By Kumar Mangalam Birla, Chairman, Aditya Birla Group
Budget 2016: In the backdrop of the increased stress on government finances following the implementation of the Finance Commission recommendations last year and the impending implementation of the seventh pay commission recommendations this year, there was a speculation that the FM will pause the process of fiscal tightening. It was a pleasant surprise to see that the FM stuck to the deficit reduction trajectory and yet delivered a Budget that is fully focused on enhancing the growth potential of the economy.
It is not only that the fiscal deficit target is prudent but the quality of the deficit is also being sought to be improved by reducing revenue deficit from 2.8% of GDP this year to 2.5% next year. Along with the legal framework for monetary policy committee, the fiscal prudence reflected in the Budget should reassure the investment community about the macroeconomic stability of India in a globally turbulent environment.
The nine pillars of the FM’s “transformative agenda” were focused on inclusive growth with employment generation, building of social and physical infrastructure and taking forward the reforms agenda. The announcements had a fair mix of new, innovative ideas (like e-market for agricultural produce, modernization of land records, EPFO contribution by government for new formal employment generation) and continuation and deepening of the past initiatives.
The Budget has made a bold financial commitment for the infrastructure sectors, especially the transport sector. Along with the measures being put in place to kick-start the stalled projects through PPP route, it should provide a boost to growth in the near-term.
To finance the increased spend on rural economy and infrastructure, the Budget has listed several additional resource mobilisation measures, especially on the indirect tax front. One hopes that the GST sees the light of the day this year. That will provide some buoyancy to government revenues.