Everyone seems to buoyed by the outcome of elections 2009 in India. India will have a far more stable and energetic government in the form of the Congress-led UPA government.Hopefully, we will see lot more governance than politics in the next five years led by PM Manmohan Singh.One of the main and immediate challenge facing the government is the economic slowdown. Although, India seems to have been faring far better than many countries around the world, it cannot be complacent. The two main reasons for this is- one, India has a vibrant domestic demand fuelled by a huge population and second is that India is just a developing country with industries and exports just on the brink of huge expansions. Also, there is lot of restrictions and caps on foreign investments in India.Therefore, well developed export sectors like IT and trextiles are the main ones which are worst-hit by the recession in the developed world.Even though we had the popular liberalisation budget of 1991 by the then FM Manmohan Singh, we still need to do lot more in terms of reforms especially in sectors like power,insurance and banking.
Many ask why its just an economic slowdown in India, while many western countries are going through a rough recession period ?It is the above mentioned reasons why there is just a slowdown in India. On the contrary, Japan is going through a deep recession even though it is not the cause of it, primarily because it is an export-dependent country.
With the left out of the way, Congress has a golden oppurtunity in setting the record straight in the economic front. The budget on July 6th will signal the direction in which this government will travel. That is why, this budget will be very important for the government as well as the industry leaders.
Here are some of the main decisions that the industry believe should be taken in this budget:
Agriculture and Food: India, even while it talks of globalisation and industrialization, should not forget that 70% of Indian population depend on agriculture. The most important policy is the Food security act, which essentially will guarantee food, three times a day for the poor. Also, more R&D intiatives and investments is the need of the hour in this sector such that new techniques and ways to cultivate fertile land and produce hybrid seeds can be achieved.
Exports sector: This sector is worst affected by the global recession and needs a fillip immediately. Tax breaks and duty cuts for this sector is a mere given. Also, textile sector should be given some stimulus package so as to revive their business and compete with global players. Also, for the IT sector abolition of FBT(Fringe Benefit Tax) and STPI tax exemption extension for another 3 years should be taken up.
Telecom: The first and foremost is the completion of 3G auction which will enable fast data transfer and more clear voice signal.Also, a proper broadband policy for India should be commisioned in line with major economies. Broadband and internet should help in e-governance and education at all levels. Atleast 8 Mbps broadband speed should be introduced in wired communication.
Insurance and Finance: Labour reforms, Insurance and banking reforms should be the priority. Banks must be adviced to lend to for many industrial projects, most of all the infrastructure projects.
Roads, railways and infrastructure: This perhaps is the most important sector. Huge potential in improving our infrastructure will produce more jobs and stimulate the demand market and improve our economic growth vastly. The main issue here is the execution of all the projects. We have all the project work and the money. But, we have to execute the projects well which is where we lack. Power generation, roads, ports expansion will hugely transform our economy. Proper execution mechanism and regulatory mechanism should be taken up by the FM in this budget for this sector.
Education: Primary education should be the main focus.Schools with properly attended teachers and students should be ensured. Innovative methods for teaching with the help of internet and computers should be used.More money should be allocated for this sector in mid-day meal schemes and should also ensure continuation of children in classes into secondary education and colleges.
Other important schemes like Bharat Nirman,NREGA(National Rural Employment Guarantee Act) with daily wages incrreased from RS.80 to RS.100 a day should be ensured. It must extend to throughout India. Similar scheme for the rural poor should be researched and executed.
Thus, these are the main and immediate steps that should be taken in this Budget. This will help the Indian economy to move back to our growth story of 2007-08. A GDP growth of 9% should be the goal which is very much achievable in the next 2-3 years.
