Will Budget Bring So Called “ Achche Din”?

Salim Desai
Sunday, February 22, 2015

Few days back there was interview of veteran financial expert & banker Mr. Deepak Parekh. In which he notably mentioned that Modi govt. had lucky nine months but on the ground there are no changes & so impatience is creeping in business world.

Yes, any previous Govt. would envy such a dream run Modi Govt. had in first nine months as commodities prices tumbled around 50%. India is the one of the biggest beneficiary as it has saved billions of Dollors valuable foreign exchange due to oil price collapse. And in near term, there is less probability that it will be on previous peak.

So Govt. has all favorable conditions but there was no corresponding increase in revenues by businesses has compelled Mr. Parekh to comment like this. He further said that corporates are optimistic about Modi, so now onus is on the Govt. to give big push for development agenda for the country.

After nine months of dream run, Budget 2015 will be the first full-fledged budget of Modi Govt. So apart from Business Community, common man is also waiting for “ Achche Din” impatiently.
What would bring Achche Din to common Indian? Some of the decisions which are related to basic necessities of common man can be taken in budget which will make him happy as well as drive the growth engine.(Few to list)

1. Reduction in Taxes: Govt. can reduce the income tax rate which will leave more disposable income in the hands of individual improving his purchasing power & consumption cycle will get push. It will have more positive effects if current income tax exemption is raised to Rs.350000/-

2. Housing Loan Incentives: Everyone has dream of own house which can be fulfilled mostly by loan in middle class people, which is fastest growing class in India. Real Estate is key sector in growth engine. So Govt. should not wait for RBI to reduce the rate of interest. Instead it should give more deduction for interest payment from Rs. 200,000/- to Rs. 300,000 to Rs.400,000/-. This will act as rebate to borrowers even if they take loan on current rates. Also, there should be separate provision for repayment of principal amount of loan in Sec 80C.

3. Medical Insurance: Nowadays, medical treatment is exorbitantly costly so there is growing demand for health insurance. Currently there is aggregate deduction of Rs. 15,000/- for premium & health checkup which can be raised up to 45,000/- to 50,000/-. Also Govt. has to improve public healthcare facilities so that poor people can benefit from it.

4. Educational Facilities: Human capital is core of India’s growth story. This capital has to be nurtured & flourished in planned manner. Govt. has to ensure that every deserving student is getting education at reasonable cost. One way is to make student loan cheaper & another way is spend more on educational facilities. Special care should be taken of weaker section on merit basis.

5. Agriculture: This is very painful that even after almost seven decades of independence, farmers are committing suicides as they are unable to survive in farming. This is a very serious matter & has to be on top agenda of the Govt. Also growing population with limited land need push for 2nd green revolution to increase food production with increased productivity. Govt. should encourage new technology & methods of farming, make available easy credits & better irrigation facilities reducing excessive dependence on monsoon.

6. Generation of more employment: More & more private investments will generate more employment which another serious problem India is facing. But Pvt. Sector is also waiting for

RBI policy for interest reduction. Let them wait & meanwhile Govt. should act as catalyst to push economy in growth trajectory by putting big ticket infra projects on fast track through budget like:
- Smart cities
- Industrial Corridors
- Connecting rivers
- Improving transport network

Overall reforms: As Development is top on agenda, it needs huge investments for which private investments are required; be it local or foreign. And here Mr. Parekh is critical again that there is still no ease to do business. Investors have been tangled with various tedious rules & regulations delaying projects, affecting profitability & increasing corruption. Govt. has to relax & devise investment friendly regulations. Second round of reforms are expected.

I am sure Govt. is working overtime to make this budget a dream budget. But this dream should not be only for business community & for common man it remains ”distant dream”. Ideal budget is pro development but not anti poor. If it focuses on development of all sections of Indian community & not boon for privilege class then India can develop leap & bounds & “ Achche din” will be around the corner.

Salim Desai is Chief Financial Officer (CFO) with Al Razzi Holding Co KSC. He holds MBA, CMA, CIPA and also passed CPA. He is an expertise in Finance analysis and Investments and passionate educationist.
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