Microsec has come out with its report on Budget preview. According to the research firm, priorities before the Government in the FY13-14 is even more demanding than what it was last year as almost all the economic indicators have further aggravated and now needs larger attention.
The Government of India is scheduled to present the Union Budget for FY13-14 on February 28th, 2013. Major challenge for the government will be to bring fiscal prudence in place through managing the twin deficits. The FY12-13 GDP growth target of 7.6 per cent, inflation at 6.9 per cent has been widely missed. In a nut shell, the government has to do a balancing act to bring high growth, low inflation, Priorities before the Government balance fiscal prudence and external sector stability. Policy reforms which has got a kick start should further find a place in the budget to raise confidence. Partial implementation of Goods and Services tax and DTC and with a road map with full introduction of the same by next year would be highly expected.
As mentioned in last pre-budget report, the Priorities before the Government in the FY13-14 is even more demanding than what it was last year as almost all the economic indicators have further aggravated and now needs larger attention. Even as sentiment has improved after the reform measures set in place, the government, through the budget should be able to spell out concrete measures which can turn around the economy though infrastructure development, employment generation and make good the external sector stability indicators.
Priorities before the Government:
Tame the twin deficits: Though the fiscal deficit estimates for FY12-13 is expected to be tamed at 5.3 per cent, the quality of fiscal adjustment should not deter government spending on infrastructure. The Current Account Deficit which is at 5.4 per cent of GDP should be brought down gradually to 2.5 per cent through export oriented measures across sectors. India needs to bring down fiscal deficit to targeted levels and FRBM levels in order to bring the country back to high growth trajectory.
GST and DTC: A realistic and resolute schedule should be introduced for the roll out of GST and DTC.
Bring growth back on track: Recent measures of the government are precursor to long term growth, but the same cannot guarantee growth unless the government supports an enabling environment to do business through quick environmental clearances.
Boost capital market measures: The financial savings of households declined from 10.4 per cent of GDP in 10-11 to 8 per cent of GDP in 11-12. An increase in financial savings is a must to support growth at a higher level. The attractiveness of financial savings should be increased. Inflation index bonds can be considered to boost financial savings.
Manufacturing & Pvt Investment and employment: The New Manufacturing Policy announced 2 years back should be implemented which will boost not only manufacturing jobs but services jobs as well. Also, higher productivity, innovative competitiveness would tame inflation.
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