In the fairytale by the same name, a little girl, Goldilocks, chances upon the home of three bears. Curious, she explores it and tries out their three different beds and bowls of porridge. One is “too hot” or “too large” and the second, “too cold” or “too small”, but the third is always “just right”.
Back in November last year, global financial services company, Nomura, had referred to this as a ‘Goldilocks’ year for India. And with that, comes a Goldilocks budget — with just the right kind of impetus needed by way of concrete fiscal consolidation and reforms to raise investor confidence and consumer sentiment. Combined with the benign commodity price environment and tapering inflation, this is a conducive environment to deliver double-digit growth in a couple of years.
Overall, the budget is practical, cohesive and responsible. The government’s approach to facilitating growth and setting up India to ‘fly’, as the Finance Minister Arun Jaitley put it, rather than playing the controller, has been a paradigm shift. “Don't tell me what you value, show me your budget, and I’ll tell you what you value”, said the U.S. Vice-President, Joe Biden. By that definition, this budget boils down to two things — more jobs and growth.
Announcements such as changes to bankruptcy law and creating a social security type pension, could have a substantive impact on growth in the years ahead. For the FMCG sector, now recording an uptick, proactive reforms to further stimulate demand and consumption will be very beneficial — in particular, more income in the hands of rural Indian consumers.
Increasing employment generation is of paramount importance. This will be led by ‘Make In India’ and the consequent boost to manufacturing and other such sectors, where we see more investment from within India as well as foreign investors. There are, however, no incentives for manufacturing in this budget and we hope that this gets addressed going ahead.
In line with inclusive growth and ‘Sabka Saath Sabka Vikas’, there is a Rs.70,000-crore investment proposed in infrastructure. To add to this, are ‘Skill India’ and education facilities.Innovation and entrepreneurship have also been brought to the fore. We now have a definite timeline for the implementation of the GST — April 2016. Being able to successfully carry out this transformational change is critical. As we see it, with other things remaining constant, this could add 2 per cent to GDP growth, while also contributing to growing manufacturing and exports.
One of the great highlights has been the many changes to improve the ease of doing business. Single-window clearances for multiple approvals and substituting prior approvals with regulatory guidelines will fasten implementation and build investor confidence. At the end of the day, however, the rubber will hit the road, in terms of how well we are able to get things implemented on the ground. The Government will have to walk the talk on speedy and relentless execution, to make these significant initiatives and ‘ache din’, a reality.
The author is Managing Director, Godrej Consumer Products Ltd.
