A sincere attempt was made to meet the expectation of delivering a Budget for 2015-16 with growth orientation blended with fiscal prudence. It is comforting to see the print of fiscal deficit of 4.1% and 3.9% for 2014-15 and 2015-16, respectively, with a clear road map to achieve 3% over 3 years. There are several laudable initiatives: Implementation of GST by April 2016, intention to reduce corporate taxes to 25% over 4 years, deferral of GAAR by 2 years with prospective application, abolition of wealth tax, cutting subsidy leakages, measures to curb black money, etc. It will pave the way for good governance and ease of doing business. The government deserves full credit in containing fiscal deficit except the minor slip in 2015-16.
The government emphasised the importance of reviving manufacturing via ‘Make in India’. As the core sectors of economy are currently beset with challenges, participation by the private sector in fresh investments is estimated to take some time. It is expected that the government will increase the outlays in the Budget on short gestation infrastructure projects. As an incremental amount of R1,86,000 crore is to be shared with the states, out of total additional tax revenues of R1,98,000 crore, the central government’s ability to commit large outlays on the Plan expenditure is constrained.
Private sector’s participation through an appropriate PPP model is the need of the hour to create a world-class, viable and sustainable infrastructure. The Budget stated that the PPP mode of will be revisited and revitalised. The government should expeditiously take up to correct the imbalance in sharing of risks in the current PPP infrastructure model. The execution of the plug-and-play model should not be delayed and should be extended to the stalled projects.
The steel sector is competitive as reflected by ranking of six of Indian steel companies among the top 34 world-class steel companies as per the ranking of world steel dynamics. Unfortunately, this competitiveness is threatened by unrestrained dumping of steel into India. Japan, Korea, China and Russia together constitute over 75% of imports into India. Imports surged over 70% this year. It is disappointing that the government has kept effective import duty on steel products unchanged inspite of enhancing the peak rate to 15%. Hike in the peak rate will not serve any purpose if the dumping of steel is not arrested. It is also surprising that the input cost duty on metallurgical coke is increased, carbon cess on coal is doubled, railway freight is increased, without any relief to the steel sector.
The author is Joint MD & Group CFO, JSW Steel