The run-up to India’s Union Budget 2019 was encouraging, with the release of the Economic Survey, in which there was an unequivocal acknowledgement of the role of private investment as the key driver for demand, capacity, labour productivity, new technology, creative destruction and job creation—all of which are fundamental goals for our economy. The Survey also recognised Public Private Partnerships as quintessential for addressing infrastructure gaps.
The budget itself built on these factors, and there were indisputable indicators that the government is committed to making the country more attractive for all classes of investors. There was recognition of the deficiency in the banking and financial services which has been beleaguered by a liquidity crisis. The government announced concrete action in significantly recapitalising banks and providing a partial credit guarantee for financially sound NBFCs. These will go a long way in bringing back confidence within this sector.
With India’s growth targets being ambitious, it was vital that Infrastructure took pole position. The finance minister announced that there would be investments of Rs 100 lakh crores over the next 5 years across the infrastructure spectrum. The appointment of an expert committee to look into the best models for long-term funding of infrastructure was also an important step, and a clear message to the markets that the government is paying attention to the needs of all stakeholders.
Make in India got a boost with the proposal for mega manufacturing, as did Aviation, with the proposal to increase FDI limits, and envisioning India as a hub for aviation financing and leasing, as alongside MRO. Enhanced FDI in Media, and in Insurance Intermediaries will all be welcome tailwinds.
The FM’s special attention to the IFSC (GIFT city) and announcement of several exemptions and incentives, underscored the priority given to cross-border financing, and creating a friendlier investment climate in the country. Foreign investors looking for signals from the Government as to intent, would be well-satisfied with what they heard.
Two clear themes emerged- (a) Access to finance for all classes of business, including MSMEs and (b) Access to markets for all classes of investors whether domestic or foreign, institutional or retail. The measures announced to give comfort to startups were very specific, and demonstrative of a government that has listened carefully to pain points. There was also a sustained focus on incentivising a digital economy, and on creating a connected India.
The budget was in many ways futuristic—with integrated funding for research, building the framework for commercialisation of space power, and focusing on the skills of the future by acknowledging the relevance of AI, IoT and Big Data, this budget scripted a new language for meeting the aspirations of a New India.
We are past the times when the Budget was the only visible demonstration of a government’s plans and proposals. Today, India competes in an unforgiving and ever-changing global market, and has to match the likes of Singapore, Hong Kong, and even advanced economies in Europe in winning investments, creating jobs, nurturing talent, and delivering on the promise of potential. Our tactical and strategic responses to competition have to be flexible, and within the framework of an ongoing conversation between the government and all stakeholders. This budget was a great start in that process, and I think we are up to the challenge.
Views are personal.
The author is managing director, Apollo Hospitals.
