Budget 2018 Reactions: More Investments May Come In, Says Rakesh Bharti Mittal, CII President Designate
In an exclusive interview with BW Businessworld, Rakesh Bharti Mittal, vice-chairperson of Bharti Enterprises and president-designate of Confederation of Indian Industry (CII), shares his views on the Budget introduced on February 1st. Edited excerpts:
There will be a BW Report Card – On a scale of 1 to 10, how do you rate the budget?
I would say it is a realistic budget which the Finance Minister has presented. Given that he has to do a balancing act on revenue expenditure, public expenditure and continue the fiscal deficit. The revised estimate for FY 2018 which is 3.5% (of GDP) is something which is positive given that there was huge public expenditure on infrastructure. Going forward, he has given a target of 3.3% which is doable with the new initiatives on social and agriculture sectors which he has announced. This will ensure we see a higher income for farmers, more employment being generated in the organized sector through fixed-term employment, more employment generation on the farm and near farm because of the FPOs having being given the 100% deduction on tax. So that will ensure that the farmers come together, value add and get a higher income. All in all, I would say it is a good budget for the rural sector which was under stress for a long time. On the National Healthcare scheme, I think it is an outstanding initiative of the Finance Minister and Prime Minister. This will ensure that the poor families will get access to quality hospitalization and medicare facilities. On the education, integrated BED programme which they have announced and we will see the details of that. This is again a good move because we will have productive teachers from day one. In addition to that, on the MSME sector, the tax rate being brought down to 25% for (firms with) revenues of up to Rs. 250 crore. It is a huge welcome step for the MSMEs as it will take a lot of stress away from them. And we may see more investments coming in.
Do you think it is a populist budget?
Being the last budget, this was on expected lines. It is in the right direction. My view is he could have been a bit more populist. He is not looking at the constraint of fiscal deficit and all.
Anything that you were hoping for in this budget?
This budget is on expected lines. If you see the cess has gone up, Capital Gains (tax) has gone up, etc. But the finance minister also had to generate resources. One demand from the corporate sector would be to bring down the Corporate Rates to 25%. Infact, CII’s recommendation is to bring it down to 18% and there should be a roadmap for that. If you see, many developed countries have done that. For example, US has brought it down from 35% to 21%, Singapore at 17%. Other emerging economies are within 20%. Therefore, there is a merit to look at that. With more and more taxpayers coming into the tax net will ensure that the collections mop up will go up and that will support the government to take decisions in bringing the balance 1%, whatever is left, the corporate tax rate to 25%.
Is the rural distress/ agriculture crisis adequately addressed in the Budget?
Well, I would say efforts have been made to ensure a higher income for farmers. All along, we have been talking about improved productivity which leads to a higher income. On the contrary, many of the times we have seen what they have been doing commodities, higher productivity has given them lesser income because the price goes lower. Maybe, they may get what they have on the overall front. But the per kg price goes on and therefore the farmer feels short of shortchanged on that. But with the 1.5 times MSP of the cost (given to the farmer) is a good step and bridging the gap between the MSP and market price will ensure that farmer continues to get what he needs to get. More importantly, the farmers will now take the risk in moving to other high-value crops because everything will come under MSP’s ambit. So that is a positive sign that I see.
Has the current budget adequately addressed the creation of jobs?
On the job creation front, I think Fixed Term Employment, which has been expanded to all sectors, will ensure that we will see employment generation in the organized sector. It will actually move from the unorganized to the organized sector. There are two benefits. Firstly, the industry will ensure that they will train and retrain this force who are on Fixed Term Employment so that they can be productive employees. I think the employees who are coming from unorganized to organized employment will get the right wages, social security schemes, provident fund, ESI, etc., in a transparent manner. They will start getting their due when which they were not getting when they were in the unorganized sector.
