My budget wish list

Although the budget by definition is supposed to be just a statement of the income and expenditure of the government, in India specifically it carries a greater weight age mainly due to the fact that it actually ends up being a policy statement of the government for all segments of the economy and is also an indicator of the direction of government policy. In that context and also due to the fact that the economy is going through a slowdown (mainly due to global factors) and there is a new and more powerful government in place today the current budget is being viewed with a great sense of expectation and hope. Most people want the government to spell out its stance on various issues like disinvestment, FDI policy, fiscal sops to revive the economy or the reversal of the sops, taxation changes, reforms in various sectors, the direction of fiscal deficit etc etc.

However given the context of the world in which we live today I believe that we need to have expectations that are on the ground and which focus on certain long term issues.

Although it is fashionable to have fancy expectations out of the union budget, I believe that it’s important to have practical ones.
As such the key statements of intent with timelines should be –
The direction of the disinvestment programme with clear indications of the mode and targets for the same. There should also be clarity on the usage of these funds for infrastructure build up. Disinvestment funds, as in the past should not be blown away in revenue expenditure. It should be used to either build infrastructure or provide subsidy for infrastructure buildup.
A greater emphasis on urban renewal programmes with incentives for carrying out stamp duty reforms for the states. I believe there is today a clear-cut requirement to move towards a low stamp duty regime that is stable across states. Urban centers in India have been ignored over years (not that rural have got attention) and the infrastructure across most key cities is pathetic. There is clear a need to set up statutory body which monitors urban renewal programmes.

Railways has been a totally ignored sector in India. Track upgradations,passenger amenities, quality of railway stations etc. have never got any importance. The buoyancy of the last few years was mainly due to economic growth and the railways did not use the increase in revenues and cash flows to either improve passenger facilities nor any infrastructure. China is spending huge amounts on its railways to improve logistics and connectivity. It is extremely important for this backbone of the economy to get proper attention. Huge investments in railway infrastructure will also be a big fiscal boost to the economy.
A clearer fixed date for CST phase-out and the introduction of GST as it will improve productivity significantly. It will help companies reduce logistic costs greatly. However we need clear deadlines here.
There should be a strong subsidy and incentive regime for investment into clean energy. There should be clear guidelines set up for mandatory targets on clean energy as a percentage of total consumption. Fuel ethanol, wind, solar all should be part of this. Government emphasis on this segment has not been focused at all.
Improvement of farm productivity and the supply chain is very important both for food security as well as improving rural incomes. A direct subsidy regime should be introduced for purchase of products that aid this cause as well as for storage and transportation infrastructure.
Aircraft turbine fuel should be made a declared product to improve the extremely fragile state of the airline industry.
Fuel ethanol should be made a declared good and interstate transportation should be allowed unhindered. There should be an additional subsidy regime for fuel ethanol made out of inputs other than sugarcane. This has the potential of boosting rural incomes in a stable manner.
Open access for electricity should be made mandatory.
In order to make available long term and cheap funds for infrastructure forex borrowings for the same through scheduled commercial banks or organizations like IIFCL or IDFC should be taken up on a large scale with the forex risk taken up by the government. There can be a limit of USD 10 billion per year for this. Cost of capital reduction for long term infrastructure projects is extremely important in my view and there could be a Textile Upgradation Fund like fund for infrastructure.
Irritant taxes like FBT should be scrapped and short term capital gain tax again made 10 percent.
Overall continuity in tax regime should be spelt out with a clear direction on the time frame for roll back of the indirect tax cuts. The roll backs should not take the industry and consumers by surprise.

Given the fear caused by the delayed monsoon and water problems being faced all over the country it is necessary to have a long term programme on rain water harvesting. For all new building permits all over the country rain water harvesting should be made compulsory or it can be a penalty system for those who do not want to undertake the investment.

Given the fact that crude oil prices are likely to remain range bound over the next few years this is also the right opportunity for fuel price deregulation. However this can be done outside the budget also.

Given the huge jump expected in the gas production of the country over the next few years, projects that transport and use gas should get a greater focus. Incentives for usage of gas as a clean energy source should be given a thought.

I think these are enough thoughts for the budget. There are lots of other things which the government can do for a strong and sustainable growth of the economy but that are for a discussion at a later date.