Govt working to transform India in digital terms

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Measures for health, education would lead to job creation, directly or indirectly

The rural and agricultural focus of the Union Budget 2016-17 presented by the Union Finance Minister Arun Jaitley augurs well for the Indian economy. I have no doubt about that. The government has actually taken multi-pronged approach towards this.

I am glad that the government is working with various agencies to transform India in digital terms and empower the people of India with the ease of doing business and learning new skills through digital means.

I am particularly impressed by the fact that as part of Union Budget 2016-17, the finance minister has lined up plans to launch a mission to provide digital literacy to around 6 crore additional rural households.

It will empower rural households with digital tools and will fuel the growth of Make in India initiative and facilitate information technology companies’ interests and causes on long term basis. Also it will help significantly the regional connectivity and hardware units catering to the rural market. The finance minister has initiated simple but practical steps like adding more career centres and linking state employment exchanges to National Career Service portal will go a long way in helping skilled and assessed candidates secure jobs, which has been lacking in India that has the highest population of young people in the world.

Measures announced for healthcare, education, skill development, real estate, and entrepreneurship would all lead to job creation directly or indirectly. The government should have also looked at making startup funding tax free in order to boost investments in startups, which would in turn create new jobs.

The union budget has a clear thrust for the rural economy while taxing urban and the top of the pyramid consumption. It carries the highest ever allocation to MNREGA and mind you that MNREGA expenditure had been coming down in the last 3 years adding to the rural stress.

The finance minister has also allocated Rs 500 crore for scheduled caste, scheduled tribes and women entrepreneurs in the budget under the Stand Up India scheme. It will also set up a national hub in the Ministry of Micro Small and Medium Enterprises (MSME) in partnership with industry associations to provide professional support to scheduled caste/scheduled tribes (SC/ST) entrepreneurs.

The scheme promises to facilitate at least two such projects per bank branch one in each category of entrepreneurs and will benefit at least 2.5 lakh entrepreneurs in this category. The 3 out of 5 year 100 per cent tax exemption is a welcome step. I think all these moves will go a long way in creating entrepreneurship and employment.

On the banking front, the allocation of only Rs 25,000 crore to recapitalise banks may be deemed as inadequate. However, given the sheer size of stressed asset problem, this infusion of government funds is perhaps the most that the FM could afford at this stage and as he has promised to supplement it later. I only hope that the FM keeps his promise. The allocation certainly recognises the fact that the tottering PSBs desperately need government assistance and alternative funding sources are scarce. If stock and bond markets improve over the year this initial handholding by the government could help to ‘crowd in’ private investment in their capital.

I am yet to go into the details of the corporate tax structure but I wish they had been made even simpler.

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