For any country, budget is an important vision document and for newly elected government perhaps the most important tool in hand to keep its people’s hopes and expectations sustained for longer time. The present day government with the help of a promising but deliverable budget can keep its own as well as its people’s morale high. Our finance minister is expected to present budget on 10th July 2014. So to keep the morale of India at higher level he must take of few issues as inflation, food inflation, growth, fiscal deficit, employment and skill building, investment by corporate, manufacturing, agriculture, infrastructure, taxes, subsidies and social security programs and free trade agreements etc.
Government can use tax and expenditure policy to address cyclical issues such as food inflation and low industrial and job growth. For example, government as short term tactical decision can cut import duties on food but raise them on manufactured consumer goods; give tax credits and interest rate subvention for domestic entrepreneurs, promoting MSMEs, encouraging self help groups to establish micro and small industries across the nation, establishing small clusters for MSMEs, building cold storages; re-look FTAs. With the help of these, government can improve the overall economic position of the country. Also at the same time government must aim to increase private and public investment (PPP model) in different sectors (mainly infrastructure) through temporary tax credits.
Government has an opportunity to show to its people that it is dedicated to people of India and will do all required for the betterment of country on all sectors and budget can be used indicate this. If government makes deliverable promises, it can easily achieve those goals (if intends to).
In next few post I will discuss different Issues mentioned above in detail.