India on right track, but some tax sops won’t hurt

The Indian government led by Prime Minister Narendra Modi has almost made it a virtue of breaking away from tradition more than two years into its tenure. It has taken policy initiatives that are laying a strong foundation for the economy. By eschewing populism and biting the silver bullet on a number of counts, the government is ensuring the country benefits in the long term. As it presents its second Union Budget on February 1, instead of the last working day of the month, it is taking the pragmatic road for quick results. The legislature will be able to secure approvals for annual spending plans and tax proposals before the beginning of the next financial year on April 1 with this move. This is a big positive. Besides this, the government is cutting links to the socialistic pattern of counting on a five-year plan as a guideline to propose its expenditure, which too is also a good initiative. Five-year plans offered a myopic view, restricting the planning apparatus to a shorter span. By doing away with this, the government can now work with a clearer strategy and vision and plan long term.

But for now, when India’s Finance Minister Arun Jaitley opens the customary red-brown leather case in Parliament this week, he needs to pass on some relief by way of taxes. The country needs a fiscal stimulus in the form of tax cuts both at the personal and corporate front. Despite the fact that the demonetisation drive has largely met with approval and backed by the resident Indians, it has slowed the wheels of the ec onomy. The government needs to give an impetus to businesses. The Goods and Services Tax is a step in the right direction, and the Modi government deserves credit for bringing it this far. From July 1, it would be rolled across the country benefiting businesses across the board. The government should continue its drive for a cashless economy and introduce measures that would nudge the country into a digital society. Divestment of public companies, too, should be looked into to tap into its locked potential and value. Stellar initiatives of the present government such as Make in India, Startup India too should be promoted and encouraged with sops. The government appears to be on the right track with the right economic policies so far.