Budget 2018: Union Budget 2018 is a holistic one, with the government integrating reforms, targeted spending and fiscal prudence to put the Indian economy on an accelerated growth trajectory, keeping in vein with the thought process of the previous Budgets—restructuring the status quo, empowering citizens and building for the future. Employing a combination of flagship initiatives (Make-in-India, Digital India, Skill India, Jan-Dhan), structural reforms (GST, creation of IBC, bank recapitalisation) and disruptors like demonetisation, the government is putting its best foot forward in the remaking of the world’s largest democracy—all of which have contributed to India’s rise on the World Bank’s ‘Ease of Doing Business Index’.
The Union Budget 2018 is a step in the same direction, aiming at enabling all of India to be more productive. The lion’s share of attention has gone towards revitalising the rural sector—be it the allocation of Rs 1,400 crore towards developing 42 food parks or Rs 14 trillion on developing rural infrastructure, the government has left no stone unturned to ensure a representative participation of the hinterland in the economic growth. The beating heart that drives economic progress and upward mobility is the MSME sector, which has been given its due credit this year.
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The lowering of maximum tax rate to firms with revenues of up to Rs 250 crore to 25%, the proposal to integrate the GST and banking channels, and rebates on creating fresh employment should enable expeditious movement of the workforce to formal sector. The extension of the PF rebate scheme to the skill-intensive footwear and leather industries and introduction of fixed-term employment for all industries should augment formalisation effort. But the increase in customs duty on certain electronic components and lack of formal proposals for big-ticket projects were sore points. With its continued focus on infra (allocation of Rs 5.97 trillion) and healthcare reform Ayushman Bharat, Budget 2018 has paid due attention to the pressing challenge of jobless growth. On the back of these key initiatives, the government is confident of adding 7 million formal jobs this year.
The job-skill conundrum finds attention. While the initiative to skill 1.3 million teachers is laudable, the skill development plank is lacking in detail, both in terms of outlay and programmes targeted. That being said, the move to set up a model aspirational skill centre in each district under Pradhan Mantri Kaushal Kendra should help build the necessary skills for gainful employment across smaller towns. With the IT industry at the crossroads of a generational transformation, the government’s thrust on new-age tech—AI, 3D, blockchain—and its decision to earmark Rs 3,000 crore for Digital India will be a shot in the arm as the industry looks to develop talent in these niche skills.
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Budget 2018, which is the first following demonetisation and GST, reflects the systematic approach that this government has taken towards making India an easier place to do business and an easier place to live. More importantly, the government’s fiscal deficit target of 3.3% of GDP for the next year should burnish its reformist credentials. For an administration presenting its final Union Budget, the government has surprisingly and sensibly eschewed populism for pragmatism—most of the initiatives announced are long term in nature and should begin to show constructive results in the medium term.
By Paul Dupuis
The author is MD & CEO, Randstad India