Budget 2019 can help spur private investment in the economy; here’s how

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New Delhi | Updated: February 1, 2019 9:29:05 AM

India Union Budget 2019: Sujan Hajra, Chief Economist, Anand Rathi, also expect the announcement of income supporting scheme for farmers based on the model of Rythu Bandhu Scheme of Telangana. This may also help fuel rural demand and thus encouraging investments.

Budget 2019-20Many economists believe that as infrastructure development helps attract investments, the thrust on programmes such as Bharatmala, Sagarmala, Pradhan Mantri Gram Sadak Yojana, Smart City and AMRUT would continue.

Budget 2019: One of the key factors holding India back in the last few years is the subdued private investment in the economy. Although private investment primarily depends on the interest rate in the economy, government, through its various policies and tools can also affect it.

While the world economy faces an increasing likelihood of a slowdown due to events such as the US-China trade war and Brexit, the Indian economy has to lean on domestic factors to push the growth further. Therefore, it is imperative for the government to become proactive and take concrete measures to address the issue to spur private investment.

The Modi government is all set to present its interim budget on 1 February 2019. According to a Crisil report, with the government likely to stick to its fiscal consolidation path, the pick-up in growth is expected to be only gradual. A change in the growth mix is on cards, with private sector likely to take over the baton from the government, said the report. Hence, the government is expected to step up its effort to drive private investments as also suggested by the Economic Survey 2017-18.

Finance Minister Arun Jaitley, in his previous budget, reduced corporate tax to 25 per cent for businesses with turnover up to Rs 250 crore. Companies are expecting the same reduction for all businesses. However, the condition that it will accompany with ending all other exemptions is yet to be fulfilled.

Also Read: Budget 2019 Live: Litmus test for Modi government as Piyush Goyal goes for the final push

Many economists believe that as infrastructure development helps attract investments, the thrust on programmes such as Bharatmala, Sagarmala, Pradhan Mantri Gram Sadak Yojana, Smart City and AMRUT would continue.
Madan Sabnavis, Chief Economist, CARE Ratings, told Financial Express Online that the government may reduce corporate tax rates in order to spur private investments, or give investment allowance. He also suggested the government to maintain its focus on infrastructure development and resolve the NPA issue with utmost priority.

Sujan Hajra, Chief Economist, Anand Rathi, also expect the announcement of income supporting scheme for farmers based on the model of Rythu Bandhu Scheme of Telangana. This may also help fuel rural demand and thus encouraging investments.

Further, a stable and business-friendly GST structure would help attract investments in a long way, say experts.

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