Budget 2019: Key economic objectives

By Nilyanka Bhushan

The budget should focus on the generation of employment through growth targets that exceed the past twenty-year performance.

For this purpose, the government should actively increase support to small and medium industries. Increase of facilities for seed and growth equity funding for startups and SMEs, provision of simplified and incentive-based credit facilities to help the manufacturing sector grow should be among the top priorities. This will catalyse the innovation and entrepreneurship that are India’s natural strengths.

Additionally, with the residential real estate sector in doldrums and near jobless growth, the government needs to put into place measures to revive the troubled housing market. Purely lowering interest rates might not work. Long term resolution of the liquidity crisis in NBFCs will also need to be addressed. As the revival of real-estate is a must for employment, it will be very important to look at what the government proposes in the budget.

Address the NBFC debt crisis

A financing crunch is hurting India’s economic growth that the non-bank financing companies have compounded and are finding their troubles worsening as a crisis of credibility starts to escalate. We will have to wait and watch how the budget will address these issues.

Focus Areas

The two sectors that should receive maximum attention are defense and agriculture-based businesses. The reduction of India’s defense imports bill can be achieved by strongly encouraging indigenous suppliers in preference to imports. Integration of the defense sector into the civilian economy to the maximum extent possible will enable a quantum jump in employment as seen in all advanced economies. Similarly, agriculture-based businesses should be encouraged through the provision of finance and infrastructure incentives. This will also enable a quantum jump in productive employment and reduce the migration from villages to cities that have occurred during the past fifty years.

While presenting the budget; the government should seize the opportunity to reshape India as an innovation economy instead of remaining services and agriculture economy. Benchmarks should be set for both the public and private sectors to perform to a uniform set of standards both financially and ethically. This will lead to a complete transformation of the Indian landscape from a few select affluent clusters surrounded poverty to a more equal and broad-based economy where a rising tide truly lifts all the boats.

Nilyanka Bhushan is the managing partner and co-founder of Sigma Ventures.