As has become customary, speculation and wish lists have been rife, both in the electronic and print media. It has long been my view that the FM’s job is the second most difficult one in our country, after the PM’s, given the compulsions of balancing the often irreconcilable demands of industry, stock markets, political constituencies, special interest groups, global investors and the common man on the one hand, with the need for fiscal consolidation, reduced subsidies, higher tax to GDP ratio and providing the stimulus for growth, on the other! It is against this backdrop, that the Budget must be viewed.
In a directional sense, the budget sets the right tone and addresses many of the key issues that will set the Indian economy on the road to an era of relatively healthy growth. Infrastructure has been on everyone’s agenda for some time now and the steps outlined by the FM are very unambiguous and should provide the much needed fillip to the sector. The Rs 20,000 crore National Investment and Infrastructure Fund (NIIF), the proposal to float tax-free infrastructure bonds and the various other steps for boosting infrastructure are welcome ones indeed. The proposal to launch a National Skills Mission to enhance employability is another extremely welcome step, given India’s demographic profile. However, merely setting up mechanisms or even allocating funds will not do. Execution will be the real test.
Mr.Jaitley has unequivocally said that the GAAR provisions, as and when they come into force, would only apply prospectively. Similarly, the proposal to rationalise the capital gains tax regime for real estate investment trusts, the phased reduction in corporate tax rates and the abolition of Wealth tax are to be welcomed. The proposal for a new bankruptcy code, a public debt management agency, and the establishment of an autonomous bank board bureau to improve management of public sector banks, are all measures that are long overdue and one can only hope that these go into implementation without any delay.
NBFCs have something to cheerUnusually, NBFCs have something to cheer about in this Budget. NBFCs registered with RBI, with assets above a certain threshold have been recognised as Financial Institutions, as a result of which certain benefits, such as recourse to the SARFAESI Act will now become available to them.
It is to be hoped that this marks the beginning of an era of clearer policy formulation, a consistent and stable tax regime and above all, an era where outcomes will matter rather than outlays!
