India’s latest budget promised to bring a quantum leap to the country’s economic growth; our local expert, and President of the Bombay Chartered Accountants' Society, gives his view.
The world is predicting India will overtake slowing China to become the world’s engine of growth in the next decade. But India is not without its issues, and the hope of transforming the country lies on the shoulders of Prime Minister Narendra Modi’s government elected with a landslide victory nine months ago.
Last Saturday, India’s Finance Minister Arun Jaitley presented his first full year budget with progressive growth-oriented and investment-friendly measures that look set to jumpstart the economy. It has been seen by many as the most important budget since the one that eventually liberalised the Indian economy in 1991.
The new budget could not have come at a better time. The falling oil price has provided India a rosy economic setting and it is expected to help in scoring its first current account surplus in 10 years. In the eye of Reserve Bank of India governor Raghuram Rajan, the oil plunge can be considered a US$50bn stimulus for the economy.
With that, the latest budget sees the government engage in a balancing act between managing the nation’s fiscal deficits (delay of deficit target), spurring growth (increased infrastructure spending), reforming taxation (implementation of nationwide goods and services tax), diversifying the economy (Made in India initiatives), and revamping social welfare (new social security programs).
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