Budget 2016: Restrict financial aid to bleeding PSUs; do not offer luxury of bailouts

By Mohammed Abdul Aziz Ansari

The budget perhaps is one of the key reflections of the government policies, governance and performance. The fact that a mere 25 basis point variation in tax rates can impact the decisions and choices of traders, business men and common man, increases our expectation from the budget.

Budget 2016: Restrict financial aid to bleeding PSUs; do not offer luxury of bailouts

Finance Minister Arun Jaitley

When any country formulates its budget for a fiscal year it takes into consideration the various macroeconomic changes across the globe.  If we look at China at this juncture, we observe the economy reaching a plateau and growing at just a little under 7 percent. This slow growth is translating into a lower demand for commodities, in particular aluminum, copper and the like. The prices of commodities are heading south and oil is trading at less than $30 a barrel. What this implies for India at this point is that we can source commodities at a significantly lower price.

With this as a foundation, I believe the budget for fiscal 2016-17 should allocate a sizeable amount of its revenues to develop infrastructure using these commodities. By doing so, infrastructure in the country will improve. However, what is even more important is that a developed infrastructure will act as a catalyst in promoting the Make in India proposal which India has for the rest of the world.

An improved infrastructure alone cannot be sufficient for the Indian economy. What is equally important is to build a talent reservoir in the Indian academic sphere to plough that infrastructure and contribute to the GDP.

During a recent discussion with an economist at the Indian School of Business, we debated how important it is to foster an academic environment that can bridge the gap between research and academia to develop a reservoir of talent. I think the budget should foster a research-based education system in the country.

At the backbone of infrastructure and academics lies public sector enterprise which contributes to the non-tax sources of public revenue. I believe the government should now channelize its efforts to restrict financial aid to bleeding public sector enterprises. The pressure on the public sector should be to perform in an efficient market. They should not have the uncapped luxury of government bailouts.

As far as the common man is concerned, I believe TDS should be reduced. It takes about 6-7 months’ time after filing of IT returns to get a refund of the excess tax deducted. This is also a recommendation of the Easwar Committee.

Having a good budget at the center is one thing and auditing the performance of the budget in terms of return on investment and economic value add is another. I truly believe that the government at the center should evaluate the performance of its various programs over the last fiscal year and take a financial decision on continuing or discontinuing the programs to make the budget effective and efficient.

(The writer is an MBA – Class of 2016 Indian School of Business, Hyderabad. Views are personal.)





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Updated Date: Feb 27, 2016 12:50:59 IST

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