BudgetSpeak #11: Anita Nayyar: Budget 2014-15: A Roadmap to the Future

07 Jul,2014

By Anita Nayyar


Expectations from this Budget are tremendous and people are looking at immediate action on growth and job creation which in reality will take longer.


India is plagued with high inflation and fiscal deficit coupled with a weak monsoon outlook. Current Account Deficit (CAD) is being contained restricting gold import which will at some point affect export. Lowering interest rates will not have the effect of capital inflows and real growth. Globally too the possibility of another crisis looms if Iraq instability and oil prices spin out of control.


Yet, India’s golden age with its youth, rising millionaires and entrepreneurs will lead right up to 2025.  India has a great future, the next 2-3 years are critical and this Budget should attempt to clear bottlenecks and layout the roadmap to unlock potential. Needless to say, this must be one of the toughest Budgets to present.


Some of the big-ticket focus areas that will curb fiscal deficit and drive growth:

Administrative reform is low-hanging fruit – tax, subsidiary handout, project clearance, etc; besides it will garner positive sentiment on Indian governance.


The climate for investment needs to be created restoring investor confidence and curbing red tape. Tax clarity without retrospective tax will give an impetus to the private sector.


Just as raising tax exemption on instruments will encourage savings of salaried people, so would raising their income tax slabs; as also a tax structure for start-ups. It will not only encourage entrepreneurship and jobs but also positively impact consumption.


GST implementation should be given definitive timeline. Government divestment and diluting stake properties in sectors like banking, must be identified and with timelines.


Pending projects revival need to be closely reviewed. For those burdened with over capacity, the long-term loss would be far greater, contained here with selling of assets. Also, many are at the state level so it would need the co-operation of the ruling and opposition parties.


Others like radio expansion through Phase 3 need clearing with immediate effect.


Subsidiary allocation should have serious laws. In addition to subsidiary caps, there must be reverse-escalation caps over a period of time to make a sector/people independent focusing on the cause.


Education policy and investment in education, teaching and training will have reach beyond 2025. Services today are about 50% of GDP. India is the global outsourcing hub of low-end tasks where cost is the business changer; this poses a dangerous future fiscal deficit outlook.


Action on issues related to land acquisition and environmental consideration should be charted.


Bottlenecks related to growth and job producing sectors like manufacturing, infrastructure, agriculture need to be identified.


Industries with potential like Media & Entertainment and IT where GDP contribution can be higher need to be encouraged. For M&E, as per latest EY M&E report, India is one of the most attractive places to invest and diversify. So from an M&E perspective the outlook should be good.


It may not be the best of times to present a Budget but neither is it the worst and the world is nowhere near 2008-09. India has a glorious future and the makers of this Budget could claim to have had a hand in it.


Anita Nayyar is CEO, Havas Media Group, India & South Asia


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