Govt must focus on developing village roads to push rural demand: Assocham

A focused government spending on rural roads to push rural demand, rationalisation of GST rates, higher spend on education and health are some of the expectations of industry body Assocham from the government ahead of the Budget. The apex industry chamber felt the government should not be unduly worried about fiscal deficit while framing the proposals for the upcoming Budget.

The logistics sector is at the forefront of India’s aim to improve exports and domestic consumptions and having an industry body led by a logistics sector executive indicates the extent to which Assocham is focussed on this, said Vineet Agarwal, Managing Director, Transport Corporation of India (TCI), who recently took over as President of Assocham.

“We feel the Government allocation on village roads through Pradhan Mantri Gram Sadak Yojana needs to go up as that will provide a big impetus to rural employment and growth,” Agarwal told BusinessLine. “The impact of higher allocation will also bolster agriculture supply chain like roads, mandis and cold storages. A technology upgradation fund for the agriculture to promote innovation can help…,” he added.

Assocham will like to see some ease of compliance and rationalisation in GST rates. “National companies have to file returns in every State (scope to streamline). Also, GST rationalisation will push consumption related demand. All of us are consuming more, while services use (taxis, restaurants) is going down,” said Agarwal.

Expenditure on health and education needs to increase as these are for the future, said Agarwal adding that government-driven India-stack should be used more and more. “All of this means, we can be generous on fiscal deficit, which can be an investment for future. It will aid the V-shaped recovery,” he added.

Govt capex up

On this fiscal so far, Agarwal said, “First quarter was weak for all, then key areas like essentials grew fast. We are consuming more through e-commerce, in urban areas for sure…Channels of consumption have changed…. As unlocking process started, government capital expenditure has increased, resulting in benefits for those in sectors like roads and equipment makers.”

Capital expenditure in the private sector has not picked up, though the enabling infrastructure exists in the form of low interest rates, productivity-linked incentives, among others. “For the private sector, concerns around how people will behave is still there. There is anxiety around Covid-19, which will hopefully reduce as vaccine roll-out happens in the next six months,” he added.

In fact, earlier, people used to talk about roti (food), kapda (clothes), makaan (shelter) and transport. Now, they talk of broadband, which has become a fundamental thing now.

“The last few months have taught us certain kind of jobs can be done from home (work from home), although senior level jobs that require certain engagement can’t be done from home,” he said. Learning aspects have permanently moved online. Schools can’t go fully online as kids need to develop socially. In massive open online courses (that existed earlier as well), chances of people completing them has become higher, Agarwal told BusinessLine.

Lowering the logistics cost is extremely important, as India looks to become more competitive, and accelerating the National Infrastructure Pipeline investment will help this. Simultaneously, having all digital processes — be it e-invoice, e-way bills, fastags, — on a common visible platform will further help, Agarwal said.