Budget 2015 not good enough for Make in India

"This is the way the world ends

Not with a bang but a whimper."

- TS Eliot, "The Hollow Men", 1925.

There is a profound shadow between the intention and act of presenting the Budget 2015. This reflects so well in the Budget crafted by the finance minister Arun Jaitley. There were huge expectations from him regarding the first full-year Budget. With nine months to prepare and deliver, he somehow missed out on fresh thinking, imagination and boldness in delivering policies and programmes that could have given a much needed boost to growth and development for the people of this country. The question on everyone's mind today is: "Did, the Indian Budget, as drafted by finance minister Arun Jaitley, deliver on what it had promised?"

With inflation and the current-account deficit having fallen substantially from a year or two ago, and a thumbs up from the international investors' interest ever since Modi took over as the prime minister of the country. The finance minister could have made some radical moves in the first full-year Budget for the 2015-16.

There was a euphoria surrounding the Budget. But, unfortunately, what the Budget lacked was the big push for entrepreneurship that could turn the prime minister's "Make in India" initiative into a reality.

There were hopes for a strong impetus towards domestic demand creation that could lead to growth of India's manufacturing sector. But, the increase in service tax and excise duty will be a hindrance to consumption. Along with this, leaving the income tax slabs and rates unchanged is going to leave lesser money in the hands of the common man to spend on domestically produced goods and services. More tax exemptions would have led to marginally increasing disposable incomes of the urban poor/urban middle class which would have given a boost to consumer spending to some extent.

The overall fast moving consumer goods (FMCG) market is expected to increase at a compound annual growth rate (CAGR) of 14.7 per cent. There is a lot of scope for growth in the FMCG sector from rural markets with consumption expected to grow in these areas as penetration of brands increases. But, unfortunately the Budget does not have much to offer the retail, e-commerce or the consumer goods sectors. Apart from announcing a fund for a job scheme and encouraging cashless transactions, the Budget has largely ignored these sectors. There are no customs duty incentives for most consumer durables and FMCG, there is no focus towards retail as an industry and no tax benefits for e-commerce players. No concrete steps have been to increase consumption among consumers. There is no clarity on goods and service tax (GST) implementation, apart from the date of implementation, which is April 2016.

Hiking the service tax to 14 per cent is a dampener for e-commerce sector, which contributes a chunk of the share towards the GDP. Also, increase in excise to 12.5 per cent would impact prices of goods sold.

The DTH industry is disheartened because of the fact that they are the only industry that pays service tax to the Centre and entertainment tax to the state. If entertainment tax had been abolished, it would have made it easy to have many channels in lower packages and higher packages would have cost less. The DTH industry was hoping that at least one of the two taxes that the industry pays to the Centre and the state would be absorbed, which did not happen.

This Budget did not outline any plans on slashing of expensive subsidies and rapid privatisations of state-run banks and industrial companies that would have given a much needed shot in the arm to the economy. The finance minister's details on plans to end electricity shortages and simplify national and state sales taxes were also lacking.

Jaitley's focus remained on fiscal discipline, which would help keep the inflation in check and companies' borrowing costs. Yet, he reiterated that the government will loosen its belt slightly this fiscal year, which begins April 1, aiming for a deficit of three point nine per cent of gross domestic product instead of the three point six per cent proposed last year. The present fiscal year's shortfall will come in at the earlier target of four point one per cent of GDP.

In the current scenario, people are sceptical about the government's ability to tackle some of India's chronic problems, starting with a long history of government overspending. The general sentiment doing the rounds is that the finance minister could have taken a quantum leap in promoting start-ups and start-up investors. After all the hype of a big bang Budget, there was nothing spectacular about it at all.