Measures to curb black money are key to widening the tax base and generating legitimate investment. The govt needs to be complimented for addressing this issue
REVIVING the investment cycle and emphasis on ‘Make in India’ were the clear priorities for the FM. Straddling the challenges of stressed infrastructure assets and rising NPAs for the sector and the government’s budgetary constraints, the FM has wisely chosen to seek moratorium on the fiscal deficit time table to find resources for infrastructure investment in the near term.
Increased budgetary outlay to infrastructure and setting up a national infrastructure fund are positive measures. While the FM has acknowledged the need to revitalise the PPP route of infrastructure development, there is no clarity on specific plans. Plug & play concept in the infrastructure sector is a bold ambition and the country would gain significantly if the government achieves this. Integration of all clearances prior to award of the project, while highly desirable, would be a significant challenge for the government to adhere to implementation timelines. Speedy resolution of issues surrounding stalled projects should precede fresh award of projects.
For meeting the vast investment requirements, access to both domestic and foreign savings is vital. Domestic savings have suffered in the last few years due to elevated levels of inflation. There are measures announced to channelise domestic savings into infrastructure formation by launching tax free bonds. Liquidity is important for their success. Measures to curb black money are key to widening the tax base and generating legitimate investments. The government needs to be complimented for addressing this issue. Removal of distinction between foreign portfolio investments and foreign direct investments will help channelise flow of foreign capital. A clear timeframe for GST implemen-tation from April 2016, intention to reduce corporate tax rates in four years and additional depreciation for new plant and machinery for units engaged in generation and distribution of power are welcome measures under the Make in India initiative. While the Budget seems to have identified thrust areas well, implementation road map and resource planning appear tentative. Plugged in alright, but the game needs good playing.