If you were FM what would you focus on this budget?
I believe the indicator we need to focus on—the antidote to the slowdown—lies in creating consumption demand. At around 60%, India has one of the highest shares of private consumption as part of the overall gross domestic product (GDP). A younger demography also means the younger generation will be working harder, earning more and spending more. Increasing consumption demand can be the most effective way to put the economy back on the rails.
Kishore Biyani, group CEO, Future Group
In the past couple of months the good news has clearly come from rural India. Government measures such as the loan waiver, the strengthening of the NREGS (National Rural Employment Guarantee Scheme), the increase in minimum support price (MSP) and higher salaries for government employees have put more money in the hands of the rural consumer. Now, when they spend it on television sets or cars or refrigerators, it helps create, or at least protect jobs in industries across India.
Also Read More on Budget 2009
How would you incentivize higher consumption?
What if the budget this time has a single agenda—ensuring that in a nation of at least one billion people, everyone spends Rs1,000 more than what they did last year? That itself translates into an additional economic activity to the tune of Rs1 trillion and around 2% boost to the rate of GDP growth. Encourage and incentivize people to spend more. And the multiplier effect of additional consumer demand of Rs1 trillion could be immense.
Our existing tax structure incentivizes savings rather than consumption. Other measures such as employment schemes, urban development initiatives, monetary policy and every economic policy need to converge on a single objective.
Now is the time when we need to not just drive innovation and creativity in public policymaking, but also bring about game changing ideas that can transform India from an “emerging nation” to an “emerged nation”.