The Union Budget 2015-16 was very critical as it outlines new government’s commitment to reinvigorate the economy, kick-start investment cycle and also maintain fiscal prudence. They have the advantage of a stable political regime & lower inflation, courtesy oil prices! In the light of this two things that I expected from the budget were growth & infrastructure enhancement, including the Digital infrastructure like access, backhaul & storage. My first reaction after hearing the budget speech of Finance Minister is that government is making a concerted effort to ‘listen’ to the stakeholders. It’s a sincere approach to problem solving with growth, competitiveness, inclusiveness, realism & long term transformation at the core.
If we reach the forecasted levels of 8.00-8.50% GDP growth we will not only be the fastest growing economy in the world but would be growing discretionary incomes and thus the domestic consumption. Though, there could be some disappointment with the fact that the set targets on curtailing the fiscal deficit will not be met, but I guess Finance Minister is being honest & pragmatic here still outlining a very measured, but positive approach for the future.
There is an undoubted focus from our Government on Infrastructure development both physical and digital but the task in hand is very arduous. Allocations are still small and our execution track record as a nation is poor. We will need to really attract global funds & resources to make this happen and the budget is pressing hard on transparency & ease of doing business in India to attract large infrastructure investments. On the digital side the vision is grandeur but the modus operandi looks flaky. The success will lie in blemish less execution. It will also be an acid test for the PPP approach, which many of us are firm believers of. Policy makers need to be clear that, getting this right is not a project, company or industry issue but an issue about India’s future competitiveness.
As the global standards are going up, investment in National Skills Mission planned to empower youth, and investment of Rs 15000 crore schemes to skill rural India is a heartening move.
“Make in India” is a great opportunity given India’s disposition to address the supply side economics & create employment. To succeed, we will need a line item by line item cost & policy comparison, including IPRs, with competing countries essentially China.
On the taxation front, the trend towards reduction in corporate tax is a positive step while increase in service tax was inevitable given the migration to GST regime. The overall direction of the budget in this regard should not invite any complaints from the industry. The abolition of wealth tax is a welcome move, which is countered by an increase in tax for the super-rich people in the country. This was again an inevitable move as the super-rich must take on the mandate to pay differential tax to maintain the balance. I expected steps towards bringing taxation for rich farmers, so that the tax benefits could actually reach the deserving.
Proposals in the budget to bring positive changes in social welfare, especially pension schemes are encouraging. However, we will have to analyse the fine print of the budget to evaluate the extent of positive change, which will be reflected through these recommendations.
In summary, I see this to be a competitive & growth driven budget for which I congratulate our FM. Budget is not just a one day event but a continuous process with clearly defined objectives and predictability. The delivery however is contingent to flawless implementation. Union budget 2015-16 is true to Mr. Jaitley statement, which said, “It is India’s turn to fly”.