.
Focus on social sector, tax changes
While continuing allocation in social sector schemes and MNREGA, it is very important to consolidate them to boost rural infrastructure, and divert people from agriculture to manufacturing. For professionals, I expect an increase of the 80CC limit to ₹2 lakh to further boost savings.
Policies should be announced to increase the tax base, so that our fiscal deficit remains in check for years to come. GST still remains the key taxation reform, however parliamentary hurdles in the wake of the recent JNU and Jat Andolan issues makes it tougher for the BJP to make headway.
In the last Budget, Jaitley announced streamlining of corporate tax and a reduction it to 25 per cent in five years. Many corporates will be interested in planning an outline based on that.
To make India’s supply chain stronger and tame inflation, I propose making public-private partnerships (PPP) in India functional. Jaitley should provide incentives to PPP projects in cold chain and warehousing. As a home buyer, I expect that Jaitley will extend tax incentives for home buyers, and will also provide provisions for single window clearance of real estate projects to boost supply.