Richard Rekhy is the CEO of KPMG in India and a member of the global board of KPMG International
India has emerged as one the world's fastest growing major economies. India's projected growth rate has also been confirmed by International Monetary Fund at 7.5 per cent for 2016-17. Since the current Government came to power in 2014, it has rolled out several measures and there is a positivity seen in the economy and overall business environment. This seems to be positively bearing fruits now.
This year, we are looking at a growth-oriented budget that will open up a number of opportunities for investors. No wonder a large number of pre-budget discussions have centred on the question of fiscal consolidation and stimulating growth through higher spending and a larger fiscal deficit. Are we willing to accept a degree of risk in order to pursue growth through investing money, or willing to stick to a safer course of fiscal consolidation? The answer is important especially after the recent market volatility wiped out USD 3.2 trillion of global wealth. In order to attract investment by other countries, we need to work on ease of doing business by curtailing the regulatory challenges.
Proactive policy initiatives such as Smart Cities and Swatch Bharat Abhiyaan present multifaceted opportunities for investors. These programmes are aimed to change cities and the country as a whole by implementing mammoth changes in rural and urban infrastructure. Many of the projects are trans-national in nature and will help India integrate with regional economies. Also, initiatives such as Digital India, Skill India and Start-up India will play a significant role in narrowing the gap between the demand and supply of skilled labour. We expect the budget to bring forth new measures to support the ongoing programmes and strengthen the focus on creating jobs. The country should also look at developing coastal towns in both East and West coast to build global trade. For Example, a large manufacturing outfit can be built in the new coastal township. The same has been successfully done by China.
Apart from reform implementation, technological disruptions needs to be fully integrated and adopted to make the delivery process more efficient and in line with the global standards. We are in the middle of the Fourth Industrial Revolution where such power of change has never been seen or experienced. Productivity, Speed and Internet of things will change the way we work. This has also led to an opportunity of creating employment. However we need to have a good policy in place to take advantage of the same.
The Finance Minister is also expected to consider major changes in tax regime to encourage higher savings, reduce litigations and ensure greater compliance. For some time now, the Government has been contemplating tax incentives for companies in the manufacturing sector, including tax deductions on remunerations paid to new employees. This is primarily aimed at encouraging firms to step up hiring and create jobs under its Make in India initiative. Other expectations are - a clear roadmap on reducing corporate tax rate from the current 30 per cent to 25 per cent, reduction and gradual phasing out of Minimum Alternate Tax (MAT).
The industry is also waiting for the passage of GST. We expect it to be a game-changer for the economy and offer a strong stimulus for growth. We hope that the Finance Minister will chart a clear roadmap for implementation and enable companies to redesign internal systems and adapt their supply chain logistics accordingly. On a separate note, two failed monsoons and unseasonal rains just ahead of the winter harvest in 2015 make it imperative for the government to pull up agriculture sector's ebbing productivity and profitability. Considering more than 60 percent of our population is directly or indirectly dependant on Agriculture, it is important that the Government provides fiscal incentives and also implements constructive reforms to tackle different issues relating to the Agriculture.
We are looking forward to a pro-growth and pro-business budget. Having said that, the success of this budget will be pivoted on its execution. Many of the reforms that are aimed at making the country a business-friendly destination have been executed appropriately and timely. However, India's basic infrastructure needs a lot more ground work. We are currently ranked 81 in the world for basic infrastructure in the World Economic Forum Global Competitive Index. Solid traction in growth instituted sectors such as roads, highways, ports, infra and manufacturing sectors will be crucial. Well-devised policies and their implementation, underlined by appropriate innovation and investment should help us achieve the target of inclusive growth.
(The author is the CEO of KPMG in India and a member of the global board of KPMG International. The views stated above are personal.)