Budget to stimulate rural economy, healthcare sector: Biswal

The budget presented by Finance Minister Arun Jaitley last week would help in stimulating the rural economy, healthcare and infrastructure sectors, a top US industry official said, but at the same time voiced concern over some of the protectionist tendencies coming out of it.
"I understand the desire to 'Make in India'. Creating a more protectionist climate and instituting unilateral tariffs is going to ultimately harm the Indian consumer and their ability to have the highest quality at the most affordable price," Nisha Desai Biswal, the president of US-India Business Council (USIBC), told PTI.
Biswal was referring to the budget proposals to increase import duties on certain smart phones and televisions.

Such a move, she said, would "impact" investor sentiment.
"We would like to see very careful and deliberative process for how you think about and look at tariffs in both countries (in the US and India)," she said.
The US Chambers of Commerce, of which USIBC is a part of, has also expressed some concerns about tariffs in the US. Price control is another area of concern for the US industry.

"India wants to stimulate an innovation economy. It wants to create investment and bring latest cutting-edge technology. But blunt policies like price controls are going to depress investor sentiment and we're already starting to see that happen," she said.

"For example, if you look at the life sciences industry in 2016 from January to September there was some USD 416 million in foreign investment in the life sciences sector. In the same time period in 2017 there was a 59 per cent reduction in investment. It was USD 173 million," she said.
"That's very directly attributed to the chilling effect that a price control policy would have," Biswal said.
Giving the first assessment of the US industry on the latest annual budget, she said this being the last full budget submission before the next years general election, USBC expected that it would prioritize more of the domestic issues and domestic constituencies.

But the budget has identified areas of investments that help to really stimulate rural economy and stimulate spending on health care, she noted.
"We have long been saying that India should up its expenditures on health. USIBCs position had been that India should try to get 2.5 per cent of GDP; the budget does contain an 11 per cent increase in health expenditures which I think is a very positive and welcome investment," she said.
"I think that's a very important and welcome area of focus in the budget," she said, adding that there is greater focus on infrastructure spending, including on transportation logistics and on smart cities.

"These are all very critical for India, for India's economy to be able to continue to move forward on its growth trajectory," she said.
Also, the focus on education and schooling is appropriate and important as the prime minister has identified skilling as one of his top priorities in order to create the workforce of the 21st century, she noted.
This budget, she said, doesn't have a huge amount of focus on foreign investors. As such, it's not a budget that has a lot of incentives or policies that are geared around attracting foreign investment.
"There are some areas within the budget and within some of the statements around the budget roll out that actually cause some concerns amongst the investor community and some of the companies that are very bullish and keen to grow in the Indian market," Biswal said.

On the other hand, this is a government that has actually been very ambitious in wanting to attract foreign investment and has sought to deal with some of the regulatory and procedural hurdles to attract more investment, she added.
"I think that they have had some significant reforms including GST that have been important signals for investors. So, I think while this budget may not have a huge focus and huge incentives for investors, the overall track record has been a net positive one," she said.
Biswal said the government has increasingly been rolling out policies throughout the year; has been putting in place initiatives throughout the year and they don't wait to package everything into budget statement.

"So, the role of the budget in being that as significant as it used to be is I think also diminishing somewhat as more," she noted.