Finance Minister Arun Jaitley's upcoming Union Budget is expected to provide a blueprint for the NDA government's plans to revolutionize governance, catapult the economy to a high-growth trajectory and improve India's credibility as a manufacturing base.
To achieve these ambitious goals, this Budget would need to push through long pending economic reforms, give a thrust to the creation of world-class infrastructure, usher in overdue tax, labour and regulatory reforms, unveil business-friendly policies and boost India's healthcare sector.
The Budget will also need to articulate new and innovative solutions to tackle the current challenges facing India and create an enabling ecosystem that supports the development agenda for the country.
Enabling the 'Make In India' Campaign
Prime Minister Narendra Modi's 'Make in India' campaign to encourage investment and manufacturing in India is widely expected to get a major thrust in Mr. Jaitley's Budget.
The 'Make in India' can be a major economic growth driver provided the government introduces enabling policies. India needs to identify its key differentiators that can give her the competitive advantage over established manufacturing players like China. There is immense potential to create a premium 'Made in India' label that personifies innovation, quality, reliability and strong IP. Brand India should stand for 'Highest Quality at Lowest Cost'.
An enabling policy framework will allow domestic manufacturers to boost product quality and operational efficiencies resulting in improved competitiveness for Indian players in the global markets. Additionally, it will lead to employment generation for millions, enabling self-sufficiency in many areas.
Improving the ease of doing business, reducing transaction costs and expediting approval timelines will go a long way in raising India's attractiveness as a manufacturing hub. Introduction of a 'single window' system for securing all clearances and approvals from the various central and state agencies and replacing the current tiered approval system with self-attestation and time-bound 'deemed approvals' will also help.
If 'Make in India' can be successfully translated from a great slogan to an innovative economic growth mantra it can transform the country into an equitable and inclusive economic superpower.
Incubating a 'Start-up Culture'
The government can also tap into the vast reserves of entrepreneurial energy in India by introducing an enabling policy environment that encourages start-ups and enables the monetization of ideas. Special incentives, tax exemptions and easier access to capital will lead to the movement of 'ideas to market' thus adding momentum to 'Make in India' initiative. Without funding, neither can ideas be turned into reality, nor will their benefits reach those who need them most.
To transform India into a global manufacturing hub, the government will need to improve infrastructure such as port-to-inland connectivity, cargo airports, uninterrupted power, adequate potable water, effective effluent treatment facilities and well-connected roads.
Establishing smart cities and industrial corridors through high-end road and rail connectivity is also a key part of this plan.
Giving Health a Booster Shot
Besides unleashing the manufacturing potential of the country, another prerequisite for a productive nation is a healthy workforce. This budget needs to demonstrate its commitment to the 'Right to Healthcare' by raising public healthcare spending to at least 2.5% of GDP from only about 1% currently.
Moreover, there is a critical need to create a highly effective, sustainable, technology-based universal healthcare system that emphasises individual responsibility for health supported by enabling state policy, moving away from creating a social ecosystem that thrives on entitlements and freebies.
The government also has to adequately support the Indian pharma industry, which has earned the proud label of being the 'Pharmacy of the World' and made our country an indispensable and integral part of global health care. It is imperative that we build and strengthen this sector so that it can assume an even greater role in global healthcare.
This Budget gives the government a good opportunity to spell out measures like low-interest borrowings for the pharma industry's capital expenditure needs, tax incentives for investment in R&D and innovation, a longer tax holiday for pharma & biotech SEZs and exemption of duties and taxes on domestic sales of essential drugs from SEZs, among other things.
In conclusion, I would say that Mr. Jaitley has a difficult task at hand in reviving growth through higher public investment without abandoning the commitment to fiscal discipline. It calls for a bold reforms-oriented Budget that is visionary in scope yet granular in its objectives.
Difficult as it may be, this is a golden opportunity for Mr. Jaitley to demonstrate the economic brilliance of the Narendra Modi-led government.