Budget 2019-20: Need for Heavy Investment in Infrastructure, Digital Economy and Job Creation in SME Segment
The Union Budget 2019-20 has stressed on the need for heavy investment in infrastructure, digital economy and job creation in small and medium firms to fulfil the aspiration of making India a $5 trillion economy.
Delivering her maiden budget speech in Parliament on Friday, Nirmala Sintharaman, the union minister of finance and corporate affairs, pointed out that the Indian economy has added $1 trillion in the past five years due to the various initiatives and reforms undertaken by the government, and is poised to grow to be a $3 trillion economy in the current year.
Underlining the importance of 'Make in India' for fulfilling this goal, the finance minister has proposed a number of initiatives as part of a framework for kick-starting the virtuous cycle of domestic and foreign investments.
Commenting on the Budget, Bhavik Narsana, Partner, Khaitan & Co, says, "Focus of the budget has rightly been in connectivity and infrastructure. Creation of jobs can be a consequential benefit. Foreign investment (both FDI and FPI) liberalisation is well intended and timely. Government needs to continue improving ease of doing business and provide a predictable business environment."
Predictably, Ms Sitharaman dwelt on the importance of programmes like Pradhan Mantri Gram Sadak Yojana, Industrial Corridors, Dedicated Freight Corridors, Bhartamala, Sagarmala, Jal Marg Vikas and UDAN for enhancing physical connectivity through various modes. She said these initiatives will improve logistics, reduce the cost of transportation and increase the competitiveness of domestically produced goods.
For the civil aviation sector, Ms Sitharaman said that the government would implement essential elements of a regulatory roadmap for making India a hub for aircraft financing and leasing activities. This is critical to the development of a self-reliant aviation industry, creating aspirational jobs in aviation finance, besides leveraging the business opportunities available in India's financial special economic zones (SEZs), International Financial Services Centre (IFSC), she added.
She also said that the government would adopt suitable policy interventions to create a congenial atmosphere for the development of maintenance, repair and overhaul (MRO) industry in the country.
For the railways sector, the Budget has proposed using public-private partnership (PPP) to unleash faster development and completion of tracks, rolling stock manufacturing and delivery of passenger freight services. The finance minister informed that 657km of metro rail network has become operational across the country.
Ms Sitharaman also said that India's first indigenously developed inter-operable transport card based on national common mobility Card (NCMC) standards that was launched in March this year will make travel across various modes convenient for people.
Talking about phase-II of the FAME Scheme that encourages faster adoption of electric vehicles, the minister said that only advanced battery and registered e-vehicles will be incentivised under the scheme with greater emphasis on providing affordable and environment friendly public transportation options for the common man.
For the highways sector, the finance minister has said that the government will carry out a comprehensive restructuring of national highway programme to ensure that the national highway grid of desirable length and capacity is created using financeable model. After completing the phase-1 of Bharatmala, states will be helped to develop state road networks in the second phase.
According to the minister, the movement of cargo volume on Ganga is estimated to increase by nearly four times in the next four years, which will make movement of freight, passenger cheaper and reduce our import bill.
In this regard she mentioned the Jal Marg Vikas Project for enhancing the navigational capacity of Ganga, and said that two multi-modal terminals at Sahibganj and Haldia and a navigational lock and Farrakka would be completed this year.
To take connectivity infrastructure to the next level, the government will make available a blueprint this year for developing gas grids, water grids, i-ways, and regional airports, which is based on the successful, One Nation, One Grid model that has ensured power connectivity to states at affordable rates, Ms Sitharaman added.
The finance minister further announced that the recommendations of the high level empowered committee (HLEC) on retirement of old and inefficient plants, and addressing low utilisation of gas plant capacity due to paucity of natural gas, will also be taken up for implementation now.
Ms Sitharaman also said that government is examining the performance of ujjwal discom assurance yojana (UDAY) to improve it further. "Union government will work with the state governments to remove barriers like cross subsidy surcharges, undesirable duties on open access sales or captive generation for Industrial and other bulk power consumers. Besides these structural reforms, considerable reforms are needed in tariff policy. A package of power sector tariff and structural reforms would soon be announced," she said.
The Budget has a slew of measures for the housing industry and intends to promote rental housing and a model tenancy law will soon be finalised and circulated to the states.
She further said that public infrastructure and affordable housing will be taken up through innovative instruments such as joint development and concession on land parcels held by central public sector enterprises (CPSEs).
For the MSME sector, Rs350 crore has been allocated for FY19-20 under the interest subvention scheme, for 2% interest subvention for all GST registered MSMEs, on fresh or incremental loans.
The finance minister further said that the government will create a payment platform for MSMEs to enable filing of bills and payment. This will help eliminate delays in payment and give a boost to investment in MSMEs.
Ms Sitharaman also extended the pension benefit to about 30 million retail traders and small shopkeepers whose annual turnover is less than Rs1.5 crore under a new scheme Pradhan Mantri Karam Yogi Maandhan Scheme.
Enrolment into the scheme will be kept simple requiring only Aadhaar and a bank account and rest will be on self-declaration, she added.