Sunday, March 1, 2015

Budget or Vision Document?

This truly was a historic budget.More than get into the nitty gritty of the economy or outline micro measures,this vision doc looks all the way uptill 2020.

By now the numbers have been dissected over and over again so i will not take that road.But the highlight for me are the following:-

  • All previous budgets have talked about it but for the first time financial inclusion for the underprivileged has got a  roadmap
  • Creation of social security for all Indians,pushing infrastructure development and employment generation
  • Push towards federalism and more power to States,desire to simplify the complex Tax structure
  • focus on agricultural sector - micro-irrigation,organic farming,solar energy
  • Reducing Corporate Tax to 25% over 4 year
The middle class might feel aggrieved to not get fresh tax sops but I am sure that the temporary pain will be well worth it if the economy can grow 8%+ over the next 5 years.

If the vision can be translated into reality then India can look at having clean cities with strong road/rail infrastructure,citizens with purchasing power,simplified tax rules that incentivise payment of taxes by businesses with a social security net for the less fortunate,easier rules for entrepreneurs leading to more employment.Utopia!

The push for Banks to make capital available to the SME segment that in majority of  cases has to turn to unorganised moneylending system with commensurate high interest rates(which have led to so many farmer suicides).By not introducing new revenue drainage schemes the Government will look to improve its fiscal position,balance of payments and foreign exchange holding.

The negatives are the continuation of populist schemes that have leaked financial resources and not really improved those on the bottom of the pyramid.The lack of concrete assistance to improve exports and the thin support for Prime Minister's favourite 'Made in India' idea.

However the Government has been pragmatic in not going overboard with populism as was expected after the rout in Delhi elections.

The budget has left a bland taste with no major announcements or policy decisions in the short term.Now the focus will be on implementing the measures outlined and making governance easier,starting a business simpler,paying tax smoother with medical health,social security,increased food output.

The vision for India for the coming decade looks good.Now the rhetoric needs to be replaced by action to translate the dream into reality.

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