A fine balance of growth and equity

The Union budget for 2017-18 has managed a fine balance between growth and equity based on strategic thrust areas. The government has continued its priority on agriculture and on doubling the farmer’s income over the next five years.

Credit availability, interest waiver schemes and a few other incentives are the focus areas which will enable it to achieve the target. The budgetary allocation for rural areas has also been increased by 24 per cent in FY18. Crop insurance, irrigation and marketing of agriculture products are three sectors that have received maximum focus in the budget. Highlighting the need to strengthen youth and their development, the government has also focused on bolstering secondary education.

The proposal to leverage information technology and launch at least 350 online courses on the Swayam platform will benefit the youth to leverage technology and enhance their skills. The legislative reforms to simplify, rationalise and amalgamate the existing labour laws into four codes on wages, industrial relations, social security and welfare, and safety and working conditions, is another significant change. These, along with focus on healthcare, will enable the country to achieve poverty reduction and alleviation.

The thrust on infrastructure and higher allocation for it in the budget will push economic activities and c;reate employment and generate more income. The government has proposed measures like the new Metro Rail policy and the development of coastal roads and airports in Tier-2 cities. The achievements in roadways have been commendable with the almost doubling of road construction achievement rate for the Pradhan Mantri Gram Sadak Yojana (PMGSY), which has increased from 73 km per day by the end of FY2014 to 133 km per day now.

Reforms in the financial sector and digitisation will also strengthen the industry and services sector. More than 90 per cent of the total FDI inflows are now through the automatic route.

Cyber security
Cyber security is critical for safeguarding the integrity and stability of our financial sector. The government has rightly highlighted the establishment of a Computer Emergency Response Team for the Financial Sector. The Pradhan Mantri Mudra Yojana has contributed significantly to helping the unfunded and the underfunded segments. Last year, the target of Rs. 1.22 lakh crore was exceeded and for 2017-18, the government has proposed to double the lending target to Rs. 2.44 lakh crore. Priority will be given to Dalits, tribals, backward classes, minorities and women. Post-demonetisation, the government has emphasised the importance of digital economy. It has proposed to launch two new schemes to promote the usage of the BHIM App and Aadhar Pay. And to achieve its public services target it has reiterated an efficient service delivery system. Direct Benefit Transfer (DBT) to LPG and kerosene consumers are a few such successful initiatives.

A major reform in this Budget is to bring transparency in political funding. The initiative is to reduce cash donations and identify source funding. Prudent fiscal management and adhering to the Fiscal Responsibility and Budget Management target of being closer to 3 per cent of fiscal deficit is commendable.

For FY18 the fiscal deficit target is set at 3.2 per cent of GDP as against 3.5 per cent for FY17. In the long run it has favoured a debt to GDP of 60 per cent (40 per cent centre and 20 per cent State) by 2023. Last but not the least, the efficient tax administration and focus to increase tax to GDP ratio has been a step in right direction.

By Kumar Mangalam Birla, Chairman, Aditya Birla Group