Hinduja boss on what the Budget missed

By Gopichand P HindujaThe fine balancing that the finance minister has done between the tight fiscal situation and the need for a strong support to boost investment and growth is the right balance, but it could have been better. It feels like winning a bronze medal when we could have won gold. The next year will tell us, if this has been powerful enough to lift the stressed economy or not.The three guiding themes of the budget – Aspirational India, Economic Development and Caring Society – are very appropriate for the country. The schemes announced on social sector are powerful, but implementation is key.Industrial manufacturing has not got the boost that it needs in the current situation, especially after three consecutive weak quarters. Focus on manufacturing of electronics, medical devices and textile is in the right direction though long overdue and we hope to see details soon and the speed with which it is steered.Automotive sector, one of the biggest employment generators, has not been given the attention it deserved. We hope the finance minister would address the situation on an ongoing basis, without waiting for the next budget. Stimulants like scrappage policy and recalibration of GST, we hope, would be looked at in immediate future.The agrarian stress and our inability to generate jobs in the farms continue to be a high value threat. This budget has addressed concerns covering areas including supply chain, credit availability, soil nutrient management, focus on dairy and fishery etc.Education and skill development initiatives will prepare young India for employment in future.Setting up of the investment clearance cell for entrepreneurs with comprehensive set of advisory services will help in ease of doing business.Enhancing the quality of services in railway on a public-private partnership mode is also a welcome move.The reduction in personal tax, across many of the income categories, can put money into the hands of taxpayers and we expect this to boost demand and consumption. Leaving out higher income-tax slabs could be reconsidered as they are the high spenders and therefore could be incentivised.Creation of a taxpayer’s charter and simplification of various procedures will help in compliance. The assurance of decriminalising offences under the Companies Act is heartening. This is something we had been advocating for long.Abolition of dividend distribution tax and increasing the limit of investment by FPI’s in government securities and bonds will go a long way in attracting more capital investment from across the border. However, LTCG issues could have been addressed.Incentives to sovereign wealth funds to invest in infrastructure sector is an encouraging move. The decision to list LIC is a bold move and could attract foreign investors. When India needed to fire on all its possible economic engines, leaving out NRI potential to contribute to the economy is somewhat perplexing. Their investments bodies could have been treated on a par with domestic investors. Changes in the definition of non-residency will trigger several high net worth individuals to review their Indian residency status.Increasing the deposit insurance from Rs. 1 lakh to Rs. 5 lakh will increase the confidence of investors in bank deposits and the banks will be able to attract more deposits from the investors.The new lower corporate tax regime introduced earlier for manufacturing companies has been extended to power generation companies. While this is good, the power sector needs stronger policy measures for it to be pulled out of the current crisis. Directions towards establishment of a full service global standard international financial service hub is certainly a move that India deserves.SMEs have got encouragements. They form the foundation for the manufacturing sector and create jobs. They need further boost especially when we need to create lots of employment opportunities for young India. The announcement of measures to bring cooperatives on a par with corporates on taxation is a good move. Cooperatives can create a large number of jobs.This was the time when every sector was seeking help. This was also the time of big fiscal constraints. As a balance, the FM has delivered a well-balanced budget to boost growth. But, it could have been better… May be a faster and efficient implementation of the policies can make up for this.The author is the Co-Chairman of the Hinduja Group.

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