Professor Sachin Chaturvedi, the Director General at the Research and Information System for Developing Countries (RIS), a New Delhi-based think-tank, said that Union Finance Minister Niramala Sitharaman's decision not to tax anyone in the Budget, especially the rich, was prompted by two factors.
One, any new taxes at this point, just when the economy is witnessing a revival amid the pandemic, would have goaded people to evade taxes.
Two, it was done in the hope that the "super rich" would invest more in India. "Those who have not been taxed should be more forthcoming to deliver what is desired," Prof Chaturvedi said while delivering Malayala Manorama's 23rd Annual Budget Lecture.
"The private sector should start investing in India for productive gains and not in other places," he added, and warned that "this luxury of not being taxed" would not be there next year if the super rich do not take the cue and fail to invest. Prof Chaturvedi is also a member of the RBI Board of Governors.
Nonetheless, Prof Chaturvedi said that India's success in crowding in private investment by way of stepping up public investment had been a mixed bag. Between 2008 and 2015, infrastructure investment to the tune of around 1.1 trillion dollars have been made in India. "In this, private investment has been marginal," he said.
He said much of the assistance had come from multilateral development banks like the Asian Development Bank and the World Bank. He said that 10.9 billion dollars had come from the World Bank. "ADB too has stepped up funding, close to four billion dollars. The contribution of Asian Infrastructure Investment Bank (AIIB) was 6.7 billion dollars," he said.
Prof Chaturvedi termed Nirmala Sitharaman's fourth Budget "politically perfectly fine". "She has not imposed any tax on anyone," he said. However, he said the Budget has transitioned India's economic policy from an entitlement-based approach to an enterprise-based one. Rather than freebies, the Budget is keen on productivity-linked assistance. “This holds true for individuals, MSMEs and large industries,” he said.
Further, he said the Budget had employed customs duty to bring in competitiveness. He said that the duty on some items have been raised to give a level playing field to the domestic sector.
Prof Chaturvedi said that the latest Union Budget would take the country forward in three desirable ways. One, the development of world class infrastructure envisaged in the Budget would reduce the inequality between urban and rural areas. "Huge levels of integration (urban-rural) had already taken place in Kerala. But in other states, the gap is wide," Prof Chaturvedi said.
He said the roll out of 5G internet services across rural areas would provide market access to rural self help groups.
Two, he said the Budget aimed to minimise carbon footprint as much as possible by nurturing biodiversity and protecting water bodies. He was especially enthusiastic about the 'Chemical-free Natural Farming' project announced in the Budget. The Budget says that it will be promoted throughout the country. However, in the first stage, the focus will be on the farmers’ lands in 5-km wide corridors along river Ganga.
He said the chemical-free Ganga corridor was a viable project. He said that the project should be scaled up with the support of the states and all river banks in the country should be made chemical free. “We should avoid a situation like in Punjab where the milk of lactating mothers were found to have more chemicals than even cow's milk,” Prof Chaturvedi said. “We have to grow fruits and vegetables with less fertilisers and less chemicals. It is high time India woke up and reduced chemical consumption,” he added.
He held up 'Kisan drones' (announced in the Budget for crop assessment, digitization of land records, spraying of insecticides, and nutrients) as a fine example of leveraging technology for better outcomes.
A major transformation, according to him, was "climate-friendly actions as business". This has been made possible by the development of 'green bonds' and the enthusiasm shown by the corporate sector for such bonds.
The third big push in the Budget was for quality human resources. He said the Budget had a "plethora of initiatives to create quality human resources for the next 25 years". Some of the “sunrise opportunities' he mentioned that would steer India to its 100th year were artificial intelligence, geospatial systems and drones, semiconductor and its ecosystem, space economy, genomics and pharmaceuticals, green energy, and clean mobility systems.