Envisioning a five-trillion-dollar economy, the Union Budget captures several progressive steps in the right direction.
From enhancing the ease of doing business, to creating a conducive environment for new-age companies and a focus on rural growth and infrastructure creation, the Budget ticks several boxes.
For starters, the positive reference made by the Finance Minister about non-banking financial companies (NBFCs) as an important growth lever by contributing to improved consumption and capital formation will go a long way in reinvigorating the SME sector.
Broadly, we see the Budget from the following aspects:
1. Ensuring availability of credit to create infrastructure: In this direction, steps are taken for providing credit through capital debt market, creation of Credit Enhancement Corporation and enhancing capital expenditure through use of public-private partnership model, to enable faster and continued growth.
2. Upliftment of the rural population: Continued focus on providing LPG connections to households, ‘Housing for All’ and building increased road network, continue to enable improvement in livelihood conditions.
3. Sustainable growth: Due importance has been given, be it by building roads through green technology, creation of infrastructure for rainwater harvesting and water conservation, or use of solid waste management technology to create energy. Over and above this, improving demand by providing incentives on purchase of electric vehicles was a noble idea. What needs to be added to this is enabling infrastructure creation for easy access to charging facilities.
4. Improving NBFCs’ access to funds from the banking sector would go a long way in rebuilding confidence. Some actions like bringing NBFCs on par with banks in respect to tax reforms are well appreciated.
The NBFC industry would have been glad to see the formation of a refinancing body which would address the liquidity stress created by certain entity-specific events that tend to affect the sector as a whole. We believe a first step to that is enhancing the regulatory authority of Reserve Bank of India over the NBFCs.
(The writer is Executive Director & Chief Financial Officer- Mahindra Finance. The views expressed are personal)