The global economy is still mired in policy uncertainties, high asset prices, political uncertainties and shipping disruptions creating significant downside risks for growth and upside risks to inflation. Yet, in comparison, India’s economic growth has proved to be an exception with inflation remaining low, stable and moving towards the 4% target.
Finance Minister Nirmala Sitharaman in today’s budget put forth her ‘Navratnas’ -- the nine areas where sustained efforts are needed to take the country on the path of strong development and all-round prosperity to achieve the vision of a Viksit Bharat.
The ‘Navratnas’ or the nine areas are Productivity and resilience in Agriculture; Employment & Skilling; Inclusive Human Resource Development and Social Justice; Manufacturing & Services; Urban Development; Energy Security; Infrastructure; Innovation, Research & Development and Next Generation Reforms.
Agriculture and employment were among the foremost issues that topped the charts in the pre-election discussions, and these have been effectively addressed in this budget.
Where agriculture is concerned, the MSP has always been a highly debated issue, the Government this year has ensured a higher MSP that was at least 50% higher of production costs. However, the announcement of a comprehensive review of the agri-research system to focus on improving productivity and developing resilient varieties is an extremely important step because if the farmer is not able to grow more, he cannot earn more, however high the MSP is.
While the government has earmarked Rs. 1.52 lakh crores for the agriculture and allied sectors, it would have been a better idea to separate the two because the allied sector covers a number of aspects like farm equipment, storage facilities, processing facilities, etc which need to be developed along with the increasing production.
While employment is an issue, employability is an equally big if not bigger issue and developing of skill sets was the need of the hour. This budget addresses the skill development issue by planning to setup 1,000 Industrial Training Institutes and has announced the implementation of 3 schemes for ‘Employment Linked Incentive’ based on enrollment in the EPFO, and focus on recognition of first-time employees, and support to employees and employers. In what I believe to be a first, the government is offering loans up to Rs. 10 lakh for higher education in domestic institutions.One can safely say that with, both employees and employers, benefiting from these initiatives, India can look forward to a large number of skilled youth being available to hire in the next three to five years.
It is heartening to see the Finance Minister announcing the ‘Purvodaya’ plan for the overall development of Eastern States of Bihar, Jharkhand, West Bengal, Odisha and Andhra Pradesh. In my opinion, this was needed for a long time given the abundance of natural resources and cultural heritage of these States. The plan to create industrial corridors, develop infrastructure, road connectivity, etc.in these States will not just help them develop but also provide employment opportunities to local youth and spur entrepreneurship as well.
MSMEs and their growth has been an extremely important focal point for this Government, and this budget provides special attention to MSMEs and manufacturing, particularly labour-intensive manufacturing for which a solution that includes financing, regulatory changes and technology support for MSMEs to help them grow and also compete globally has been devised. While a number of initiatives have been taken by the Government for the MSME sector, the most significant announcement is the development of a new credit assessment model for MSMEs based on digital footprints easing their access to funds.
Apart from this, the opening of SIDBI branches to serve all major MSME clusters within 3 years and provide direct credit to them will make it easy for them to access funds. The government’s plan to setup E-Commerce Export Hubs PPP mode will help MSMEs and traditional artisans access international markets.
Renewable energy, especially solar energy, has been another focus area for the government and is being driven through the PM Surya Ghar Muft Bijli Yojana. The government’s focus on developing renewable energy resources have been on an upswing in the recent past with a focus on heading towards net-zero emissions. The plan to initiate research and development in small and modular nuclear reactors is expected to lend further impetus to India’s renewable energy journey.
The government, this year, has made a provision of Rs 11.11 lakhs crores for capital expenditure to build and improve infrastructure which has been at the core of India’s growth and the government’s provision of Rs. 1.50 lakh crores for long-term interest free loans to support the states in their resource allocation and provision of viability gap funding, favourable policy and regulations will help attract private investments in the sector.
Tourism is a key contributor to every country’s economy and the government’s efforts to position India as a global tourist destination will also create jobs, invite investments and create economic opportunities for other sectors. The government’s plan to create world class pilgrim and tourist destinations should go a long way in improving the revenues for the states.
(Umesh Revankar is Executive Vice Chairman, Shriram Finance)
