Modi 2.0 is stronger than its previous formation and in the last few decades, one of the strongest in terms of the majority it enjoys in Parliament. They have the record of bringing fiscal deficit under control and implementing various social welfare norms using direct benefit program. They were fortunate to face favorable tail-winds due to falling oil prices giving rise to significant drop in import bills and hence, an opportunity to keep fiscal deficit low.
As we stand today, oil prices are higher, GDP growth is slow, unemployment is high, global economy is in duress due to trade conflicts between large powers and our monsoon is not looking great. Revenues for the Government seem to have fallen significantly below the forecast. Moreover, frequent changes in regulatory framework and social benefit programs have impacted demand for consumption negatively.
We have an ambitious Vision 2030 unveiled by the previous Finance Minister, making our economy $ 10 trillion (Rs 10 lakh crores) with next generation infrastructure of roads, railways, ports, airports and all possible urban transport systems; housing for all with a clean environment; world-class education, health, sanitation; high productivity in agriculture to proactive governance. All of these are well-thought goals to pursue and Modi 2.0 will need to push the envelope in that direction.
Union Budget 2019 will have the task of balancing the vision of 2030 and the immediate needs of boosting demand and generating jobs. Most jobs are in small enterprises and in the domain of self-employment in our country. These are dependent upon the progress of larger companies and government programs. For these jobs to be boosted and new jobs to be created, enterprises and government need additional capital. Given the stress our financial services sector is facing now, capital isn’t available to expand businesses or introduce new programs.
Financial Reforms Structural changes such as taxation in the form of GST and Income Tax coupled with monetary policy of Reserve Bank of India to improve liquidity in the market are expected.In that case, companies and individuals will have greater disposable income at their hands. Their demand for capital goods and long-term assets such as automotive, farm equipment, buildings and machinery will grow. Accordingly, manufacturing, construction, retail and e-commerce sector will have greater utilization of their capacities; eventually create more jobs. Consequently, services sector such as logistics, financial services, IT, hospitality, entertainment and all other services will reverse the trend of slow growth in revenues and job creation.
Push for Greater Efficiency
Several public sector enterprises can be run with greater efficiency if private equity is brought in. Governments have panned divestment in the past and have been inconsistently successful. Time has come to focus on it with an ambitious target. Government could monetize the assets held by some of these companies and deploy the proceeds to spend on building high quality infrastructure and providing for the social welfare programs.
Farm productivity has been on a decline for years making agriculture as one of the most unattractive careers to pursue. Government has to address this urgently to raise productivity by a slew of measures right from boosting research in agri-sciences, smoother trade in agricultural products and linking farm loans with crop insurance to improving supply chain, enabling export growth, fair norms in taxation and leverage of technology. Productivity improvement here will not only contribute directly to our GDP but also reduce unemployment and boost in consumption leading to a virtuous cycle of economic growth. This budget is an opportunity to announce concrete measures and commit resources.
MSMEs need access to capital, stable policies and skilled manpower. Current methods of starting a company, winding it up, financing its operations and conformance with the policy regulations are far from being world-class. Our ease of doing business has received a lot of attention in the media and policy conversations. I hope, we make significant progress in this direction in this budget.
Skilling our talent pool has made progress over the last few years, but we are still far away from the time when the 10-12 million youth entering the labour pool each year match the skill levels that employers are looking for. Policies for greater efficiency in the existing system and involvement of employer organizations in the mission could quicken the progress. I hope, the Budget introduces some revamp of the existing policy and appropriate funds in this direction.
The world is looking at us for 5G roll-out and hence, Telecom sector is going to be in focus. While a huge sum of money is planned from the airwave auctions, the providers need the capital to invest. Prudent financing of the sector could add thousands of new jobs.
With AI and many such advancements in technology, our productivity would increase and we need to stay competitive in the global stage. While the right policies are essential to make our industries such as IT and Outsourcing competitive globally, the sectors which are manpower intensive need a different set of policy framework to encourage them create new jobs.
Right from 1991 when Dr. Manmohan Singh presented Union Budget, it has been a tradition to see major policy announcements in the Budget Proposals. 2019 will be no different. We hope, this Budget will be historic and take India to a higher trajectory of growth!
Aditya Narayan Mishra is a Director & CEO with CIEL HR Services Disclaimer: Views expressed are solely that of the author and not of this publication. Sify.com reserves the right to moderate comments.