Over last four years the Union Budget has had broad consistency in terms of pursuing two key elements. The first being increasing tax to GDP ratio by bringing a greater share of economy, including services, under some form of taxation, and the second is increased allocations to infrastructure and social sectors through initiatives such as rural employment guarantee scheme and urban renewal.
While the budget is an exercise in planning for resource mobilisation and allocation, is also an occasion to review the progress made on targeted outcomes of earlier policies. We expect the broad thrust of the government to remain consistent with the past even as certain changes would be necessitated post review of earlier policies. The robust economic growth has led to significant resources in the government’s kitty, which should help it to focus on additional sectors whose growth is important.
The budget is going to be presented against a backdrop of an increased global economic uncertainty on one hand, and some tentative signs of slowing domestic economic activity on the other. It is extremely important for us to keep economic growth at sound pace, as growth has been the biggest source of the increases in government outlays.
The ensuing global uncertainty could pose short-term risks to some sectors. But we believe there are only two serious risks to our sustaining high GDP growth rate over the long-term. One is supply bottlenecks due to inadequate supporting infrastructure and two, socio-political instability arising out of significant differences in rates of progress across various regions and segments of population.
(Shikha sharma is the MD & CEO ICICI Prudential)