The Budget for Bharat that will transform India

The recent move of demonetisation by the government had shaken the country to its core. Public opinion became divided. There was hardly any fence sitter. However, one thing was sure: everybody was waiting eagerly for the Union Budget to understand ‘what next’.

Today’s budget is commendable. The government had to balance the socio-economic growth agenda, digital connectivity, enlarging the tax base and easing the process of doing business in India. This budget is largely people-centric; it provides impetus for growth and income generation at the grass-root level, where the real Bharat exists. The finance minister has made a strong attempt to pump capital into the rural economy and the infrastructure sector. This is bound to yield dividends, and I believe it will give a multiplier effect with demand generation and employment creation over time across the whole of India because of the spur in the rural economy.

Today’s budget comes at a time when the world’s economy is facing the headwinds of protectionism. The International Monetary Fund estimates that the advanced economies will grow 1.6 per cent to 1.9 per cent and emerging economies from 4.1 per cent to 4.5 per cent. The Indian economy continues to be bright spot in the global scenario. The measures announced in the budget will accelerate growth momentum, and place the country in the 8 per cent to 10 per cent growth trajectory. Demonetisation has increased the capacity of banks to lend at reduced interest rates, and this will create a low interest environment and bring down the cost of capital, boosting private investment as well.

The emphasis on affordable housing and providing it infrastructure status will drive growth. This push will have a positive impact not just in core construction sectors like steel and cement but also in the lending business of banks and NBFCs, and credit takeoff will improve, which is the need of the hour.

The important take away from the budget is the government’s decision to contain fiscal deficit at 3.2 per cent of GDP in fiscal 2018. This will not only reduce net borrowing, but also give a positive impact on interest rates. The tax cut for the MSMEs with the turnover of '50 crore is a positive move too. The abolition of Foreign Investment Promotion Board is a step in the right direction to improve the ease of doing business with India.

The proposal to make political funding transparent is a step in the right direction as it leads to better and accountable governance. I am happy to see that the budget has announced significant steps to that direction. The initiative to include the Railway Budget into the Union Budget is a welcome move. The idea to feed about 7,000 railway stations with solar power in the medium term is to be appreciated.

The massive investment in infrastructure will boost the performance of the automotive sector. Host of small and medium enterprises, an integral part of this sector, will have more funds to invest, with the reduction of corporate tax to 25 per cent. Lubricant sector will also get a boost due to the fillip given to construction and road infra segment.

From a healthcare perspective, it is good to hear that the FM wants to encourage private sector participation in medical education. I was hopeful that healthcare would be accorded infrastructure status.

The heart of government’s endeavour lies in digitalising the Indian economy. To that extent, the focus is on growing the digital footprint in the country  — enhancing digital infrastructure, capping cash transactions, reducing cash donations and using Aadhaar Pay to enable more digital payments.  Therefore this budget would not only transform Bharat but also India.
The writer is Chairman of Hinduja Group of Companies (India)