KSOM Organizes Pre-Budget Discussion over Virtual Platform
Like every Indian, who would be hooked to the television tomorrow for the Budget 2021, MBA students of KSOM too had their share of discussion and expectations with the objective of improving the GDP growth with respect to all the five major sectors of the Indian economy aligning that with the 17 SDGs. On 31st January 2021, they participated in a Pre-Budget Discussion with respect to the provision, progress and expectations from Budget 2021, under the guidance of Prof. Shikta Singh. There were around five panels representing- Agriculture & Rural sector, Finance sector, Industry, Healthcare & Education and Infrastructure.
In her welcome address, Prof. Shikta Singh mentioned Covid-19, a black swan event that has stifled the global economy. Governments across the globe as well as in India initiated fiscal and monetary stimulus programs to combat the damaging economic effects caused by the pandemic. The theme of the discussion was ‘Connecting the Dots – Budget 2021’.
Setting the context, Prof. S. N. Misra, Dean, KSOM explained the trade-offs amongst fiscal deficit, inflation and GDP. Prof. Saroj Mahapatra, Director, KSOM congratulated the students for their active participation. The five student panellists discussed the various facets of the sectors, viz., Agriculture and rural development, finance, infrastructure, health & education & industry.
The agriculture sector has high expectations regarding farm’s bill, women labour participation rate and schemes that would allow them to take credit from banks easily. For achieving the target of doubling of farmer’s income by 2022, it also needs better pre and post-harvest handling facilities, storage and distribution to boost the exports and an online platform to promote sales. Priorities such as involvement of Krishi Vigyan Kendras to take export oriented technology to farmers, attracting private investments by promoting value added organic exports and Ayurveda, boosting of agri-credit through centralized database, monitoring of KCC in uniform manner and increasing the viability of small farmers, including animal based farmers, were discussed. Addressing a major concern of irrigation, the students expected this year’s budget to address the problem by installation of micro-irrigation systems. They also suggested more fund allocation to MNREGA to spur consumption.
Discussing the financial sector, they observed that corporate tax reduction has boosted investor sentiment in the midst of a severe slowdown. After this cut base, the corporate tax rate in India has become competitive and should help to boost investment. In terms of income tax, the expectation is to increase the 80c limit, exemption limit to increase to five lakhs. The expectation w.r.t. personal tax cuts will be a major push to the demand side, thereby increasing the disposable income which will have an impact on enhancing the purchasing power of the individuals reviving back the consumer’s confidence. Further, changes in the regulatory framework in the life insurance industry will lead to the growth of the industry. Capital markets expect that DDT should go into holding period in regard to LTCG and should be increased from 12 months to 2-3 years. Moreover, expectations moved in to raise interest deduction for a housing loan to the tune of Rs. 2 lakhs. The sector also expects abrogation of angel tax or GST rate cuts for EVs and 100% FDI investment into insurance intermediaries and focusing on insurance schemes.
Addressing the concern with start-ups, the industry sector expects lucrative incentives like tax incentives to be included. Issues like excluding start-ups from section 42 of Companies Act, improvement with regards to gender equality and ease of doing business to boost the start-ups were discussed. The panelists expect installation of smart meters to improve operational efficiency of DISCOMS, reforms in UDAY scheme to reduce the aggregate technical and commercial losses to less than 10%. They suggested increasing the investment of Rs. 1.77 lakh crore in renewable energy to achieve the SDG goal of affordable and clean energy.
With the FMCG sector expecting one single GST rather than complicated GST slabs, the automotive sector has expectations of reducing GST from 28% to 18% to increase demand. A budgetary allocation of Rs. 12000 cr in MSME sector is expected from this year’s budget. Setting up of Khadi institutes, to increase the demand in the MSME sector and also more focus on improving the exports that would encourage local productions.
The panellists also expect suitable reforms to be rolled out to expand manufacturing units in tier-2 and tier-3 cities, creation of investor friendly trade regime to spur momentum in the manufacturing sector and signal the transition from expenditure led economic growth to demand led economic growth, reforms on inverted duty structure .
While everyone is looking for a boost in infrastructure, the student-panellists expect the government to focus on renewable energy sources, more liquidation and pump more cash flow into the market, and more encouraging schemes to boost infrastructural developments to attract FDIs. Disinvestment in the laid back PSUs or ways to increase efficiency and profitability is expected from this budget by sticking to an asset monetization plan. The sector also expects an improvement in roadway acts that leads to the growth of the automobile and ancillary industry. Inclusion of more airports under the “UDAAN” scheme will further boost revenue into the aviation sector.
Health care, a major sector, expects more policies to safeguard women’s health to ensure more women participation in the labour force which will boost the economy. It also expects lower GST on health equipment, inclusion of action policies like tax holidays to boost the ‘Make in India’ initiative. Bringing home healthcare under limelight under the Ayushman Bharat Yojana was a major expectation in this year’s budget.
The sessions were informative and well conducted by the student panellists.