On February 28, expect the roads to be clear, as most Indians will be glued to their TVs. While many of us will watch Australia and New Zealand battle it out in Auckland, many others will be trying to assess how the Finance Minister's budget speech will impact our lives. With 'Make in India' and 'Digital India', the government has made some big promises, and this Saturday we hope to hear more about how these will be executed, and how the Indian growth potential will unlock.
There are two broad themes that underscore all long-term economic growth efforts, and I hope both get adequate attention in this budget: access to quality education and encouraging entrepreneurship.
1. Access to quality education: The utmost priority for the nation should be to empower and equip our population - which continues to be our biggest asset - with education and skillsets that help them improve their lives, and add value to the economy. This needs to start at the primary level. It's not enough, however, to encourage private sector participation in primary education. The government needs to carefully monitor these organisations to ensure that the twin goals of high quality and affordable education are met. The Skill India programme is a great way of empowering rural India and increasing its contribution to the GDP. However, broad education sector reforms are needed to improve the quality of the talent we produce for top-line growth across all sectors. We need to invest in creating a nation of 'thinkers' instead of merely 'doers'. There are ample examples of pioneering Indians who are leading organisations of all types - but many of them credit their higher education to other countries. Digital literacy is also important, and so is using digital infrastructure for e-learning. The government must invest heavily in this area, as it allows maximum reach with minimum investment.
2. Encouraging entrepreneurship: A lot needs to be done to help entrepreneurs start new businesses and build them for long-term success. To begin with, creating a better investment climate by making it easier for venture firms and angel investors to fund new companies is important. Today, VC firms are governed by three different regulatory bodies - the Securities and Exchange Board of India (SEBI), the Department of Economic Affairs, and the Central Board of Direct Taxes (CBDT). While the checks and balances are clearly needed, the streamlining of the process is equally important. In the interim budget last July, the government announced an INR 10,000 crore budget allocation to encourage start-up growth. Specific information on how these funds will be used is eagerly awaited. Also, currently more than 10 different ministries run their own start up programmes - integrating these to create a single-window process for entrepreneurs will not only benefit start-ups, but also ensure effective utilisation of the allocated funds. Finally, there is issue of the minimum alternate tax (MAT) rate, which is currently at 18.5% and is applied to start-ups that are not making profits. This can end up creating severe cash-flow issues for some companies, and in turn stifle growth.
By Uday Challu