Budget presents Jaitley with 3 rare opportunities

 Swachh Bharat Cess imposed last year should be made broad-based.'

'Budget should be predominantly economy/ business-oriented and problem-solving rather than political consideration-based.'

Indians' hopes for achche din seem to have taken a backseat at least for the time being.

With stock markets going back to pre-Narendra Modi days and the rupee finding new lows, the aam aadmi has plenty of reason to worry about the economy.

Investors too are at a loss and economists are busy working out solutions to help India counter the present crisis.

In an email interview, Amit Rathi, below, left, managing director, Anand Rathi financial Services Limited, talks to Indrani Roy/Rediff.com about Budget 2016, the present crisis of confidence, the impact of China's economic woes on Indian markets, and the role of foreign investors.

Coming to Budget 2016, how difficult will this year’s event be for Finance Minister Arun Jaitley?

The Union Budget is but a prospective financial statement of the central government for the next financial year.

It, therefore, is almost impossible for any government to please one and all through a Budget.

The government being the single largest spender of the economy, the only player with the power to change tax rates and unlimited borrowing capacity, the Union Budget, assumes great importance in an emerging market economy like India.

The most important aspect of the Budget is that it communicates government’s economic priorities and strategies for the year and also the years to come.

What are your expectations from the Budget this year?

The forthcoming Budget provides the Union government three rare opportunities.

First, three major state elections -- in Kerala, Tamil Nadu and West Bengal -- are scheduled for the next financial year.

Going by past electoral performances, the National Democratic Alliance government does not have major stakes in any of these states.

This offers the space to the Union government to make the Budget predominantly economy/ business-oriented and problem-solving rather than political consideration-based.

Second, despite all our woes, India stands out as the beacon of hope in the current subdued global economic environment.

At this juncture an economically and fiscally responsible Budget that aims at improving the conditions for doing business would substantially enhance India’s global standing.

Third, unlike most emerging market economies, the subdued international commodity prices allow India to simultaneously effect fiscal consolidation and inflation control.

These opportunities should not be frittered away.

Which areas you think should the Budget focus on?

In terms of focus, I expect four areas to attract special attention of the finance minister in the forthcoming Budget.

These are:

• Addressing rural and agricultural distress,
• Boosting investment, especially in infrastructure,
• Improving employment opportunities rapidly through support for entrepreneurial endevours and job-oriented skill development

and

• Realising the objective of a more equitable India through broad-based inclusion initiatives.

Is there any step in particular that you want Jaitley to avoid?

Adhering to, let alone furthering, fiscal consolidation targets in periods of disinflation and thereby low nominal income growth is challenging as is evident from the recent direct tax collection data.

Moreover, while shouldering the responsibility to implement the recommendations to hike the pay of the government employees, the current budget would need to accelerate investment on infrastructure and the rural economy.

Despite these, we anticipate little fiscal slippage in the next year.

The savings of fuel subsidies because of the expected continuation