Business Today
What I would like to see in Budget 2015

"Budget 2015 will need to increase planned expenditure while adhering to the commitments under the fiscal consolidation plan," writes Hari Sankaran, vice chairman & MD, IL&FS.


Hari Sankaran

(1)  Fiscal Consolidation: Both the Reserve Bank of India and rating agencies have unambiguously stated that further action on interest rates and rating will depend on the progress made by the Central government on its fiscal consolidation plan. Adherence to commitments would be seen as a fillip to growth.

(2)  Enhanced Planned Expenditure: Previous Budgets had kept planned capital expenditure constant. Budget 2015 will need to increase planned expenditure while adhering to the commitments under the fiscal consolidation plan. To achieve this, reduction in administrative expenditure, targeted subsidies and greater efficiencies through e-governance initiatives, among others, will be needed. An enhancement of planned expenditure would also help in kick starting the investment cycle in the country.

(3)  Rational, Clear, Predictable and Consistent Tax Regime: Any, and all, measures in this regard would be welcome. In addition, fiscal incentives to invest in the infrastructure sector, job creation and in deploying risk capital, would be appreciated.

(4)  Measures to Improve Tax to GDP Ratio: The current tax-to-GDP ratio is around 8.5 per cent. Specific steps to increase it to 12 per cent over the medium-term without negatively impacting savings would place public financing on a firm footing and at a more sustainable level.

(5)  Capitalising PSU Banks: PSU banks have been at the centre of the financing strategies for industries, infrastructure and other sectors. There is an urgent need to significantly capitalise PSU banks to help them make their financials more robust, allow them to continue financing initiatives and comply with Basel III norms. The Budget will have to give a clear idea of the plans to achieve these goals.

(6)  GST: The Central government has committed to operationlising GST from April 1, 2016. The Budget should confirm that the country is on track. This would send the right signals.

(7) Private Sector Investments in Infrastructure: According to estimates, the private sector is supporting around Rs 80,000 crore of Public-Private Partnership (PPP) investments in the infrastructure sector annually. This will result in efforts to mobilise more private sector investments in the sector. While any move towards the engineering, procurement and construction (EPC) mode of implementation would be regressive, and may lose out on the many gains made over the past decade, the Budget could outline steps that the government is willing to take to improve the PPP framework.

Hari Sankaran is Vice Chairman & Managing Director  at IL&FS Ltd

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