Budget 2013 Highlights: Chidu's formula for growth

P Chidambaram’s 5 point formula to revive growth:

The key to restart growth is to restart the investment engine; will remove any apprehension in the minds of investors

Need new and innovative funds to mobilise investment

Need to improve communication of policies to remove distrust and fear among investors

Propose to seek help of ADB and WB to invest in roads in NE states and connect them to Myanmar

The road construction sector faces challenges not envisaged earlier including financial stress; Regulatory Authority to be set up

Earlier we had said - Budgets can signal and impact sentiment, but they cannot really push up growth. If the Economic Survey talked about 6.1-6.7 percent GDP growth in 2013-14 even before the budget, the forecast is probably based on hunch or expectations of big election-eve spending which will anyway push up growth.

But if the Finance Minister is to give the economy a real leg up, he has to make announcements about not just his budget finances, but how the system will change to provide the right environment for investment and growth.

More important, as the Economic Survey pointed out yesterday, the economy has three choices: business as usual, where growth will level off at 6-7 percent as the new normal; towards decline (which is the case now); or serious reforms, in which case growth can be pushed up to 8-9 percent.