Budget 2016 will augur well for inclusive growth

Vivek Gambhir, Financial Express, 03 March 2016

This is a responsible "Rural First" Budget that attempts to strike a balance between reviving demand and continuing on the path of fiscal consolidation.

For the FMCG sector, initiatives to support the recovery of rural and urban consumption should help to bring growth back on track. Allowing small and medium shops to remain open for seven days should boost retail trade.

Millions of consumers are increasingly aspiring to consume affordable and quality products. Growth has however recently been dampened due to insufficient job creation and the tepid growth in disposable income.

Focused efforts to alleviate rural distress; to uplift the agrarian economy and address the impact of poor monsoons and weak agricultural prices, through enhanced irrigation cover, improved agricultural productivity and better targeted subsidies, will help put more money in the hands of farmers and augur well for inclusive growth. Rural India will benefit from initiatives like MGNREGA, electrifying all Indian villages by 2018, health insurance and spreading digital literacy. Statutory backing of the Aadhaar scheme and other such initiatives for "minimum government, maximum governance", will ensure more targeted delivery of benefits to those who need it.

Accelerating rural infrastructure projects and investing in capacity building will also lead to more productive jobs being created in rural India.

The need of the hour is job creation, which we hope will be boosted through 'Make in India' and investments in manufacturing and infrastructure. Concrete steps towards improving the ease of doing business, making labour markets more flexible and speeding up infrastructure projects, will greatly help this. Focusing on skilling and education is imperative to make people more employable and provide the long-term backbone to sustain this trajectory.

For the medium term, the implementation of transformative reforms, like the GST, at the earliest, will be imperative to fast track economic growth and boost consumer confidence. Given the Government’s intent to stick to its path of fiscal consolidation, we look forward to an interest rate cut or more liquidity in the system to drive private capital investment.

Going forward, given the plethora of schemes that have been announced, it will be important for the Government to deliver on the promises made through ensuring effective on-the-ground execution.