Budget 2023-24 must focus on rural consumption to enhance capacity utilization in factories and to attract investments in the economy. Enhanced agriculture vis-à-vis efficient agricultural supply chains and rationalization of direct taxation for middle incomes would give a big push to the economic activity and strengthen growth.
Percolation of Ease of Doing Business at the factory level, rationalization of cost of doing business, state of the art infrastructure vis-à-vis increased capital outlay would go a long way to create employment opportunities for the growing young population in the country.
Demand creation particularly in the rural India will have multiplier effect on enhanced production possibilities, expansion of capacities, vis-à-vis private investments and employment creation. These will turn-on the overall virtuous circle of growth and development of Indian economy. Special focus on the rural enterprises vis-a-vis food processing will greatly help to enhance rural incomes, rural consumption and employment creation in the rural economy.
The increase in public investments in agricultural infrastructure would attract private investments in cold storage, warehousing and supply chain of agriculture produce in order to reduce food wastages and get them to urban citizens at moderate rates. It shall also raise the returns to agriculturists. Strengthen access to credit for long term loans to enhance growth and productivity in the sector and to enhance farm incomes. Adoption of direct transfer of subsidies on electricity, fertilisers, etc. to the beneficiaries to ensure better delivery of subsidies to the end-users. Minimise the wastages from the current level of more than 30% to less than 10% in next five years by augmenting storage capacities, modernizing/ upgrading the godowns.
It is essential that an integrated holistic view of the agriculture value chain is taken towards providing the necessary fillip to the agricultural growth. This requires a joint participatory approach from all concerned stakeholders including the farmers, input vendors, traders, processors and the government.
Further, to rationalize the taxation for middle incomes, there is a need to increase the tax rebate benefits for consumption expenditure. Tax rebate on purchase of self-occupied house is given Rs.2 lakh only since the last many years. This needs to be enhanced with the wider scope of consumption expenditure such as purchase of more than 1 house, purchase of car, along with other durables. Consumption expenditure rebate must be enhanced to Rs.5lacs per annum. This will not only enhance the aggregate demand in the economy but also attract private investments, increased capacity utilization in the factories.
Although, procedural requirements have been relatively reduced and the communication between Government departments has become transparent and hassle free, however, the cost aspect still needs to be relaxed further. Cost of doing business should also not be more than three top world manufacturing countries, namely, China, United States and Japan. Reduced costs of doing business and level playing field in the country will increase the competitiveness of our industry and exporters; and also reduce imports of the items where India has domestic capabilities. The Budget must focus on reducing the cost of doing business including (1) costs of capital, (2) costs of power, (3) costs of logistics, (4) costs of land and availability of land (5) costs of labour/availability of skilled labour and (6) costs of compliances.
Source : Compiled from Budget Documents, Government of India.
The growth of Budget has remained consistent over the years. The size of the budget has increased from Rs. 27 lac crores in 2019-20 to more than Rs. 39 lac crores in 2022-23. The enhanced busget trajectory has helped the country to expand allocations for various sectors of the economy.
Infrastructure is one of the crucial sectors that propels overall growth and development of the Indian economy; the increased spending on infrastructure give a multiplier effect to rejuvenate the aggregate demand in the economy. Undoubtedly, the robust growth of infrastructure is the key ingredient to realize the vision to become Atmanirbhar Bharat and a developed economy by 2047. At this juncture, PM Gati Shakti National Master Plan and National Infrastructure Pipeline (NIP) will certainly boost the growth trajectory of infrastructure development in the country. Infrastructure investment in the economy must not be less than 10% of the GDP to achieve state of art infrastructure and to become a developed economy by 2047.
Access to finance is a major roadblock being faced by the MSMEs impacting their competitiveness and growth. The current banking norms result in high primary security and collateral security demanded by banks for the MSMEs which hampers their growth prospects. Focus of the government should therefore be on hassle free disbursements of loans at affordable rate of interest for MSMEs. Also, the majority of MSMEs are either sole proprietorship or partnerships; hence, taxes should come down on these businesses at 25%.
Tourism sector is a major engine of economic growth and an important source of foreign exchange earnings in many countries including India. The sector provides opportunities to skilled as well as unskilled job seekers, thereby, providing employment to all sections of the society. In India, majority of the travel and tourism industry is composed of MSMEs. In this regard, development of tourism infrastructure is of paramount importance and should be accorded a priority to provide for a better experience, facilities, safety to the tourists and thereby enhance employment creation in the country and facilitate growth of MSMEs.
On the socio-economic front, focus on twin merit goods of education with skill development and basic health with safety must continue with a longer-term vision. Focus on education as well as skill development is the need of the hour in order to reap the dividends of our demographic advantage and would hold a crucial place for supporting India in its journey towards being AatmaNirbhar. Ensure presence of schools within the radius of 1 km, colleges within the radius of 10 km and universities within the radius of 25 km in the next five years.
Strengthen mechanisms for bringing together Government, Industry and Academia to boost Industry-University linkages in order to promote the employability of the youth in the country. Promotion of easier private sector investment rules for teacher training facilities and other training institutes. There is a need to enhance and incentivize research & development, skill set upgradation, usage of digital technology, application of industry 4.0, creation of green jobs, among others, in the country.
Last but not least, the pandemic has brought the country's health infrastructure into sharp focus, highlighting the critical position of the public health sector and the need for increased Government spending on public health. We sincerely urge to correct the imbalances in the availability of affordable healthcare facilities in different parts of the country in general and augment facilities for quality medical education in the under-served States in particular.
(Dr. S.P. Sharma is Chief Economist & Director of Research • PHDCCI (PHD Chamber of Commerce and industry, India)
Disclaimer: The opinions expressed in this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of Indiastat and Indiastat does not assume any responsibility or liability for the same.
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