With the Union Budget around the corner, organisations across sectors are looking forward to renewed measures to support and expand the business ecosystem. The global economic environment is calling for important initiatives in India as well that can lead us to continued growth.
The focus of the Budget like it has been in the recent past should continue to be inclusive growth and empowerment of the rural populace. E-governance initiatives will hold the key to transformation of the economy and projects like Aadhaar will be the first step towards ensuring economic equality. In order to further economic growth, ensure recovery in core sectors, like agriculture, and improve the financial status of people below the poverty line, the government needs to initiate more programmes like the direct cash transfer scheme.
The government needs to consolidate these efforts through reforms in the education and healthcare sectors, which will continue to be the priority in coming years. Additional focus also needs to be given in bringing about financial inclusion since that is the backbone for other important initiatives.
The government has taken several steps to bring in reforms in the banking sector since the economic liberalisation in the early 1990s. From providing plain vanilla banking services, banks have gradually transformed themselves into one-stop solution providers. ATMs, Internet banking, mobile banking and social banking are fast becoming the norm.
The concern, however, is that the Indian banking landscape is expected to evolve so that there are regional as well as national players, but except for a few large banks not many have a pan-India presence. So what about the rural population that isn’t aware of banking services or even if they are, cannot access these services? With over half the Indian population still excluded from the nation’s formal financial system, the need for strategic steps in this area is vital.
I believe that technology will pave the way for inclusive social and financial development. Technology has the potential to act as a force multiplier, spring-boarding the Union government’s efforts in achieving growth at the grassroot levels.
On its part, the government has taken steps towards implementing next generation technology solutions to ensure both country and business transformation; however, a lot still needs to be done.
The other important focus of this year’s Budget should be on innovation. Innovation that can bring about reforms in the sectors of education, healthcare, banking and environment, creating sustainable and cost-effective solutions for the people at large, especially those at the bottom of the pyramid. We need innovation that can leverage the huge pool of talented people and abundant resources within India to fulfil needs that are not met through conventional means.
To cite an example, researchers at Xerox have invented a banking solution that reduces the cost of establishing branches — even in rural areas — and automates much-needed personal banking services, like opening a bank account or applying for a loan, making it simple for consumers in India and other developing countries to manage their money.
It is a solution so simple and effective that it can be used in the remotest corners of the world. Pilot projects for solutions such as these are already underway in India but more can certainly be done.
Realising that innovation could spur the engine for growth and national prosperity, the Prime Minister rightly termed this decade as the “Decade of Innovation” three years back. Keeping this in mind the National Innovation Council was established to bring about a socio-economic transformation, driven by innovation, and is all set to operationalise with an initial capacity of Rs 500 crore. It is important for the finance minister to give emphasis to the role of research in economic development and plan for an ecosystem that can support the growing base of innovation and technology in India. The Budget needs to allocate separate funds for scientific research, a critical step towards developing India as a knowledge economy.
The government must continue the good work begun last year where we moved to a negative list taxation regime for service tax purposes. This has led to the overlap of value-added tax and service tax in certain situations. The finance minister can look at alleviating this hardship and higher costs for customers as this is against the spirit of goods and services tax (GST). Industry has been waiting for GST regime and, perhaps, it is time for some provisions which advance the structure and spirit of GST to be brought into this Budget in the interim.
The precarious global fiscal situation and adverse forex movement for Indian importers make it imperative that the government supports the industry with regulatory, tax and trade incentives. We can ill afford to lose the momentum gained in earlier years by not addressing the bottlenecks in our trade ecosystem, in turn allowing other fast-emerging economies to capitalise on global opportunities.
Lastly, a conducive environment is imperative today, where ecosystem players come together to promote citizen benefits in sectors such as healthcare, education, information technology and telecom, power and infrastructure. Budgetary allocations and policy reforms promoting local innovation, greater collaboration between industry players and the government and creating an environment for new investments in key development sectors is the need of the hour. The time for action is now. The Budget is an indicator of government sentiment and investments in enabling what I believe should be inclusive growth — both social as well as economic — in this vast nation.
(The writer is the managing director of Xerox India)