Almost all business leaders expected that the National Budget 2021 in some way or the other will shell out measures in the form of much-needed catalysts for boosting demand, curbing inflation and thereby reviving the economy.
What policies did the Budget 2021 entail to ensure financial recovery and spur economic growth in your sector? What other reforms should be thought about?
Construction and real estate sector contributes around ten per cent of the Indian economy and generates the second-highest employment. In the recently announced Union Budget 2021, there is a good allocation on infrastructure in general particularly in roads, railways and airports. From a real estate perspective, the Union Budget 2021 has yet again announced incentives for affordable housing. It is proposed to extend the Rs 1.5 lakh benefit on interest paid on affordable housing loans by one year to March 31, 2022.
Affordable housing projects are given a deduction under Section 80IBA of the Income Tax Act and provided tax exemption for affordable rental housing projects. However, to give it further boost, it is important that the segment, which is one of the major employment generators, gets a big shot in the arm. The real estate sector has been dealing with several liquidity issues, particularly more now after the pandemic hit. So, the liquidity stimulus is needed by the government to prevent the sector from stalling.
The housing industry needs to be focused on measures to further bolster demand in 2021. Therefore, the government can increase the tax deduction under Section 80C of the Income Tax Act for principal repayment on home loans and some reductions in home loan interest also. As an additional stimulus to ensure realty sector picks up faster, like in Maharashtra we hope that the Central and state governments work together and take a look at reducing GST and stamp duty on registration of housing units.
Going into the next decade, smaller cities and towns are expected to be key consumption drivers. Do you agree with this outlook and if yes then what policy changes should the government make to ensure that organisations can keep rural India at the centre of its growth story?
I agree with this outlook and over the next decade, consumption in strong-growing consumer markets such as India will be reformed by the Fourth Industrial Revolution, and more than one billion first-time consumers. The confluence of robust economic growth, a vibrant consumption landscape, greater connectivity and key social reforms will create a massive opportunity to advance inclusive and responsible consumption.
To keep rural India at the centre of India’s growth story, government needs to address the policy issues, enhance efficiency, competitiveness and expand business opportunities for industry through a range of specialised services and global linkages. It should also provide a platform for sectoral consensus building and networking. Major emphasis to be laid on projecting a positive image of business, assisting industries to identify and execute corporate citizenship programmes
In line with this consumption growth story, organisations have a great responsibility to nurture this consumption with sensible and responsible demand generation. Through shared accountability, both the private and public sector can ensure an inclusive and responsible future of consumption in India.
The government has been advocating ‘Ease of Doing Business,’ making India ‘AtmaNirbhar’ by promoting ‘Make in India’ initiatives aggressively. What steps should the government think of in order to drive consumption and improve consumer demand?
Backed by the unprecedented Covid-19, the Central and state governments have given an unparalleled priority to improving the business environment in the country by driving reforms to facilitate ease of doing business. In the Ease of Doing Business 2020, a report published by The World Bank to ‘Compare Business Regulation in 190 Economies’, India has ascended 17 notches, ranking at 63rd position. Under the Atmanirbhar Bharat package, various schemes were announced by the finance ministry that focus on reforms for ease of doing business in India.
To further enhance the competitiveness of the Indian industry, the reform momentum must be sustained with consistent monitoring. It is equally important that Central and state governments ensure the reforms reach the grassroots industry effectively with short-term measures and long-term strategies. One of the many measures is to aim at easing personal taxation and making the whole tax administration simpler. The government should also consider the report of a task force to bring India’s six-decades-old tax legislation more into line with those of other countries.
SMBs are key to resurging growth for a developing nation such as India. How can corporates and the government work together to provide an opportunity for startups and SMBs to grow in the country?
The Small and Medium Businesses(SMBs) contribute significantly to the economic and social development of the country by fostering entrepreneurship and generating employment opportunities. Policymakers should tackle short-term challenges, supporting short-term liquidity and availability of funding, but also and importantly push start-ups to grip new business opportunities. Policies that reduce obstructions to entrepreneurship, offer incentives for start-ups, and boost entrepreneurial potential could help speed up the recovery and preserve combined employment in the long term.
What kind of economic trends do you foresee for FY22 spread over quarters?
I feel the Indian economy is already showing good signs of recovery and from all sources it does seem that it will rebound soon, perhaps in the first quarter of financial year 2021. After a low period in 2020, the Indian economy has shown a strong rebound in economic activity since September last year, and that was exactly the time when India’s industrial production and consumption expenditure began showing a rebound.
India’s economy is expected to bounce back strongly in the next fiscal year through investment, self-reliance and inclusiveness after the disorder formed by the pandemic.
