There is a dire need for a transformational budget as India is witnessing astonishing changes both at local and global levels. There are unanswered questions around slowdown in Industrial Capex, Interest rate stability, Inflation and Polluted Business Climate. It will be very important to see fiscal policy particularly on revenue expenditure discipline. This would require cuts in spending on defence, and a reduction in central government assistance to the states. Such cuts are necessary in an environment of high inflation and robust growth. They would also help create room for other high priority expenditure in areas like health and education.
India today needs almost $ 1 tn in next five year plan towards infrastructure spending. To achieve such ambitious target we need to have financing in place and domestic financing cannot even support half of total infra spending. There is a need to look at more innovative routes like creating special Infrastructure vehicles or reviving IIFCL. Also, budget should get more liberal to FDI route for many sectors and that can fund large part of our infrastructure deficit.
There is immense nervousness in the mind of decision makers and investors in India on the back of scams and backlash of the past. However, rural growth, aspiring middle class and strong and sustained demand are the silver linings. This is good time for the Finance Minister to fill the gap between strong growth and supply challenges by putting a solid execution road map for Infrastructure, GST and Direct tax code. Gujarat, Delhi & Bihar are good examples of sucess.
Times are challenging but opportunities are overwhelming. We need a transformation that fillips our progress & puts economy on a path that is in best interest of the country & society.
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