What I Would Have Done as Finance Minister Announcing the Union Budget

As the Finance Minister of India, the Union Budget presents a vital opportunity to address key economic challenges and set the nation on a path of sustained growth and development. Given India's youthful demographic, the primary focus would be on maintaining growth momentum and generating employment opportunities. If I were in the position of the Finance Minister, here is what I would have done differently in announcing the budget, incorporating practical aspects to illustrate these ideas.

1. Enhancing Employment Opportunities

A. Sectoral Focus on Employment

India's young population presents a significant opportunity, but also a potential risk if not channelled into productive employment. Therefore, I would prioritize sectors with high job creation potential, such as manufacturing and technology.

Example: In the technology sector, government-backed initiatives to create tech hubs and digital skill Centres in tier-2 and tier-3 cities would not only decentralize job opportunities, but also prevent urban over-crowding. This approach helps in creating a more balanced economic development across regions. Also, government administrative machinery needs to be incentivised (thru carrot & stick approach) to promote setting up of more technology hubs or data-centres.

B. Vocational Training and Skill Development

To prepare the youth for these opportunities, expanding vocational training and skill development programs would be crucial. Enhancing partnerships with industries to tailor these programs to meet current market needs would ensure that graduates have the skills employers are looking for.

Example: Launching a "Skill India 2.0" initiative, which includes courses in new-age skills such as AI, machine learning, and renewable energy technologies, could make India a hub for these emerging industries, providing employment to millions. Regional industry associations need to be incentivised to set up such training centres. Probably, certification should make some 6 – 12 months training compulsory before such candidates are job ready. Funds kept aside for CSR activities need to get channelised for this purpose. There should be some check on how many candidates have been picked up by the industry after being trained vocationally by the industry associations. Like in other country like China, to give an exposure to kids at very young age about basic life enhancing skills of better understanding of financial system, basic life saving skills, basic civil rights, etc.

2. Supporting Entrepreneurship and Start-ups

A. Comprehensive Support for Start-ups

While the budget includes provisions for start-ups, I would have gone further by simplifying the regulatory framework and providing more substantial tax breaks for new businesses. This would encourage more individuals to start their own ventures, thereby creating more jobs.

Example: Introducing a "Start-up India Fund" specifically aimed at providing seed capital for start-ups in under-served areas can encourage entrepreneurship beyond major metropolitan regions. This fund would provide initial funding, mentoring, and market access support. All government ministries at State level and Centre level should be encouraged to set up their own machineries for promoting start-up ventures.

3. Simplifying and Stabilizing Taxation

A. Unified Capital Gains Taxation

The aim to simplify capital gains taxation is a positive step, but I would focus on creating a more equitable system that balances the interests of all stakeholders. A unified capital gains tax structure would reduce confusion and litigation, making compliance easier for taxpayers. Also, I would respect capital owners as much as I respect labourers. Accordingly, I would give similar respect, if not more to risk capital providers. My focus would be to expand the base of tax-payers and one of large part of population not being covered is agriculture sector, where inequality gap is huge.

Example: Implementing a flat capital gains tax rate with exemptions for long-term investments could encourage more stable, long-term investment behaviour, thereby reducing market volatility. In this process, there could be some accidently like benefits of indexation has been removed on debt funds invested prior to Mar’23 and also on all real estate transactions.  In fact, I would prefer to start taxing rich farmers (say annual income more than INR 1 cr) – just to reduce the gap between rich and poor farmers and to check mis-use of relaxation in agricultural income.

B. Consistency in Tax and Regulatory Policies

Frequent changes in tax and regulatory policies create uncertainty, which can be detrimental to economic planning and growth. As Finance Minister, I would commit to maintaining a stable policy environment, allowing businesses and investors to plan long-term.

Example: Instituting a policy review mechanism where major tax and regulatory changes are only made after a thorough consultative process and with a minimum of two years' notice, would provide much-needed stability. Frequent changes in income tax laws should be discouraged. However, basic slabs of income tax need to be reviewed and re-adjusted considering the inflation factor.

4. Ease of doing business

There should be one desk across all ministries and government departments who would constantly take feedback about how do we make life easier for all stake-holders. Also, I will like to work in direction to enhance digital infrastructure to support businesses, including improving internet connectivity and cybersecurity. This is essential for the growth of e-commerce and digital transactions.

Example – The way private sector takes feedback from their stakeholders like clients and employees, I would like see a particular desk set up across various Government Departments and Ministries whose role is to take feedback about “Ease of Doing Business”. Journey if growth and development needs not only to be inclusive but it needs to be fulfilling and I believe that will create more sense of patriotism and not only during cricket match- Finals. To enhance the digital acceptance among Indian public at large, I will try to replicate the success of DIGILOCKER and UPI and similar other platforms at multiple levels including in Securities markets or banking operations. This also can be extended to cover regular day-to-day requirement of banking operations or even simple requirement of KYC norms. The success of ONDC as E-Commerce platform can be extended to services also. I also wish to offer programs to enhance digital literacy among senior citizens, enabling them to access online services, stay connected with family, and engage in digital financial transactions. I also plan to develop community support services, such as helplines, day-care centres, and home assistance, to cater to the needs of the elderly.

CONCLUSION

As Finance Minister, my approach to the Union Budget would focus on creating a balanced and sustainable economic environment. Prioritizing employment, supporting entrepreneurship, simplifying taxation, and ensuring regulatory stability are essential steps toward harnessing India's demographic dividend and fostering long-term growth. By taking these measures, the budget would not only address immediate economic challenges, but also lay a strong foundation for the nation's future prosperity.