Budget 2015: Path-breaking initiatives make it short on hype, but long on substance, says Prashant Jain

By Prashant Jain

This is a remarkable Budget — everything about it is focused on the long-term welfare of the country and its citizens. It proposes some path-breaking initiatives to correct deficiencies in the economy and in its functioning.

The Budget aligns very well with the strategic direction that this government has set for India — first earn and then spend, fiscal prudence, sustainable economic growth as the key to employment and prosperity, targeted and effective support to vulnerable sections, improve competitiveness of Indian businesses by sprucing up infrastructure, less onerous land and labour laws, simpler and more effective taxation, fair and transparent regulatory framework, quick decision-making and supportive government policies to encourage local businesses.

It has maintained a good balance between encouraging a muchneeded revival in capex by allocating nearly 25% more to infrastructure, nearly 33% more to railways and yet continued on the path of fiscal consolidation.

Setting up of a national infra fund, reducing risk to private capital in PPP projects, increasing availability of plug-and-play projects, targeting an efficient dispute resolution mechanism and corporatisation of ports are commendable first-time initiatives that should aid revival of the capex cycle in FY16. The thrust on renewables is serious.

The target for 175 GW by 2022 across solar, wind, biomass and small hydro, apart from being very environment-friendly will also revive the capex cycle. The Budget has desisted from aggressive revenue assumptions. It’s a welcome break.

Adjusted for tax rates, the growth assumed in the corporate, excise and customs taxes is 8%, nil and 10%, respectively, which is reasonable and probably conservative, given the nominal GDP growth of 11% in FY16. The estimates for non-tax revenues also appear to be achievable.

Using the terminology of the economic survey, JAM — Jan Dhan Yojana, Aadhaar, Mobile — have the potential to usher in a revolution. The target of achieving direct benefits transfers to over 10 crore households in FY16 is monumental and has the potential to provide effective and targeted support to the poor at a lower fiscal cost. Hopefully, over time, electricity and fertiliser subsidies will move through this route as well.

India has been grappling with black money and high physical savings. Initiatives have been proposed to tackle these — the new bill on black money, Benami Transactions (Prohibition) Bill to enable confiscation of benami property, gold bonds, encouraging cashless transactions, making PAN card mandatory for high-value transactions etc. should lead to higher financial savings and better tax compliance.