Finance Minister Arun Jaitley has unveiled a Budget that seeks to make the Indian economy more robust, the business environment more investor friendly, and economic growth more inclusive.
It may not have been the 'Big Bang' Budget that most were expecting, but Mr Jaitley has succeeded in creating a pro-growth and pro-investment roadmap, laid the groundwork for the success of Prime Minister Narendra Modi's ambitious 'Make in India' campaign and kick-started thinking on the agenda of 'Healthcare for All'.
The Budget has sought to improve business sentiment and spur investments by domestic as well as overseas players in the country through easier regulations and a simpler and stable tax regime. The gradual reduction of the corporate tax rate from 30 per cent to 25 per cent over four years with a corresponding rationalisation of various tax exemptions is significant. While encouraging private investment, this step also signals a break from an exemption-based regime.
By clearing the path for the introduction of the long-pending Goods and Services Tax (GST) from April 1, 2016, the Budget has championed a crucial tax reform that will bring India on par with developed economies. Deferring the implementation of the controversial General Anti-Avoidance Rules (GAAR) by two years and its prospective application will reassure investors and reinforce the business-friendly credentials of the Modi government.
The proposed introduction of the new bankruptcy law is a welcome move as it would safeguard stakeholders' interests while ensuring swift liquidation of unviable companies in line with international best practices.
In order to enable the 'ease of doing business', the FM has expressed his commitment to do away with multiple approvals for setting up a manufacturing unit. It should pave the way for a 'single window' approval system, which is likely to boost investor confidence.
Push for 'Make in India'
While the Budget may not have announced any big bang schemes for 'Make in India', it has most certainly taken a few critical steps to set the ball rolling for converting 'Make in India' into a growth mantra.
A major breakthrough this year has been the much needed attention given to the infrastructure sector, which is a prerequisite for Make in India's success. The corpus of Rs 70,000 crore allocated to infrastructure is expected to lead to the development of major infrastructure projects, including road, railway networks and power plants. The proposal to revitalise the PPP model for infrastructure development will definitely yield positive results for the sector. Additionally, tax-free bonds in rail, roads and irrigation projects will bring much-needed funds for this critical sector.
The FM rightly touched upon the fact that the 'Skill India' and 'Digital India' initiatives are the drivers for 'Make in India'.
With 54 per cent of India's population being 25 or below, India can reap the demographic dividend through right-skilling. Unfortunately, currently less than 5 per cent of our potential workforce gets formal skill training to be employable. The Budget announcement of a National Skill Mission and the Rs 15,000-crore Grameen Kaushal Yojana targeted at skilling rural youth will address this huge unmet need. These initiatives aimed at skilling the youth of India will go a long way in kick-starting 'Skill in India', which is a critical enabler for 'Make in India'.
However, a much stronger impetus to manufacturing in terms of enabling policies and special incentives would have given the 'Make in India' programme the propulsion it needed.
I also expected more granularity in the implementation strategy for 'Make in India'. Similarly I expected 'Make in India' to be more expansive and encompass 'Innovate in India'. The Budget proposal for setting up the Atal Innovation Mission with an outlay of Rs 150 crore is just a starting point for setting the stage for encouraging investment in R&D and innovation. It is more in the nature of modest seed funding to 'Innovate in India'. I expected more enabling provisions and incentives for companies engaged in innovation as it would have encouraged many more players to follow the path of innovation.
'Job Seekers' to 'Job Creators'
I particularly appreciate Government's initiative towards setting up a Rs 1,000-crore Self-Employment and Talent Utilization (SETU) fund for incubating start-ups. This is very encouraging as I believe it will help take 'ideas to market' and encourage our youth to become 'job creators' instead of being 'job seekers'. However, the introduction of special incentives and tax sops for angel investors would have ushered in a more conducive start-up ecosystem.
The move from 'Jan Dhan' to 'Jan Surakhsa' is a big reform that will go a long way in ensuring social security for the poor and senior citizens. The proposed Universal Social Security System is perhaps the most important reform that I hope will be linked to universal healthcare in the near future.
Enabling India to become a pensioned society from a pension-less society and encouraging health, accidental and life insurance are also landmark initiatives that need to be applauded.
Healthcare Boost Missing
However, I feel Mr Jaitley could have done more on the healthcare front by significantly ramping up the Budgetary allocation to the healthcare sector. He has committed Rs 33,152 crore for healthcare in FY16, a little over Rs 30,645 crore for FY15. The opening of six new large public hospitals across the country and introduction of better health insurance options are strong symbols of change, but his Budget stopped short of prescribing an investment formula for Universal Healthcare.
The Budget also belied the pharma industry's expectations of making capital expenditure in the sector more attractive, incentivising R&D investments or reversing the services tax imposed on clinical research organisations last year.
In the final analysis, the FM has certainly laid a very positive roadmap for reviving investor sentiment, resuscitating India's infrastructure, returning India to a path of robust economic growth, and restoring the common man's expectations for better days to come.
(The author is CMD, Biocon)