“The Union Budget 2016 presents an all round holistic development agenda that Prime Minister Narendra Modi’s government has been emphasizing on. There are various initiatives proposed under the Prime Minister’s ambitious national campaigns of Skill India, Startup India, Digital India, Make in India, Stand up India and Swachh Bharat Abhiyan that are expected to transform the country over the longer term.
This budget is clearly focusing on providing relief and benefits to the 70% of India’s population that is living in the rural territories with a focus on uplifting farmers by providing subsidies, skill development for the youth, women empowerment ,education, healthcare facilities, boosting local entrepreneurship and a focus on infrastructure.
To start with INR 35984 crore outlay has been given to the agriculture sector and 89 stalled irrigation projects have been fast tracked. Multiple schemes like 100% village electrification by 2018, 38500 crores for MANREGA is (the highest ever), LPG subsidy for rural women – all these initiatives were much-needed. Given the adverse climatic conditions that have been plaguing the farmers, the budget will be a much needed shot in the arm. If we were to look at this from a long term perspective – developing rural regions will ultimately benefit companies – as this will open up new markets for them. The 300 urban clusters that are planned to be developed will incubate growth centres in rural areas by providing infrastructure amenities and market access for the farmers. They will also expand employment opportunities for the youth. In turbulent global economic scenario, India needs to focus on rural development – which it clearly has.
Strong emphasis has been laid on education and skill building this year. Sarva Shiksha Abhiyan has received an increased allocation, while setting up of a Higher Education Financing Agency will certainly help the government in achieving its skill building program- an initial capital base of 1000 crore has been allocated for this. The overall youth to be trained under the National Skill Development Mission overall will be 76 lakhs. Seeding the entrepreneurial spirit of the country, amendments in Companies Act for improving enabling environment for start-ups have been made. They will enjoy tax holidays for 3 years. A separate provision under this for SC/ST/women entrepreneurs has also been provided under Standup India scheme. Also there is a proposal to increase the target next year to 1,80,000 crore for Pradhan Mantri Mudra Yojana (PMMY) which was launched for the benefit of bottom of the pyramid entrepreneurs to borrow from Banks – NBFC – MFIs. These measures will help create abundant jobs in the country, make India a very attractive destination for investment and give a much- required boost to the Make In India initiative launched by our government. We are going to be the largest consumer market in the world, hence focusing on these areas was a must.
Infrastructure has continued to receive strong backing, with INR 2.21 lakh crores to be spent on infra projects. Building on the transport pathways, roads and railways have received major backing with projected INR 2.18 lakh crores spends. Individually INR 97,000 crores will be spent on roads alone in the year 2016-17. LIC of India will set up a dedicated fund to provide credit enhancement to infrastructure projects. Investment basket of foreign portfolio investors will be expanded to include unlisted debt securities and pass through securities issued by securitisation SPVs. Any distribution made out of income of SPV to the REITs and INVITs having specified shareholding will not be subjected to Dividend Distribution Tax – this will help boost liquidity in Infra sector through new listings. Development, operation and maintenance of an infrastructure facility beginning on or after 1st April, 2017 shall be eligible for investment linked deduction under section 35AD of the Income-tax Act. A new credit rating system for infrastructure projects which gives emphasis to various in-built credit enhancement structures will be developed, instead of relying upon a standard perception of risk which often result in mispriced loans. Providing legal framework for dispute resolution and re-negotiations in PPP projects and public utility contracts is another key highlight for the infrastructure sector. Also to facilitate deepening of corporate bond market, a number of measures will be undertaken that will help benefit fund raising and liquidity for infrastructure sector.
Finally the additional allocation of Rs 9000 crores for the Swachh Bharat program will help take the initiative to the next level of penetration.
In my view overall, this has been a very positive budget for the country and will give the much needed shot in the arm in terms of grass roots transformational development.”