With the Finance Minister Arun Jaitley setting the tone for the upcoming Budget by stating that ‘mindless populism’ in policy making needs to be checked, his comments would add to expectations that this government could unveil tough fiscal consolidation measures to revive the sagging economy in his first annual Budget on July 10, said Arvind Sethi, CEO, Tata Asset Management.
The CEO of Tata Mutual Fund added that the expectations are that the Government would use the Union Budget to create an environment, which is conducive for growth. “The idea would be to drive GDP growth to over 6 per cent in FY16, and further accelerate it to 7-8 per cent in the ensuing years. Higher growth would help create new job opportunities,'' he said.
With regards to support for the manufacturing sector, Sethi said, “The new NDA government is likely to initiate meaningful steps to infuse life into the manufacturing sector: both organised and small scale industries. Steps are expected to trigger growth in many sectors, which include auto and auto ancillaries, consumer durables, electronics, etc.”
He added that there could be various changes to correct anomalies in the import duty structure.
As for thrust on project implementation, the CEO said, “There are ₹20 trillion worth of projects facing execution issues. The government is looking to accelerate execution by removing obstacles, which can kick start economic growth.”
Stating that most steps are not in the scope of the Budget, he said the Budget speech would necessarily lay special emphasis on the issue.
As for foreign direct investment in defence, he said it is an area where a lot of action is expected. “While Indian Inc is opposed to 100 per cent FDI in defence, there is hope that 74 per cent would be allowed, with conditions on ‘technology transfer’. There are expectations that the government would encourage Indian private defence equipment manufacturers, which would boost manufacturing growth,'' he added.
Commenting on the tax reliefs for the ‘aam admi’, he said, “The Centre is likely to provide relief by way of tax exemptions to the common man, thereby creating a positive demand environment in the economy. This may include increasing the tax exemption limit, raising the tax benefit on medical and housing loans, etc. Higher disposable income in the hands of common man would boost demand for consumer discretionary items.”