FM needs to balance domestic demand and growth
Darius Pandole February 21, 2015The government will need to balance the imperatives of encouraging domestic demand and stimulating growth, whilst keeping the fiscal deficit and inflation under control.
A prerequisite for domestic growth is to focus on prioritising areas that will maximise the ease of doing business in India.
Efforts are needed to make administrative and bureaucratic procedures time-bound and fast-tracked, so that new investments can be stimulated.
The government would need to define a stable tax and regulatory environment.
Any proposals that hint of retrospective taxation will send wrong signals to investors and increase the uncertainty related to investing in India.
It would be important to encourage investments into Indian infrastructure.
This would require increasing the availability and reducing the cost of long-term funding through appropriate fiscal incentives, and encouraging PPP models to improve on-ground project execution.
Improved infrastructure would lower the cost of doing business in India, and provide multiplier benefits for the economy.
(Darius Pandole is Partner at New Silk Route Advisors)