The top
MBA College in Greater Noida, Ishan Institute of Management & Technology
has been a front runner in performing intellectual surgeries on important
policy tools. The Union Budget has been presented amidst positive feedback from
the corporate sector and has generated generally cautiously optimistic investor
sentiment. From today and onwards the world’s largest democracy gets ready to
initiate yet another financial year. While there are expectations and wish
lists that are unique to different stakeholders of the Indian economy, it makes
enormous good sense to ask if the budget can be used as a policy tool by the
Government of India to enhance economic growth rates. To put it across in
crystal clear terms, we may ask if the budget can be used to achieve double
digit economic growth rates.
While
it is fashionable to think on the lines of the Washington Consensus that
asserts trickle- down economics and the role of the government as a gateway for
managing the economy with respect to dynamics of the free markets rather than
act as a gatekeeper with a centrally commanded economic planning structure, one
must warn against the ill effects of over-emphasising financialization. The
term “financialization” is essentially borrowed out of the book of corporate
captains, academicians and alumni of the Harvard business school and has been
extensively used in corporate budgeting and financial planning to shed flab and
get corporate enterprises into a mean and lean structure by doing away with
fiscal profligacy. Yes, it makes sense to cut down on public expenditure that
is unmindful and we in India for sure do not want to witness a Troy or Odyssey
on the lines of the Greek tragedies. Yet we must accept that economic growth
shall not perpetuate on its own by streamlining costs. The turnaround of the
economy in the long run depends on the handling of structural, cyclical and
institutional factors that the state must address unlike corporate enterprises.
To this extent at Ishan, the top MBA college in Greater Noida we believe that
the concept of the welfare state mandates attention.
First
one of the biggest cyclical issues that remain a worry is the ailing
agriculture sector. Subsidies on fertilizers must be dealt with a necessary
streamlining of costs. The area that needs consolidation is water resources
management and the redesign of the existing system of irrigation that leaves
our agriculture and farmers to the mercy of the rain Gods. The creation of a
fund alone will not solve the issue. Recall that MGNREGA was a great innovation
based on pump priming by the previous government but climaxed leading to
non-creation of physical assets and demand pull inflation owing to higher
income levels. It shall be great to design a water resource management system
and bringing the same under the reign of MGNREGA on a condition that the work
in progress on such projects for rain water harvesting, building of dams, water
channels, canals, wells and tube wells shall be disclosed publicly as per Right
to Information and that consecutive rounds of funding shall be anchored to
successful achievement of asset creation in the previous rounds. This is easier
said than done but should be done to improve the agriculture sector while
improving fiscal discipline and transparency in reporting of projects.
Secondly
the structural issue that needs to be solved is the one of start up firms and
their capacity to create jobs. The days of centralized economic planning based
on the Feldman model of erstwhile USSR are gone. Start –up firms may be
leverage by the government to create jobs and improve income levels. For this
to happen the government may opt for a pay-roll based income tax cut for
start-up firms that invest a threshold level of financial resources in skill
development programs like web designing, mobile app development, coding,
payment gateway development, digital marketing, big data and internet of
things. This will have the twin effects of raising start-up investments on
training and development of human resources while addressing the need to move towards
an investment based economy away from the consumption based economy that we now
have. More over start-up firms in the manufacturing sector may be given pay
roll subsidies under the Make in India campaign to stimulate employment
generation in the rural areas.
As
regards institutional factors, there is a pressing need to realize that in the
long run we are all dead and staying in the growth curve shall require
technological progress. Corporate income tax rebates may be announced for
R&D programs. Moreover with world class business and technology school
brands in IIMs and IITs, angel investors willing to finance the creation of
product based and technology based start-up firms out of R&D programs at
IIMs and IITs may be considered for tax holiday for three years without any
interest or penalty obligations.
At
Ishan Institute of Management & Technology, the Greater Noida, the first
MBA College in Greater Noida, academicians of the Management Department pray
for sustainable economic growth of India and intellectually support the pro-GDP
growth policies of the current government.
