Budget 2015: Govt on calculated fiscal consolidation mode
Union finance minister Arun Jaitley presented a budget that is pro-growth and inclusive. It has laid down the roadmap for the next few years, which is directed towards the vision of a prosperous India by 2022.ht view Updated: Mar 02, 2015 22:55 IST
Union finance minister Arun Jaitley presented a budget that is pro-growth and inclusive. It has laid down the roadmap for the next few years, which is directed towards the vision of a prosperous India by 2022.
The government has committed itself to tread the fiscal consolidation path, especially through rationalisation and efficient delivery of subsidies by means of direct benefit transfers. However, by keeping a slightly higher fiscal deficit target for 2015-16 and extending the medium-term target of fiscal consolidation by one year, more space has been created for productive investments in infrastructure. In fact the budget scores on the thrust laid on public investments to encourage private investments.
The budget can also be termed transformational on the taxation front. The reiteration of GST rollout by April 2016, the announcement of phased reduction in corporate tax rates, and enacting a comprehensive law on black money are encouraging reform measures.
Given the daunting challenge of providing a million jobs each month, the budget has rightly focused on job creation as the central pillar of policy measures. For this, the need of the hour is to propel industrial growth by encouraging investment and the budget has taken care of this. With the rationalisation of taxes, correction of inverted duty structures, and improvement in tax administration and the ease of doing business, Indian industry will become more competitive. The proposal to replace multiple prior permissions by a pre-existing regulatory mechanism is a laudable step and will drive much higher investments.
A large chunk of employment can be generated by creating an enabling environment for MSMEs and start-ups. The budget takes cognisance of the fact that the ease of doing business is most important for small businesses. Establishing the electronic Trade Receivables Discounting System financing and introducing the bankruptcy code are welcome reform measures. Setting up a Techno-Financial, Incubation and Facilitation Programme to support technology start-ups and reduction in income tax on royalty and fees for technical services will also encourage start-ups.
While embarking upon the growth path, the need to create a supportive financial system is imperative. The budget has struck the right chord in this direction. The plans to set up the Micro Units Development Refinance Agency bank will facilitate funds for micro-enterprises in the informal sector.
There has been a clear focus on financial inclusion. By announcing a number social security measures and utilising the Jan Dhan platform to mobilise various social security schemes, the government is treading the path of inclusive development.
The government has taken a step forward towards monetising gold. Developing the Indian gold coin, having a sovereign gold bond and revamping the gold deposit and gold metal loans scheme will help in more effective utilisation of gold reserves and bring down dependence on gold imports.
Another important announcement in the budget relates to the creation of a unified national agriculture market. A move towards a single national market for agri-produce will help rein in inflationary pressure as well as give better prices to farmers.
Continuing with the positive measures announced in the first budget of this government, Jaitley has again laid a strong thrust on the tourism sector. The proposal to extend visas-on-arrival to 150 countries, focus on heritage sites and the planned improvement in railways infrastructure, will accrue benefits to the tourism industry.
It is heartening to note that the central focus of the budget has been growth and job creation with the larger objective of poverty elimination. We hope the government will implement these in right earnest.
Jyotsna Suri is president, FICCI
The views expressed by the author are personal