The Hindu02 Feb 2016
By Mr. Kumar Mangalam Birla, Chairman, Aditya Birla Group
In the last couple of years, the government has implemented some giant-scale programmes in mission mode — demonstrating a lot of zeal and passion that one didn’t associate with the public sector in earlier days.
Near-universal enrollment of Aadhar, its use for direct transfer of benefits and the Jan Dhan Yojana are some examples. These successes have possibly emboldened the government to launch another mega initiative in the form of the National Health Protection Scheme, covering 10 crore poor families (almost 40 per cent of India’s population) for secondary and tertiary care hospitalisation up to Rs.5 lakh.
This scheme, which will be the world’s largest government-funded healthcare programme, is the highlight of this year’s Budget. In some ways, it also symbolises the ambition of this Budget and its people-centric priorities, which are also reflected in several other welcome announcements.
The Budget rightly focussed on relieving the agricultural sector of the stress it has been facing in recent times. Pegging the minimum support prices of agro-products at 1.5 times the cost of cultivation will be a major step towards realising the government’s agenda of doubling farmers’ income by 2022.
Other measures such as the development of agro-markets, ‘Operation Green’ for stabilising the prices of perishable crops, new missions for fishery and animal husbandry will help boost rural income and diversify the sources of income for farm households.
Social and physical infrastructure have also received much-needed priority. Increased allocations for health and education sector are essential for us to realise the full benefits of the demographic dividend.
Similarly, the infrastructure sector deserves higher allocations, considering the imperative to improve the competitiveness of Indian industry and the need to boost public investment at a time when the private capital expenditure cycle is yet to revive.
The allocation for infrastructure has been bolstered by almost 20% to about ₹6 trillion; this will have a multiplier effect on the rest of the economy. Enhanced targets for roads and railways will also improve connectivity and result in better logistic efficiencies.
In the current year, while the government faced shortfalls in non-tax revenues, there were two impressive successes on the fiscal front.
One was the widening of the tax net and increased buoyancy in direct tax revenues. This appears to be a fallout of the greater formalisation of the economy that has been happening following demonetisation and the roll-out of the GST. This bodes well for improving India’s tax-to-GDP ratio in the medium-to-long term — a fiscal dividend that can then be deployed in social and infrastructure spends.
The second success was on the disinvestment front, where the government exceeded its already ambitious target. The Budget mentions the privatisation of Air India, which signals that the government retains its commitment to the disinvestment programme.
These successes and the government’s acceptance of the target of bringing down the Centre’s debt to 40 per cent of GDP over the medium term suggest that the government is on a fiscally responsible path — notwithstanding the minor slippage in the FY19 deficit target (3.3 per cent of GDP) from the previously announced goalpost of 3 per cent.
On the taxation front, the relief in corporate tax rate given to medium-scale enterprises deserves applause, as it brings our taxation structure closer to the ASEAN levels. The long-term capital gains tax for equity investors is back, but the fact that the capital gains so far have been grandfathered is a fine balancing act.
Overall, this Budget continues the government’s thrust on investing in tomorrow’s India and is aligned to its key theme of building “a strong, confident and a new India.”
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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