It was an unusually action-packed Saturday juggling the adrenaline rush of the exhilarating Australia-New Zealand match and the finance minister’s much-awaited Budget presentation.
As the finance minister pointed out, over the past two years, our foreign exchange reserves have increased to a record $340 billion; the rupee has become stronger by 6.4 per cent against a broad basket of currencies; and ours was the second-best performing stock market amongst the major economies. In that sense, this was a coming-of-age Budget for India, quite literally, awaiting its ‘chance to fly’. And Arun Jaitley rose to the occasion, like a maestro conducting an orchestral symphony.
The FM has given an ambitious target of 8-8.5 per cent GDP growth in FY16 on the back of a clear tax policy roadmap, revival of infrastructure investment, greater financial inclusion and monetisation of non-earning assets like gold.
There were several positives for the infrastructure sector — National Infrastructure Fund with a Rs 20,000 crore annual inflow, allowing tax-free infra bonds, setting up 5 UMPPs with a capex of Rs 1,00,000 crore, corporatisation of ports and allocations for roads and other infrastructure projects.
By choosing to keep the fiscal deficit at 3.9 per cent and phasing it to 3 per cent over three years, the FM has kept room for greater public spending on investment. This has to be well supported by controlling leakage through the ambitious trinity of Jan-Dhan, Aadhar and mobile.
Has the FM been able to fulfil the expectations of all stakeholders? The answer is yes. To a potential foreign investor, he has shown carrots of stable and clear tax regime and reduced tax by abolishing MAT on long-term capital gain on share sale; to an unrelenting economist, he has promised low inflation through fiscal discipline and prudence by controlling wasteful expenditure and subsidy leakage; to a staunch investment crusader, he has unveiled the first phase of investments like 1,00,000 kms of roads and electrification of 20,000 villages and the means to finance it by bonds and also leveraging SPVs. To the individual tax payer he has provided a package of additional deductions that should bring a smile to a large extent of tax payers. To the corporate sector he has promised a softening of tax rates over the next few years with improved ease of doing business and, last but not the least, he has kept up the tradition of taxing the smoker more. The budget also aims for a social security system for Indian citizens similar to the likes of developed countries. Various ambitious schemes have been launched to provide insurance and pension to the masses.
It was a budget laden with the weight of huge expectation. The mandate before the FM was to ensure growth is not stifled, investment in infrastructure happens and the common man is given his due. The FM showed great flair in doing that and much more. He has not opted for fireworks, rather, he has taken assured steps with clear intent which reveals a longer term plan for sustained growth in the years to come. Overall, a balanced budget which will help in boosting both public and private investment, promote consumer spending by increasing disposable income and restore investor faith by bringing a clear roadmap in tax regime and giving the elephant wings to fly.
– By Harsh Goenka
Chairman, RPG Enterprises