Union Budget 2019 India: The business of job creation has simple ingredients — land, labour and capital — with multiple recipes possible in how they combine. India has been a hostile habitat for job creation after 1947 — Nehru said he hated the word profit and Mahalanobis believed India would not have any taxes after 1970 because the public sector would generate so much surplus – and this continued in the recent past with business people called “suit boot waala”.
An important signal in this Budget was the upfront and overdue recognition of job creators and the private sector as a partner in creating prosperity.
Many Budget moves recognise that a 10-year-plan is not 10 one-year-plans — four labour codes, higher education commission, making foreign investment more welcome, public infrastructure investments, recapitalising banks, a national research foundation, resolving the angel tax issue, thinking about improving the rental markets, lower corporate tax rates for medium-size enterprises, and much else will go a long way in helping large and small entrepreneurs create more formal jobs.
Obviously a Budget cannot do everything but there is much more that I was expecting on the Ease-of-doing Business.
The innovative interchangeability of Aadhaar and PAN numbers for filing income tax for individuals points to a recognition of the costs of duplication.
I wish the Budget has set a deadline for a single Universal Enterprise number to replace the 27+ different numbers issued by various different parts of the government to enterprises.
I hope the building of Team India with the Jan Bhagidari — minimum government and maximum governance — involves a road map for rationalising, simplifying and digitising the regulatory cholesterol faced by all employers but that hurts MSMEs the most — 57,000+ numbers, 3000+ filings, and 5000+ annual changes.
Some changes to the huge payroll confiscation — the difference between net and gross salary — could have boosted consumption. But, overall, the fiscal discipline has been maintained and will sustain the ongoing reduction in the cost of money.
The brain of the Indian state is now connected to its backbone but it is not connected to its hands and legs. The bottom 50% of our 22 million government employees across the country are an important factor in making formal job creation difficult and I wish civil service reform has been called as an important priority for the next decade.
Historian Ramachandra Guha often reminds us that India has created the world’s largest democracy on the infertile soil of the world's most hierarchical society.
But that begs the question of why India has not created the world’s largest economy with 1.3 billion people? The answer lies in various factors that sabotaged our productivity and there is still much policy work to be done in formalisation, financialisation, urbanisation, industrialisation, and human capital.
This Budget makes down payments on the goal of reaching a $5-trillion economy but courage, persistence and imagination will be needed.
The author is Chairman, Teamlease Services