Great boost for agriculture, but tepid for infrastructure: Hemant Kanoria

This is the first budget in decades which has rightly given an 'implementation' based thrust to agriculture and rural segments. I think the specifics covered are practical and will surely yield results. It is not only about vision, but would actually act as a booster for the economy, covering the largest segment of our country’s population. However, I have not been enthused with the announcements pertaining to infrastructure, not because it has been neglected, but it does not have the specificity for implementation, unlike agriculture.
 
This budget has not only substantially enhanced the outlay for agriculture, it is also replete with many well thought through measures that address almost each and every aspect in the entire agri value chain right from irrigation to credit enhancement to procurement of agri-produce to market access or usage of digital platform to reach out to larger sections of the rural population. Add to that, the outlay allocated for building rural infrastructure. I feel this would provide considerable fillip to demand generation at the rural level and would also open up entrepreneurship opportunities. The rural sector will also largely benefit from the social sector schemes. The move to open up marketing of food products produced and manufactured in India to 100 percent FDI deserves special mention.
   
Focus has also been given to entrepreneurship encouragement, development, financing and support. These have been requests that we have been making to the government since quite some time. It is heartening to see the response and its manifestation in the budget document. We have to develop millions of entrepreneurs in our country to create opportunities for the youth.
 
The infrastructure sector, which is the backbone of the economy, has been addressed, but the announcements will take a long time for implementation. The proposals to introduce a Bill on resolution of disputes, to form new guidelines for renegotiation of PPP concession agreements and to have a new credit rating system for infrastructure projects are steps in the right direction, but an immediate time-frame for implementation should have been articulated. PPP in infrastructure must be put back on track and we have already lost precious time. Low-cost housing is likely to get a boost from the measures announced. Reforms in FDI policy for Asset Reconstruction Companies (ARCs) and enabling a sponsor of an ARC to hold up to 100 percent stake in ARC is a welcome move as this is one area where we need more specialist players.
 
I welcome Finance Minister’s decision to restrict categorisation of budget expenditure as revenue and capital expenditures and move away from Plan and Non-plan expenditures. This will assist in portraying a clearer picture of which of the expenditure items are productive and which are not.
 
However, the issues on 'ease of doing business' and 'tax simplification and streamlining' seem to have escaped the notice of the Finance Minister in the milieu of issues. The corporate sector will not have much to rejoice for. The additional Dividend Distribution Tax (DDT) beyond a certain amount of dividend, trebling of Securities Transaction Tax (STT) for options, the introduction of new cesses in certain categories are some of the steps which are unlikely to go down well.
 
Determination of residency of foreign company on the basis of Place of Effective Management (POEM) stands deferred by one year while General Anti Avoidance Rules (GAAR) is to be made effective from FY18. When we need foreign investment, these steps may not be sending out the right signal to international investors, especially when the issue of Retrospective Taxation has already created quite a controversy. Allowing NBFCs to be eligible for deduction of up to 5 percent of their income in respect of provision for bad and doubtful debts is a positive move, although it is still not at par with banks.
 
I was quite surprised that the defence sector was almost entirely overlooked. When this sector is supposed to be an integral part of the ‘Make in India’ programme, I was expecting certain measures to be announced in this budget aimed at stimulating domestic production of defence equipment.
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Hemant Kanoria is the chairman and managing director of Srei Infrastructure Finance Limited