The Economic Times
01 March 2016
From taking care of the needs of the poorest to tackling tax litigation and NPAs, the Budget covers all, says Mr. Kumar Mangalam Birla, Chairman, Aditya Birla Group
At a time when the global economy appears increasingly wobbly and financial markets choppy, the Budget has kept its focus on inclusive growth and on enhancing the competitiveness of the Indian economy, even while maintaining the principle of fiscal prudence. Before the Budget, one was wondering if the finance minister would give a go-by to fiscal targets in pursuit of growth. But he has done an excellent balancing act there.
The step-up of funds for infrastructure sectors, particularly roads and highways, is impressive. The Budget also has a clear thrust on agriculture and rural development. The vision to double farm incomes over the next five years is bold. Modernisation of land records, accelerating the village electrification programme and developing a common electronic market for farm products are all positive steps.
As is the decision to allow 100% foreign direct investment in marketing of food products made in India. This should help the entire food value chain and create additional employment. The government contributing to the provident fund of new employees for a period of three years will boost not only job creation but also shift some casual employment into the formal sector.
Providing a statutory backing to Aadhaar is welcome and in line with more targeted transfers of financial benefits. The tax relief given for small taxpayers, for rent-payers and for first-time homebuyers will help to create additional purchasing power at the bottom of the pyramid.
The additional resource mobilisation measures have helped the FM to announce an ambitious target of reducing fiscal deficit to 3.5% of GDP in 2016-17. This is despite the interim provision being made for the implementation of the Seventh Pay Commission award. Not only is the fiscal deficit target prudent, but that the quality of the deficit is also being sought to be improved by reducing revenue deficit from 2.8% of GDP this year to 2.5% next year.
Along with the legal framework for monetary policy committee, the fiscal prudence reflected in the Budget should reassure the investor community about India's macroeconomic stability in a globally turbulent environment. Stalled projects through the PPP model will hopefully see some positive movement with the mechanism being put in place to resolve disputes and renegotiate contracts.
The bankruptcy code and the moves to strengthen the asset reconstruction companies, along with the recapitalisation of public sector banks, will help tide over the problem of NPAs. The Budget also announced steps to resolve the pending tax litigations. The approach to disinvest PSUs appears to be rightly changing towards restructuring these enterprises and unlocking their value. With a combination of fiscal prudence, rural and infrastructure push, tax and financial reforms, the Budget has set the stage for a great leap forward.
Dr. Pragnya RamGroup Executive President, Corporate Communications & CSRAditya Birla Management Corporation Private LimitedAditya Birla Centre, 1st Floor, 'C' WingS.K. Ahire Marg, WorliMumbai 400 030.
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