Will India become the factory for the world?

The first full-year Budget of Modi 2.0, that comes on the back of some strong bold moves on the domestic front and serious global economic threats at our doorstep, was expected to be packed with some powerful moves, promoting investments, consumption and job creation.

Making India the factory for the world can address a lot of our current economic and social concerns. ‘Make in India’ has certainly not made as much progress as expected in comparison with other schemes as “Swachh Bharat” or “Beti Padao” and the manufacturing sector was expecting some strong hand-holding from the Finance Minister.

Focus on manufacturing of electronics, medical devices and textile is in the right direction, and we hope to see details soon and the speed with which it is steered. Proposals on export hubs and the schemes on industrial corridors on highways are expected to support the exporters.

Reduction of corporate taxes announced earlier for new manufacturing companies along with various labour law reform proposals were good encouragements to bring in global companies to look at India as their global supply base. Addition of power sector is a welcome move, but we have not seen any credible move to lift the power sector from the crisis.

The new announcement of measures to bring co-operatives at par with corporates on taxation is a good move. Co-operatives can create a large number of jobs.

MSMEs form an important element of the manufacturing supply chain and the Budget addresses their concerns well. An incentive to sovereign investment funds is a good start and we hope to see the scope grow further to the manufacturing sector.

Inclusive growth

The Finance Minister’s three themes of Aspirational India, Economic Development and Caring Society reflects the government’s intent to promote inclusive growth. The Budget, aligned with this guiding thought, has taken many steps to boost the social sector spend.

The new education policy and allowing FDI in education, opening up online higher education, various schemes on connectivity, a centralised national recruitment scheme and new-age technologies are welcome announcements for the youth chasing their dreams.

The Finance minister has to be complemented for the abolition of dividend distribution tax and decriminalisation of corporate laws. These are required to attract foreign investment in India.

Reduction of personal income tax in the new regime is expected to put money in the hands of the consumer to enhance demand. But it remains to be seen if this is good enough to propel demand growth.

The agrarian stress and the inability to generate jobs in the farms are a major threat. This Budget has addressed these concerns with a list of actions covering areas including supply chain, credit availability, soil nutrient management, use of solar power, focus on dairy and fishery, etc.

The Budget has positive elements like the part divestment of LIC, government securities for NRIs and ETFs for retail investors.

The Budget did not have much for the automobile sector, which has been deeply hurt by slowing demand.

This Budget was at the time when almost every sector was screaming for help and support. There were also big fiscal constraints. As a balance, the finance minister has delivered a well-balanced outcome to boost growth. Further reforms are to be quickly implemented to make India the factory for the world.

The writer is Chairman, Hinduja Group of Companies (India)