Union Budget 2015: FM balances reforms, consolidation

Vivek Gambhir, Financial Express, 02 March 2015

To borrow from Jacob Lew, US Treasury Secretary, "The Budget is not just a collection of our numbers, but an expression of our values and aspirations". There has been much speculation and hope riding on this Budget, coming as it does at a time when improving consumer sentiment and investor confidence needs to translate into better economic growth. The government's intent to drive the twin engines of getting growth back on track and taming inflation needed a road map of fiscal and structural changes to revitalise the economy and encourage investment-led growth. In short, the call of the hour is to drive jobs and growth. The finance minister has done well in checking all these boxes.

Overall, this is a responsible ‘Make In India' Budget, path-breaking even, in how it achieves a balance between fiscal consolidation and growth-oriented reforms, that should hopefully result in double digit growth in a few years. Transformative announcements such as changes to bankruptcy law and creating a social security type pension network will provide a major impetus to growth. For FMCG in particular, proactive reforms to stimulate demand and drive growth, will help bring growth back on track. The emerging middle class and rural India have had their consumption stymied due to their wallets getting squeezed. Increasing money in the hands of these consumers will stimulate demand and consumption.

The ‘Make In India' campaign cues a much-needed boost to employment generation by creating more jobs. Revving up sectors like manufacturing will aid GDP growth and encourage more investment, both from Indian and foreign players, resulting in more jobs. The INR 70,000 crore investments proposed in infrastructure and the thrust on ‘Skill India' and education will bolster this in the long term.

Rural India will benefit from the increased allocation for MNREGA rural infrastructure development. Efforts towards promoting innovation and entrepreneurship through initiatives like the MUDRA Bank should further this.

It is reassuring to have a definite timeline of April 2016 for implementing the much awaited GST. Other things remaining constant, it is expected to add 2% to GDP growth. It will also aid growth in manufacturing and exports.

There are also several efforts being made to improve the ease of doing business. Initiatives like single-window clearances for multiple approvals and substituting prior approvals with regulatory guidelines, will quicken the pace of implementation and build investor confidence. While the Budget has laid out many great initiatives, its real success will lie in concerted efforts to drive strong on-ground execution. Only then will we be able to realise the ‘ache din' promise and truly capitalise on the tremendous potential that India holds.