Finance Minister Arun Jaitley's last Budget was largely directional. This Budget would have to be about decisive action and must give a time-bound roadmap for economic revival.
Expectations are that the Budget will provide more specifics on Prime Minister Modi's 'Make in India' campaign.
If successful, the PM's global campaign to encourage investment and manufacturing in India can transform the country into an equitable and inclusive economic superpower.
The 'Make In India' Mantra
'Make in India' can be a major economic growth driver provided the government introduces enabling policies. India needs to identify its key differentiators that can give her the competitive advantage over established manufacturing players like China. There is immense potential to create a premium 'Made in India' label that personifies innovation, quality, reliability and strong intellectual property. Brand India should stand for 'highest quality at the lowest cost'.
At a time when China is losing its attractiveness as a manufacturing destination because of rising production costs, India can highlight the fact that the combination of a strong and stable democratic government and the relatively free play of market forces make it a very attractive investment destination. Moreover, nearly two-thirds of India's 1.25 billion population are in their working age and that makes it an attractive manufacturing destination in terms of availability and cost of talent.
However, the economic slowdown of the past several years has stifled the Indian manufacturing sector, which can only be revived through genuine pro-manufacturing policies. The Budget, therefore, needs to be innovative in its approach to introduce policies that will spur domestic manufacturing.
It is critical to create a level-playing field for domestic manufacturers. This can be done with the introduction of a weighted premium for indigenously manufactured products in government tenders. Several countries across the globe offer a 15-20 per cent premium for locally made products as part of their government procurement policies. Hence, overseas manufacturers targeting these countries are compelled to partner with local companies. This encourages collaborations for technology transfer to the domestic industry, which eventually manufactures the products locally.
A similar model can work for India as well. It will help propel domestic manufacturing, boosting product quality, operational efficiencies, and result in improved competitiveness for Indian players in the global markets.
Additionally, it can also lead to employment generation for millions, enabling self-sufficiency in many areas.
India also needs to improve the ease of doing business, reduce transaction costs and expedite approval timelines. There is an urgent need to introduce a 'single-window' system for securing all clearances and approvals from various central and state agencies. The current inordinately lengthy-tiered approval system should be replaced with self-attestation and time-bound 'deemed approvals'.
Enable a 'Start-up Culture'
In order to tap the vast Indian entrepreneurial energy, the government needs to introduce an enabling policy environment that encourages start-ups. Special incentives, tax exemptions and access to capital will lead to movement of 'ideas to market' and, therefore, add momentum to the 'Make in India' initiative.
To transform India into a global manufacturing hub, the government will need to improve infrastructure, such as port-to-inland connectivity, cargo airports, uninterrupted power, adequate potable water, effective effluent treatment facilities and well-connected roads.
Establishing smart cities and industrial corridors through high-end road and rail connectivity is also a key part of this plan.
Right to Health
Besides unleashing manufacturing potential of the country, this Budget needs to take decisive steps towards increasing healthcare spending to initiate our march towards 'Right to Health'.
The government needs to demonstrate its commitment to universal health coverage. It needs to urgently raise public healthcare spending to at least 2.5 per cent of the gross domestic product (GDP) from the existing 1 per cent. It is critical to create a highly effective, sustainable and technology-based universal healthcare system that emphasises individual responsibility for health supported by an enabling state policy, moving away from creating a social ecosystem that thrives on entitlements and freebies.
This Budget is a golden opportunity for the government to usher in the promised 'acche din', which will go a long way in reaffirming the credentials of the Narendra Modi-led government.
The author is Chairman and Managing Director, Biocon