The Indian economy, like the rest of the world, was very severely impacted by the Covid pandemic. The pandemic highlighted the need to take more effective measures to strengthen recovery and to effect reforms that would put the economy on a stronger and sustainable growth path. The Budget presented by the finance minister does exactly that. I believe that the greatest merit of the Budget is that it shows that the government is prepared to change traditional policies for those that would be oriented toward making industry competitive, creating wealth and generating larger employment opportunities. The FM also announced various initiatives that would lead to more equitable growth. One very important announcement was the decision to divest 2 PSU banks and one general insurance company. This will require a change in the laws and in future make divestment of banks and insurance companies easier. Manufacturing and the economy will benefit. Along with this change the government has finally accepted the need for generating resources for development from non-traditional sources.
Thus, divestment of PSUs is targeted to raise Rs 175,000 crore. The monetisation of the operations of infrastructure projects is another valuable source of funds for development. The very substantial provisions for building infrastructure are welcome. Not only would the construction of infrastructure create large employment opportunities but would also help in reducing costs of manufacturing and making it more competitive. The programme for making the railways future ready will also help the growth of manufacturing and exports. The adoption of the PPP model is welcome.
The creation of a development financing institution that will be professionally run and provide long term capital for infrastructure was long overdue. All credit to the FM for approving this. It will give an impetus to infrastructure activities. The prosperity of the agricultural sector is critical for the growth of the economy, including manufacturing, and the creation of a more equitable society. The decision to double the income of farmers, expand rural credit and make available funds to the APMCs for infrastructure are all very important to achieve this objective. The Budget only simplifies the administration of the direct tax administration and makes it more transparent. No new taxes have been imposed. As far as indirect taxes are concerned, it appears that there will be rationalisation in custom duties to remove anomalies and promote domestic manufacturing.
The automobile industry will grow rapidly when the manufacturing achieves sustained double digit growth. The announcement that the GST system would be smoothened may help in removing the tax bias against cars. The extension of the gas distribution infrastructure would help the growth of sale of CNG cars. The detailed policy on scrappage is yet to be announced and its impact would be known after that.
The fiscal deficit is projected at 6.8%. This would not be a cause of worry provided that the assets are created efficiently and at minimum cost and are operated to ensure viability. Some changes in rules and procedures would be helpful to make this happen. Overall an excellent Budget.
