So rightly 2016-17 Budget has focused on agriculture, rural development and bank recapitalization to ensure that India grows for all. He has stepped up allocation for rural and skill development, road, rail, ports and airports as part of infrastructure development without impinging up on fiscal discipline so that prices, which is tax on poor do not skyrocket.
The significant aspect of the budget is that allocation for MSMEs has been 30 per cent. MSMEs are critical for inclusive growth as many MSME clusters are around tier two tier three cities. Besides MSMEs account for 40 per cent of manufacturing and 45 percent of exports. This is a welcome development as this will push job creation in Bharat.
Along with stepped up allocation for agriculture, the budget has provided tax breaks for start ups. More skill development institutes numbering 1,500 are to be set up mostly in semi-urban and rural areas. Upping agricultural growth rate back to 3.5-4 per cent is critical if Indian manufacturing particularly MSMEs are to grow as it would generate much needed consumption demand.
Food processing sector will get a leg up with the Budget announcing increase in FDI cap to 100 per cent. India is among the top producers of fruits and vegetables but nearly 40 per cent of it, particularly in North East and hilly states, go waste because of lack of cold storage, food processing, logistics and marketing. If more food processing comes up this waste can be avoided and more jobs and income can be generated. Most of the food processing units are MSMEs.
Food processing Minister Harsimrat Kaur told SMEpost.com that one of the reasons food processing industry has not taken off in India is because of lack of infrastructure. States like Andhra Pradesh, Maharashtra and other states in South have strong food processing industries because of good infrastructure.
This budget apart from lifting the FDI cap on food processing, there is substantial allocation for rural infrastructure and farming, which would help in leapfrogging food processing across the country, Kaur said.
The Budget has also rationalized schemes for MSMEs, some of whom have outlived its utility. There were 180 schemes in the past. Many of them have been scrapped and some others have been merged to make them more effective.
Overall the budget has been good for achieving higher growth of 7.5-8 per cent in the coming financial year in a more inclusive manner, pushing farm sector, rural infrastructure and MSMEs. The intent is good but it is to be seen how successful the government is in implementation and governance to ensure the budget proposals translate into action on the ground.