Finance Minister Mr Arun Jaitley, in his Budget for 2017-18, has put the money where the mouth is. Among different descriptions about the Rs 21.46 lakh crore Budget, the most apt came from a top global banker who said it was a piece of workmanship and business-like.
Even though, expectations were running high, the final set of numbers and development roadmap was low on hype and substantive on deliverables for farmers, rural workers, lower middle class, aspirational youth and small and medium enterprises.
Given the kind of global challenges like protectionism being resorted to by the most developed economies and the capital flight away from the emerging markets, the Finance Minister had to factor in the domestic variables while presenting the Budget which had many firsts to its credit. For one, it was presented a month in advance that would have a qualitative impact on the government expenditure and secondly, the rigidities of the plan and non-plan expenditures were given a go-bye.
Coming after demonetization and imperative of giving a big push to the rural economy, Mr Jaitley has given a combined allocation of Rs 1.87 lakh crore .to the country’s rural landscape. The flagship rural job programme , Mahatama Gandhi (MNREGS) that has been given the largest ever outlay of Rs 48,000 crore would no more be meant for ‘digging holes and pits’ but used for building quality rural assets. So much so that, all MGNREGA assets would be geo-tagged and put in public domain for greater transparency. Even space technology would be used widely to plan MGNREGA works.
Initiatives like linking farmers to E-mandis and urging more and more states to de-notify lot more farm produce from the clutches of the APMC Act would go a long way to help farmers realise better prices for their harvest.
An important question is: whether this Budget can revive the consumption demand and investment in the private sector?
As has been recognised by the Economic Survey, a brilliant document making some brilliant and honest assessments about the state of the domestic and international economy, India’s private sector is battling the crisis of balance sheets with heavy debt on their books. So, it would logically take a while before India Inc starts committing fresh money, making it imperative for the government to front-lead the investment cycle and then follow it in the second order. That’s what exactly this Budget does. Despite global headwinds, as much as 24 per cent hike has been committed in the capital expenditure for capital formation. The most prominent sector receiving the government investment is the road, raid and shipping infrastructure with a combined outlays of Rs 2.41 lakh crore. In the following order of multiplier effect, the private sector would get orders for cement, steel, rolling stocks and so on, creating jobs for the skilled and semi-skilled people and increased revenue for the promoters.
When it comes to youth, the thinking is quite clear: to create an echo system where entrepreneurship flourishes with the help of easy bank credit, fiscal sops and technology enablers. As one of the analysts put it, the corporate India should not be seen only in terms of wealth creation in the stock market for five-ten top business houses but for millions of micro, small and medium entrepreneurs. The Budget makes a big difference to this lot of people. Even as the government has made a commitment to reduce the corporate tax to 25 per cent for the entire industry, the preference has been given to the SMEs who will pay lower taxes.
With the affordable housing receiving an infrastructure status after some tweaking of the nomenclature, a big boost has been given to the sector which had received a hit after the demonetization and subdued demand. As a growth driver, it would boost employment in construction and deliver on the promise of the government to give housing for all.
If there is one area, where the Budget has delivered in sync with the expectations, it is with regard to taking India digital. It has affirmed quite assertively that the digital drive was not limited to demonetisation but would be a new normal. Host of incentives and infrastructure support has been committed for making operational Apps like BHIM, fiber optics, points of sale and merchandise platforms to link the entire eco – system digitally. Making the economy cashless is one of the ‘TEC’ pillars , enunciated in the Budget to Transform, Energise and Clean India . In fact, it would not only help India clean up internally from the menace of black money and corruption but would also create jobs and energise youth.
Connected to this theme is abolition of the Foreign Investment Promotion Board, sending a loud and clear signal to the global investors about drastically cutting the red tap and removing the discretionary powers to clear or not clear foreign direct investment projects. Then, one of the most courageous initiatives is to bring in transparency in funding of political parties through the electoral bonds and limiting the cash contributions to just about Rs 2,000. This would go a long way in winning popular support for fight against corruption.
While the Finance Minister has given direct tax giveaways of Rs. 20,000 crore, he has done it without introducing any new taxes and sticking to the financial discipline. The fiscal deficit has been kept at eminently acceptable level of 3.2 per cent of the GDP; a measure that would help the country retain confidence of the global rating agencies.
Summing up, the Budget for 2017-18 is well-grounded and would set a stage for revival of GDP growth in excess of 8 per cent in the coming year, if not in the next fiscal itself.
*Author is a senior New Delhi-based journalist writing mostly on political-economic issues.