The run-up to the budget was characterised by a high degree of optimism and an expected rise in the growth trajectory. The industry expected the budget to have measures for boosting consumption and, hence, accelerating growth.
The Budget has some potent measures to this end. The Jan Dhan Yojana, Aadhaar and Mobile numbers (JAM) trinity will improve disbursement, giving a fillip to consumption expenditure.
The additional thrust on infrastructure and electricity, apart from improving efficiency, will create employment, thereby increasing the overall consumer and consumption base. The rate of progress is likely to be faster with a larger role envisaged for private-public partnership (PPP).
Also, the greater devolution of revenue to states will facilitate the implementation of GST and provide the states with resources to tackle their unique problems.
However, we believe the optimism capital that was so effectively created in the run-up to the budget starting with the election has been underutilised. In a consumption-led economy that India is, one could argue that economic growth depends more on people feeling rich than people being rich.
The revision of exemption on healthcare expenses and Provident Fund (PF) is a step in this direction. But the budget was an excellent
opportunity to encourage consumption through some amendments to taxation laws, especially those that impact consumers, such as VAT
and excise. Our reading so far is that these measures have been sparingly used.
At the same time, a higher tax on petroleum and services will increase input costs,impacting consumer prices.
Finally, the food processing industry, which accounts for a mere 10% of the total food industry, is in need of a significant push from the government. We are hoping this will happen in the coming budgets.
Having said that, this budget distinguishes itself with a clear articulation of future intent. The trick now lies in how the government converts this vision into reality though action on ground.
The author is MD, Britannia Industries