The Budget must focus on the growth of the MSME sector for generating employment and on skilling India for improving our global competitiveness.
There are many roadblocks in the way of our growth journey. High borrowing cost, inefficient power supply, high transaction costs vis-a-vis poor infrastructure, complex tax structure, anomalies in the level-playing field vis-a-vis inverted duty structure, problems in land acquisition, rigid labour laws and unavailability of skilled workforce impact industry and businesses and also the common man. There must be focused efforts towards growth of MSME sector and on skilling India for improving our global competitiveness.
The economy has been witnessing positive sentiments. The real GDP growth rate has improved to 7.4% in the first half of this year as compared to 7.1% in the corresponding period of 2013-14, while inflation has declined to near zero. Other lead macroeconomic indicators have started to display an encouraging trend.
Initiatives such as Make-in-India, Jan-Dhan Yojana, ordinance for changes to the Land Acquisition Act, amendments in labour laws and launch of labour schemes are steps that have been taken to improve the ease of doing business. To fulfil the Make-in-India vision and to give push to the manufacturing sector, and consequential boost to employment, the growth of the MSME sector is a must. This sector facilitates socio-economic development of the country and is considered as a strategic asset. However, the scope of MSME definition in India is limited. To comply with global standards, the MSME scale should be increased in terms of financials and manpower so that more companies come under MSMEs and existing companies are able to expand their capital base.
Collateral-free lending should be promoted for MSMEs and appropriate qualitative grading of promoters and projects should be available. The government should promote MSME-focused NBFCs as they are more nimble-footed than banks and a better alternative than unorganised financiers and money-lenders.
The Budget should ensure proper infrastructure for the MSME sector and equipment facilitating vocational training programmes not only in the urban areas but also at grassroots level. Vocational education should be based on skill mapping and address the demand-supply gap. Vocational education has to be integrated with professional and technical education. We need to take confidence-building measures which could get private players to commit to skilling workforce. The Budget must also make significant allocations to the primary education sector.
The Budget should focus on attracting sizeable investments, both domestic and foreign. The issue of stable, non-adversarial tax regime must be addressed and advanced ruling facilities must be available for all taxpayers.
Implementation of a well designed GST at the earliest, by reducing state border taxes, can create a pan-India common market for goods and services, enabling environment for trade and industry, and is believed to push our growth by 2 percentage points.
The Budget is being formulated in a conducive macro-economic environment at domestic and international level after many years. The first Budget of this government encouraged on building stakeholders’ confidence and promise of progress. We hope that the coming Budget will make significant announcements to improve socio-economic segments of the economy.
The author is president, PHDCCI
Alok B Shriram