Infrastructure for nurturing entrepreneurship
Kanwaljit Singh, MD, Helion Venture Partners
India is renowned for its heritage of entrepreneurs who have set up innumerable successful businesses across the globe. This legacy of the spirit of entrepreneurship has to be kept in mind while chalking out policies and programmes that will take our economy forward.
As the finance minister, my primary emphasis would be on bringing in a massive investment push for upgrading infrastructure across the country.
Equally importantly, soft infrastructure such as education and research and development need to be treated on a par with hard infrastructure such as telecom bandwidth, power, transportation, etc. I would also focus on increased government spending on education and healthcare with a major stress on primary education and healthcare, which currently offer lesser incentive for private players to enter.
While these measures will help improve the quality of manpower and provide opportunities for development, we also need more direct measures. Here, I strongly recommend incentives for promoting entrepreneurship and SME (small and medium enterprise) growth through a three-pronged approach:
1. Enhance the collateral-free credit guarantee fund provided for small industries
2. Enforce public and private sector banks to create microfinance schemes by partnering with NGOs (non-governmental organizations)
3. Improve credit delivery in rural and semi-urban areas, where the scope for micro and very small businesses is the greatest
Also Read More on Budget 2009
A rational approach to subsidies
Years of doling out subsidies across various sectors have not borne fruit in alleviating poverty and have on the other hand contributed to the burgeoning fiscal deficit. While it is neither advisable nor politically prudent to drastically reduce subsidies, I would focus on removing subsidies in selective segments with clinical precision. For example, remove subsidy for LPG and retain it for kerosene, remove chemical fertilizer subsidy and subsidize agricultural services and value-added inputs, and bring in market pricing mechanism to areas such as petroleum. Along with rationalization, one also has to ensure better targeting of the benefits of subsidies. The investment principle of “target returns” will have to seriously come in to play for subsidies.
Reform in the power sector and incentives for renewables
Looking beyond finance and investments, I would like to introduce a similar set of reforms in the power sector as those that have brought spectacular changes in the telecom sector. The power sector has a direct impact on GDP (gross domestic product) growth and there is an urgent need, therefore, to create a national mission for upgrading the power infrastructure across the board. A planned approach to tapping renewable energy sources will also ensure that the scourge of power outage, that is the bane of the small entrepreneur, will be put to rest. I would provide high incentives to companies focusing on clean energy such as solar power, windmills, electric cars, IT (information technology) solutions for energy efficiency, etc. Today, the heavy excise duty on silicon chips and lead acid battery is weighing down this sunrise sector.
Autonomy of RBI untouched
The stability and trustworthiness of the Indian economy and its banking system are built on the foundation of the autonomy of the Reserve Bank of India (RBI). Most of us agree that our central bank played a leading role in weathering the storm and insulating our economy to a large extent from the global recession. The autonomy of this world-class institution should remain unquestioned.
Empowering inclusive growth
I will work towards driving growth where the benefits of economic progress will trickle down to 300 million who live on less than $2 per day. This can be best achieved by ensuring a level playing field between urban and rural areas, marked by better infrastructure and efficient credit delivery. Promoting entrepreneurship will ensure inclusive growth with dignity; where inclusion happens by right and not necessarily by state action.