The Budget was presented against the backdrop of a slowing economy facing several macro-economic challenges including high inflation, slowing private investments and high fiscal deficit. Given these challenges, Arun Jaitley’s Budget provides an impeccable balance of expectations and realities. The Finance Minister has set a delightfully positive tone by advocating fiscal prudence, shunning populism and pitching for bold reforms.

By promising not to change any of the tax provisions retrospectively, which would create a fresh liability and commitment to providing a stable and predictable taxation regime, the Finance Minister has put forward a credible roadmap for sustained investment.

Measures related to advance ruling for resident taxpayers, the setting up of a high level committee for clarity on tax issues, a review of the Direct Taxes Code, and addressing the issue of transfer pricing are welcome. They will lay the ground for a conducive investment climate.

On the jobs front

India requires nearly one million jobs each month for the next 10 years. There has been a strong thrust on job creation in the Budget. Significant spending on infrastructure will kick-start jobs. The infrastructure sector can potentially help create 45-50 per cent of the one million job requirement in the non-farm sector every month for next 10 years. The proposed setting up of new airports, ports, and industrial corridors will also facilitate large-scale job creation.

Housing and construction is another area that can boost growth and employment in country. The Budget has given a major boost to this sector through a relaxation in foreign direct investment (FDI) provisions for the development of ‘smart cities’, greater allocation of funds for low cost affordable housing, and a ₹50,000 hike in tax deduction limits for interest on housing loans. In addition, the Finance Minister has offered ₹8,000 crore for the National Housing Bank (NHB) to extend support to rural housing in the country.

Tourism is another area that has found a strong focus in this Budget. It is a sector with huge employment potential. The e-visa facility proposed to be introduced at nine airports in the next six months will facilitate visas-on-arrival and provide a strong boost to the tourism sector. In addition, services provided by Indian tour operators to foreign tourists have been taken out of the tax net. These should provide a strong boost to the tourism sector. The creation of tourist circuits in five cities, preservation of archaeological sites, development of world class convention facilities and launching international sports events would not only help in creating jobs on a large scale, but also ensure balanced regional development across the country.

Right medicine

A strong thrust has also been given to the MSME sector which is a key contributor to employment generation. With the view to giving a boost to capital formation, the Government has lowered the eligibility limit for investments from ₹100 crore to ₹25 crore to get the benefit of investment allowance.

Combined with measures to give a boost to employment generating sectors, the introduction of a national multi-skill programme called Skill India for skilling youth aims at creating an employable workforce. The economic stimulus presented in the Budget is the right medicine for reviving the growth of the economy and meeting the challenging requirement of creating millions of jobs for youth entering the workforce each year.

The writer is the president of the Federation of Indian Chambers of Commerce and Industry

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