The one motto that underpins the current government’s economic policy is ‘inclusive growth’ and I would like to see this year’s Budget reinforce the governments’ commitments in that direction.
With that aim in view, I would like the government to do extensive touch up on at least three pillars of the economy; agriculture, infrastructure and banking.
The government must take tangible measures to improve the performance of the agriculture sector as it is already bearing the brunt of drought for over two years and its performance affects the entire economy.
Last year, the government allocated sizeable funds to support micro-irrigation, watershed development and the Pradhan Mantri Krishi Sinchai Yojana.
The Budget should look at raising the momentum through enhanced budgetary allocation for increasing the area under irrigation along with expanding the insurance net to protect the farmers from natural calamities. The government also needs to invest in supporting agricultural research and empowering the farmers to acquire relevant skills, take up entrepreneurship and link up with the markets.
Private sector participation in the infrastructure sector has been lukewarm for various reasons. I want to see the government taking urgent note of this. One of the ways it could consider is to devise innovative financing schemes to fund this sector. Clear direction on implementation of the Kelkar Committee recommendations will help attract investor interest.
Harmonisation of various industrial park regimes can supplement the infrastructure push being given in industrial corridors to make manufacturing competitive in India. The third area that the government must focus on is banking, where enhanced allocation for re-capitalising banks that are exposed to the vulnerabilities of the economy is the need of the hour.
The thrust on ‘job creation’ in contradistinction to ‘job seeking’ is welcome. It displays deep confidence on the resilience of the country’s economy as well as the trust that is reposed on the capacity of the youth to rebuild India. The novel ‘Start-up India’ action plan announced recently was a move in that direction. Some areas for improvement include providing for tax exemption to angel investors, seed capital funds and stock options offered by start-ups to employees.
Last but not the least, the government must look at increasing the tempo of tax reforms. Some areas that require clarification are: Minimum Alternate Tax, not subjecting share capital investments to transfer pricing, hastening dispute resolution, alternative dispute resolution methods, keeping track of transactions through extensive use of PAN and giving effect to recommendations of the TARC. I would like the government to commit to these initiatives through legislative changes wherever relevant and appropriate; this Budget being a perfect opportunity and vehicle to do so.
The author is Chairman, PwC India
