Budget 2015 an audacious bid to kickstart growth: KM Birla

By KM Birla

Budget 2015 is innovative, growth-focused and inclusive. It cuts red tape and severely punishes corruption. The slew of initiatives taken will position India a few notches higher on the ease of doing business, rendering it a much more attractive global destination for industry .

It takes advantage of the sweet spot India's economy is placed in, on account of low crude oil and commodity prices, benign inflation and a strong external position.The budget does much to kickstart growth while maintaining fiscal balance.However, the fiscal deficit target of 3% of GDP has been deferred by a year.

The major peg for growth is higher public investment, comprising spending on roads, railways and capital outlays by PSUs. Overall, infrastructure spending in 2015-16 will be Rs 70,000 crore higher than in 2014-15. Other significant initiatives include the National Investment and Infrastructure Fund, tax-free bonds for rail, road and irrigation sectors, a resetting of the public-private partnership model, and corporatization of ports.The infrastructure push will help revive capital spending by the private sector also.

T here are measures aimed at reviving the industrial and service sectors, including initiatives to encourage innovation and startups and streamline the process of regulatory approvals. Particularly striking is the proposal to set up five ultra mega power projects of 4,000MW each in the plug-and-play mode, to be awarded through transparent auction. Hopefully, this will be extended to infrastructure projects in other sectors.

Other pluses include the objective to cut corporate tax rate from 30% to 25% over the next four years, and the move to abolish wealth tax. The deferment of GAAR by two years, lowering of taxes on royalty payments for technical services, and correction of customs duty anomalies will stoke business sentiment.

There are proposals to bring about a unified national market for agricultural products and promote refinance facilities for micro enterprises. Some measures will make it easier to do business, among them streamlining of processes to resolve procurement contract disputes and commercial disputes, and setting a two-day time frame for excise and service tax registration.

The financial sector stands to gain with measures like setting up of an agency for public debt management, expansion of the role of the postal sector in banking activities, discouraging cash-based transactions and unlocking and monetizing private holdings of gold through issuance of gold bonds with a fixed rate of interest.These will augment the stock of private financial savings.

On the environment front, the budget has set an ambitious target for renewable energy power generation. Common effluent treatment plants have been exempted from service tax.

As for skill development and social needs, loans for higher education will be increased and primary schools upgraded. More institutions of excellence in areas such as engineering, medicine and management will be set up. The push to sow the seeds of a universal social security framework, through low-cost insurance policies, is welcome. All in all, it is a great budget. An audacious one that beats expectations.

(The writer is Chairman, Aditya Birla Group)