Budget has a vision to propel India to be the manufacturing hub of the world: Baba Kalyani

By Baba Kalyani

The first full Budget of the Modi government has come at a time when the green shoots of economic revival appear to be taking root. My impression is that the finance minister has delivered a Budget which is strong on vision, reflects clear intent to put the economy on the path of double-digit growth and has a strategy to execute challenging reforms in critical areas.

From a macro-economic perspective, the government has done well to meet the fiscal deficit target of 4.1%. The softening of global crude oil and commodity prices has contributed in a significantly lower current account deficit. Forex reserves at $340 billion are at an all-time high. The government is committed to keep inflation at below 5%. All these have helped the finance minister to spell out a road map for lowering fiscal deficit.

The Budget clearly provides a tremendous impetus to “Make in India”. Increased investment in infrastructure of Rs 70,000 crore and a higher allocation of Rs 2,46,727 crore for defence will clearly provide a boost to domestic manufacturing industry. These investments would help revive the investment cycle and contribute to increasing the share of manufacturing in national GDP from 15% to 25%. As a follow up, we now expect the government to expedite announcement of the new defence procurement policy to facilitate larger private sector participation in defence production. The steps to facilitate “ease of doing business” will further support revival of growth in the domestic manufacturing industry.

Some of the key enablers to achieve manufacturing growth include rollout of GST from April 1 next year, announcement of five 4,000 MW capacity power projects, the initial Rs 1,200 crore allocation for the Delhi Mumbai Industrial Corridor, significantly higher investments in the renewable energy sector, opening of opportunities for medium and small industries, emphasis on the housing sector and corporatisation of ports.

The road map to reduce corporate tax, deferring the applicability of GAAR for 2 years and avoidance of retrospective taxation will considerably increase confidence of domestic and foreign investors.

While the finance minister did speak about the need to push exports, I am slightly disappointed that minimum alternate tax and dividend distribution tax on special economic zones have not been lowered. We hope the new foreign trade policy, to be announced next month, will provide incentives to exporters.

This Budget has a vision to propel India to double-digit growth and make the country a manufacturing hub of the world. It is also an inclusive Budget that seeks to make a difference in the life of every Indian.



Baba Kalyani is Chairman & MD, Bharat Forge Ltd