We have weathered the recession storm of the last couple of years and the FM must help maintain the 'feel good' about the economy. The Budget somehow seems to have more than its fair share of impact on public sentiments and therefore apart from all the details of income and expenditure, the FM must ensure that the 'message' is positive.
This will entail a few things; 1. The withdrawal of the stimulus must be done in parts, 2. Inflation in general and food prices in particular must be brought under control even by easing imports if necessary and 3. Greater clarity in taxation - on both the GST and Direct Tax Code and its application.
The budget should go some way in encouraging key sectors like Education, Healthcare and Clean Technology. There is an urgent need in the country for rapid scale up in each of these and it can be achieved only through enthusiastic private participation. It also helps that these sectors are currently finding favour with entrepreneurs, young and old alike. Any 'stimulus' to these sectors will generate more than commensurate rewards.
Spending on Infrastructure:
Spending on infrastructure should continue to be encouraged and we must find innovative ways of finding finance to fuel this spend. In addition to creating much needed assets, infrastructure spending, like the National Highways Project has demonstrated, can have a robust impact on the economy (especially rural) and create the much needed jobs.
Both for the sake of the medium-long term health of the economy and for the sake of external stakeholders (whose sentiments are critical both in global finance and global geo-politics) we must use this budget atleast as one tiny step towards fiscal prudence (getting the deficit down to sub 5% levels). From that perspective, the initiatives on the PSU disinvestment front and all the talk of de-reulation in petroleum prices and fertilizer subsidies are very encouraging. Opening up non-strategic sectors for FDI is also something that the FM could consider strongly. FDI in Retail for example, has the potential to revive an industry that has faced a few hard knocks recently, create a multitude of jobs for varied skill sets and stoke domestic demand and consumption.
This brings us to the Financial Sector, the domain that requires some urgent reforms. Finding the necessary balance between the need to regulate andpromoting much needed investments is of paramount importance. While the RBIhas rendered yeoman service in ensuring that the global recession did not hit out shores too hard, now is probably the time to be a little more aggressive and pro-active in vying for investments.
This is 'The Land of the Million Entrepreneurs' and for India, the key to growth and particularly inclusive growth lies in multiplying entrepreneurial initiatives. The Budget must include provisions aimed at promoting MSMEs. Access to finance on reasonable terms and ease of starting a business are critical from that perspective. While the License Raj is officially dead, the Government should see that even the smallest traces of it are wiped out. Finance must reach where it is most badly needed and where it has the best possibility of a positive impact not just on the economy but on the society itself. Among other Financial Institutions MFIs too have a big role to play; and the Government while setting the rules for MFI play must ensure that the cost of finance for MFIs are not set too high, making the entire exercise self defeating.
Want to make your startup journey smooth? YS Education brings a comprehensive Funding and Startup Course. Learn from India's top investors and entrepreneurs. Click here to know more.