The Finance Minister has presented an uninspiring and insipid budget, without a bold vision. Several of the new schemes are populist in nature. Arun Jaitley has adopted a cautious approach and has been prudent in retaining the targets of fiscal deficit as part of the fiscal consolidation plan prepared by the UPA government. He has clearly acknowledged that the UPA government left behind a healthy economy.
Repackaging of schemes
Most of Mr. Jaitley’s announcements are a mere repackaging of schemes initiated by the previous government. Sixteen new industrial townships had already been launched and four industrial corridors were under implementation during the previous government’s regime. Mr. Modi had promised creation of 100 ‘smart cities’ for which a meagre Rs.7,060 crore has been allocated — inadequate to create even a single city.
Industrial activity, manufacturing, job creation and urbanisation cannot be at the cost of social sector spending
There has been only an incremental movement on the foreign investment regime in defence manufacturing. An announcement of 49 per cent cap with substantial Indian control will not enthuse any major foreign investor to invest in the country. Mr. Jaitley was also silent on the government’s stance on FDI in multi-brand retail, especially in the context of creating supply chain efficiencies and developing cold chains for agricultural produce.
Further, the announcements on Special Economic Zones have been very vague, with little clarity on on the taxation regime and infrastructural strengthening in these zones.
Growth of manufacturing
There is no substantive measure for accelerating the growth of manufacturing in the country. While establishing Rs.10,000 crore venture capital fund for startups is a welcome development, a differential rate of credit for manufacturing would have provided considerable relief for promoting the growth of this sector.
It is clear that the focus of this government is primarily toward promoting private enterprise and urbanisation. Industrial activity, manufacturing, job creation and urbanisation must receive attention from the government, but not at the cost of social sector spending. Mr. Jaitley was silent on the allocations for MGNREGA and for the health and education sectors. It appears that the focus of the government is to promote the interests of urban residents at the expense of the majority of Indians who still reside in rural areas.
(Anand Sharma is former Union Minister of Commerce, Industry and Textiles.)