A Balanced Budget Focusing on Reviving Infrastructure and Rural Economy

By Sumit Sawhney, Country CEO and MD, Renault India Operations

The Government has succeeded in ensuring that the Indian economy is buoyant despite the prevailing uncertain environment and global headwinds. Control over fiscal and revenue deficit are encouraging and the clear focus on rural development, thrust on infrastructure and poverty alleviation while keeping fiscal prudence is in the right direction. The agricultural credit at 10L crore is one of the biggest wins which will provide the necessary impetus to the rural economy. As the Indian economy moves from good to great, there was an expectation for a more aggressive budget to enable this transformation.
The 10 fold increase of skill centers will increase availability of skilled work force across industry segments. However, for job creation, there was expectation of pro-business policy for the manufacturing sector including the automobile industry which is one of the key pillars of the economy.
Having said that, there are some linkages that the automobile industry can benefit from, led by the focus on infrastructure development including that on rural road development which will lead to faster and more effective mobility solutions. Also, synergistic investments in rail, road and river will ease supply chain operations and will benefit logistic heavy segments like the automotive industry and hopefully bring down logistics costs. The boost to National Highways, coastal connectivity, and ports is another step to bolster last mile connectivity for manufacturing sector and will also aid exports. Another positive is the abolition of FIPB, which is a great step in the direction of ease of doing business and making India investor friendly, hopefully attracting more FDIs.
One of the focal decisions that the automotive sector was looking forward to from this budget was the GST roll-out, and how different vehicle categories will be taxed. Another area which deserved attention was the vehicle scrappage policy. A clear roadmap on these policies would have given a boost to the industry. Although the budget didn’t have much for the automobile sector, we are hopeful for some pro-business policies on a continual basis to benefit the industry.
With the agenda of ‘Transform’, Energize and Clean India’, the Union budget has paved the way to create sustainable growth and generate employment. The overarching focus has been on reviving the market sentiment and reviving economic growth in a non-inflationary manner, while attempting incremental fiscal consolidation.