Budget 2018: From reviving private investments to boosting employment, what all it must address

Published: January 27, 2018 12:30:46 AM

Budget 2018: The three most important challenges before the upcoming Budget are: boosting private investment, generating employment and addressing rural distress. While government capex has been a key driver, the share of private sector capex is three-fourths of the total spending.

budget 2018, budget date, budget 2018 india, India budget, Union budget 2018, budget 2018 expectations, private investments, employment, budget challenges, rural issues, rural distressBudget 2018: The three most important challenges before the upcoming Budget are: boosting private investment, generating employment and addressing rural distress. While government capex has been a key driver, the share of private sector capex is three-fourths of the total spending. (PTI)

Budget 2018: The three most important challenges before the upcoming Budget are: boosting private investment, generating employment and addressing rural distress. While government capex has been a key driver, the share of private sector capex is three-fourths of the total spending. Private capex demand is trending at a decadal low and a pick-up in the investment cycle is key for sustainable growth.

An improvement in corporate return expectations and strengthening balance-sheet fundamentals will act as incentives for India Inc to make investments. With recapitalisation of state-owned banks, they will be able to match credit demand. The Budget will have to address issues related to ease of doing business and improve credit access for MSMEs, which will help encourage private investment and also generate employment.

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Subdued private capex has had an impact on employment generation. Over the last few years, sectors with high potential to absorb labour, such as agriculture, construction and transport, have grown at a slower pace. As rapid automation is reducing the labour-intensity of many a industry, policies will have to support sectors with large job potential and also be directed at skilling the youth for new job opportunities. Introduction of a national employment policy which will provide incentives, particularly for labour-intensive sectors and reforming the country’s labour laws, can help create more jobs, too.

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The rural economy’s fortunes are linked with agriculture output and wage growth. With both falling, a more sustainable solution lies in deeper agricultural productivity, reforms and a step up in rural infrastructure related to farms and allied activities such as animal husbandry.

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