New Delhi: Narendra Modi rode on the promise of reviving the Indian economy after a thumping majority for his party in the last general elections. The first budget of his government will reflect his plans for next five years.
The challenge for the government is to strike a balance between the expectations of general public, business community, investors and to form a stable policy to boost Indian economy.
The top focus area of the Modi government would be to revive investment cycle. The 'Make-in-India' campaign is to play an instrumental role in addressing many of the issues faced by the country. Boosted investment in manufacturing would make India selfsustaining, generate employment and trigger the investment cycle.
The 'Make-in-India' programme would only succeed if the government is able to attract investments, both domestic and foreign. The government would also want to focus on R&d for to increase innovation and competitiveness.
The creation of specific business zones by setting up of manufacturing hubs, industrial parks, more special economic zones, freight corridors should give a boost to the manufacturing sector. India has seen a significant rise in the money brought in by foreign institutional investors (FIIs) in the past 12 months.
Transport infrastructure is a backbone of industries so government should focus on the development of highways, ports, railways and setting up of airports in smaller cities. Tax reforms are also needed to attract investment in the country. Lower tax rates, enhanced tax breaks for investments in the infrastructure sector. Measures to be taken to provide cheaper and efficient funding for the small and medium sector would also facilitate growth.
The Budget should include some policies on liberalisation and attract investment in other sectors.
Revenue collection should be widened through increase in the tax base and additional revenues through non-fiscal resources such as divestments. Additional revenues from disinvestment of shareholdings in non-strategic public sector undertakings, telecom spectrum, coal block allocation and dividends from public sector enterprises should be targeted.
Last year, retrospective amendments and general anti avoidance rules (GAAR), there was a sense of panic in doing business in India. The government's decision to not contest the Bombay High Court judgment in the case of Vodafone gave a positive signal.
The biggest challenge for the government is to turn its vision into action and hope that all the stakeholders would collaborate to put Indian economy on a new horizon.
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