Budget 2018 stood for entrepreneurship, employment and quality of life. Not only it creates opportunities for SMEs with the Mudra Loan allocation of ₹3 lakh crore but further nurtures India as a haven for entrepreneurs. We were expecting a forward-looking budget with a reduction in corporate tax and the government has given a positive nod by bringing it down to 25 per cent.
Another notable aspect is government’s strong stand for promoting training and skill development. These measures will help in augmenting the level of skills among the youth, with emphasis on those belonging to the weaker sections of society. The reduction in corporate tax is a much awaited and welcome move. Companies with a total turnover of up to ₹250 crore will have to pay 25 per cent as corporate tax. While this decision will generate a greater feel-good sentiment among corporate India, we are hopeful that the limit will be pegged higher than the current amount so as to benefit more corporate entities.
Tourism in spot
Jaitley’s address clearly communicated the government’s intentions of boosting tourism in the country. India has always had very strong tourism potential given our rich cultural and historical heritage, variety in ecology, terrains and places of natural beauty. And with a growing economy and ever-increasing Government initiatives like ‘e-Tourist Visa’, ‘Digital India’, ‘Make in India’, etc. there has been an almost simultaneous increase in demand by business and leisure travellers for quality services and accommodation.
The decision to transform 10 prominent tourist places into iconic destinations via private funding, marketing and branding is highly laudable. The decision of investing in strengthening the country’s airport network and infrastructure will boost the tourism sector for years to come. The Government plans to increase the number of airports by at least five times the present number of 124 enabling the country to handle the influx of over one billion travellers annually. Accordingly, an allocation of ₹60 crore to kick-start the initiative seems in order.
Besides, the UDAN Scheme will be connecting 64 unconnected airports across India. These measures will increase holiday travel and generate more employment among various sections of society. Apart from encouraging more entrepreneurial ventures and employment, the Budget also plans to increase the quality of life. For this, an agency would be set up to check pollution levels in the NCR, driving greater health coverage which is the need of the day considering the alarming levels of pollution engulfing metro cities.
GST concerns
With these positives, there were also some areas of concern involving GST. One major change which we were expecting was GST being levied on the actual price rather than the declared tariff for hotel accommodation. It is a well-accepted practice globally that discounts are given on the declared tariffs. Therefore, GST on paid tariffs would be realistic and reasonable.
One cannot overlook the fact that hotels and hospitality have countless upstream and downstream linkages. Consequently, the sector generates millions of jobs both directly and indirectly. With the Government making every effort to raise the number of jobs and employment avenues, a more realistic approach in the Budget towards the sector could have been beneficial for all entities involved.
The other cause for concern is the fiscal deficit at 3.5 per cent of GDP for FY2017-18. A higher fiscal deficit would make foreign and institutional investors wary of investing in Indian companies. For India’s success story to gain more prominence, it is important that fiscal deficit targets are adhered to. The impact a higher deficit has on a nation’s credit rating is already well documented and needs no reiteration, not to mention its negative impact on inflation.
Banking on them
Apart from the above, there were other salutary announcements. The decision to recapitalise public sector banks is just what’s required since it will allow additional lending of ₹5 lakh crore. The outlay of ₹2.04 lakh crore for the 99 Smart Cities; the decision to develop 35,000 km via an allocation of ₹5.35 lakh crore under the Bharatmala project; the construction of a new tunnel in the Sera Pass; the introduction of the pay-as-you-use system at toll plazas; allocating ₹1.48 lakh crore for Railways’ capex; the elimination of unmanned railway crossings; installing escalators at all stations having footfalls of more than 25,000; progressively building stations and trains with Wi-Fi and CCTV; etc. are all steps that will boost tourism footfalls.
Meanwhile, the industry remains hopeful that the missed opportunities of GST implementation on the actual price of hotel accommodation and other allied concerns will be addressed at the earliest in the coming months – in the interests of all entities and issues, including jobs creation. Overall, this budget is a big win for infrastructure, job creation, India’s farming community and MSMEs.
The writer is Founder & CEO of OYO