The Finance Minister has laid out a clear path for the next five years with a special focus on infrastructure, manufacturing, financial services and the social sector. Most of the budget proposals ensure continuity of the government’s policy agenda for a holistic development. As recommended by the CEA in the Economic survey 2018-19, the government has prioritised investment as a growth engine, with capex witnessing an increase of 7% year-on-year, at the same time doing a commendable balancing act of containing the fiscal deficit at 3.3% in FY20.
It is encouraging to see that the Government will launch a scheme to attract mega investment in sunrise and advanced technology areas which would give a fillip to manufacturing sector growth in the long run.
In the budget speech, the FM has laid out an investment of ₹50 lakh crore (between 2018-2030) towards building railway infrastructure. The fact that the government proposes to use PPP to unleash faster development and completion of tracks, rolling stock manufacturing, and delivery of passenger freight services will be a big boost to the Indian manufacturing industry.
The government has announced its intention to invest ₹100 lakh crore in infrastructure over the next 5 years. This is a significant initiative and will continue to boost the Indian economy.
The government has rightfully recognised the need to promote research in the country, which would form the bedrock of future growth of the Indian economy. In this direction, it is a welcome measure to note the proposal to establish a National Research Foundation (NRF). Besides this, in the current financial year, the government has provided ₹400 crore to upgrade the quality of education. It is a good start but would need more fund allocations.
The government has proposed to streamline multiple labour laws into four labour codes. Industry will keenly look forward to this reform.
Well managed NBFCs will get a reprieve with the budget announcement of getting funding from banks and mutual funds without being unduly risk averse. It is welcome to note that the government will provide a one-time, 6-month partial credit guarantee to PSBs for the first loss up to 10% amounting to ₹1 lakh crore.
Overall, the budget strikes the right notes and takes cue from the strategy laid out in the economic survey of an investment driven ‘virtuous cycle’.
(M.M. Murugappan, Executive Chairman, Murugappa Group)