<b>Naushad Forbes:</b>A prudent Budget

At a time of global uncertainty, India is emerging with a clear strategic direction for its economy, with considerable focus on governance. Fiscal prudence is evident with the goal of a fiscal deficit being pegged at 3.2 per cent of gross domestic product (GDP). 

 We see a significant boost to investment in rural areas, a fillip to MSMEs and continued focus on widening the tax base and creating a more tax-compliant economy.  GST (goods and services tax) implementation is on track through collaboration of the Centre and states. The Confederation of Indian Industry (CII) looks forward to its roll-out, which will be a key milestone in India’s 

economic journey. 

A recent CII-Maersk study highlighted that high indirect costs of trade account for as much as 38-47 per cent of total transportation and logistics costs, severely undermining the country’s export competitiveness of manufactured goods. The significant increase in infrastructure investments by 14 per cent to Rs3.96 lakh crore is extremely welcome and would have a multiplier effect on the economy, including employment, especially through high spending in transport infrastructure pegged at Rs2.4 lakh crore.   For the first time, the Railway Budget has been merged with the General Budget, supporting planning for a multi-modal transport strategy for the country. Railway stations development, creation of a rail safety fund, rail energy efficiency measures, airport modernisation and land monetisation, expansion of airports in tier-2 cities and increase in roads expenditure will fast-track the infrastructure mission.

The total allocation for rural, agriculture & allied sectors for 2017-18, up 24 per cent at record Rs1.87 crore, will promote agriculture, which accounts for 17 per cent of India’s GDP and 50 per cent of the country's workforce.

The reform agenda continues, with the abolition of the Foreign Investment and Promotion Board and agricultural market reforms. The move to cleanse up funding for elections, including the innovative electoral bonds, reiterated the government’s commitment towards transparency and good governance. CII had recommended reducing the cash donation limits and the Budget has curtailed such donations to Rs2,000.  The push for autonomy in higher education is the best way to foster quality. I have always argued that combining autonomy with competition is the best way of delivering quality in education, and much more powerful than our previous attempts to regulate quality into the system. Additionally, strong measures proposed for skill development and building the apprenticeship scheme will go a long way in strengthening the skill base in the country.  

One important announcement was creation of a National Innovation Fund with a corpus of at least Rs10,000 crore for boosting research and development (R&D). At present, research in the higher education sector is 0.04 per cent of GDP, which needs to increase tenfold to the global average of 0.4 per cent. Similarly, private sector investment in R&D, which is currently at 0.3 per cent of GDP, needs to increase fivefold to the global average of 1.5 per cent.  We would have liked to see lower corporate income tax for all companies, given that large companies contribute significantly to investment and employment. And, the additional surcharge on high-income tax payers deviates from the principle of honoring honest tax payers. We also look forward to hearing the detail of the 

agency to achieve the time-bound listing of CPSEs, and how the Arbitration and Conciliation Act of 1996 will be amended to address PPP dispute resolution.  Overall the budget is prudent and pragmatic. It takes several welcome steps forward and is fully consistent with the policy agenda of the government. This year’s excellent Economic Survey gives us direction not just for next year, but a vision for the next phase in the country's development.  We look forward to many more steps to fulfill that vision. 

The writer is president, Confederation of Indian Industry