A big win for Narendra Modi has raised the outlook for a faster economic recovery led by a revival in the investment cycle. India’s economic growth was below the 5 per cent mark at 4.7 per cent in 2013-14, against 4.5 per cent in 2013.

Although the road to revival is not without its set of challenges, the Gujarat experience inspires confidence. Acceleration in much awaited project approvals, potential tax and administrative reforms and a focus on infrastructure and manufacturing should accelerate a recovery. The current government will focus on reforms and ‘development’, unlike the ‘inclusion’ agenda pursued by the previous government.

Budget expectations The Budget will strive to balance the pursuit of growth and inflation control.

We may see cuts in fuel and fertiliser subsidies in the Budget to curb both the fiscal and current account deficits.

The RBI has been pro-active, considering the funding requirements of the new government. It has cut the statutory liquidity ratio of the banks.

The Budget is expected to focus on converting farming into a profitable venture from a mundane activity conducted by a vast majority for subsistence, is anticipated. This will also be complimented by meeting the aspirations of a new ‘rurban’ (rural+urban) population.

The BJP in its manifesto promised a price stabilisation fund, which would be utilised during food price escalation, to contain food price volatility. The NDA created 61 million jobs during its previous tenure, mainly in the manufacturing sector. The Government may rejig the employment guarantee scheme to increase the productivity of workers employed under it.

A new simplified tax regime is expected which will move towards converging the various rates of indirect taxes into first, a unified structure of three rates, and thereafter merged into the Goods and Services Tax (GST) rate with the states’ consent. The critical measures expected are granting or extending infrastructure or industry status to a gamut of sectors such as media, real estate, power distribution and rural housing. Any policy which may have a spiralling effect on inflation needs to be addressed with relief measures. The Government needs to accelerate investment in coal, power and roads which could reduce the bank’s stressed loans, as most of their assets are exposed to these projects.

What people want The Government must keep in mind the common man’s expectations from the Budget. It should raise the tax exemption limit which at present is ₹2 lakh per annum. Disposable income will increase, which in turn will raise spending power. Also, women should be given a special concession as far as the tax exemption limit is concerned. Taxes should be exempted for women earning up to ₹4-4.5 lakh.

The annual limit for medical reimbursement and health insurance premiums paid by individuals for themselves, their spouses or dependents amounting to ₹15,000 also needs to be hiked. The Government could raise the tax exemption limit for interest payment on housing loan from the existing ₹1.5 lakh to ₹3 lakh per annum. The upper limit for Section 80C should be increased; this will not only lead to increase in investments but will also bring down taxes to be paid.

What NRIs want Concessions in short term capital gains tax will spur NRIs under the Gulf Cooperation Council (GCC) to invest in India. Acceleration in infrastructure and roads spending will result in higher investment spending, with GCC contractors raising the bids to develop projects as public-private partnerships.

A pick-up in GDP growth could result in higher trade flows between the GCC and India. Disinvestment in PSUs may attract long-term investors from GCC countries to buy stakes in companies.

It is expected that the Government will push reforms to kick-start the recovery and bring India’s GDP growth above 6 per cent in the next two years. The Budget should focus on the core sectors.

The writer is the CEO of Doha Bank

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