The recent Indian budget announced by its Finance Minister, Mr. Arun Jaitley, is interesting in the way that it tends to be conservative, cautious and yet exciting at the same time. In his maiden full-year budget presented about 10 days back, Mr. Jaitley is arguing that India can increase investment without borrowing more. The Economic Survey of India, the basis for Jaitley’s budget for the fiscal year starting April 01, 2015, forecast growth of 8.1 percent to 8.5 percent under new calculations that make India the world’s most dynamic big economy. Not only is the country on course to reach double digit growth rates but can do so while also meeting its fiscal deficit targets. The forecast marks acceleration from growth of 7.4 percent in the current fiscal year and argues that India has in fact reached a sweet spot where there is now finally scope for undertaking big bang reforms. These bold reforms according to the author of this report, Mr. Arvind Subramanian, economic adviser, hold the key to tomorrow’s bright India, since although on first look the outlook appears impressive, it in effect follows a big overhaul of India’s economic data, which previously showed the economy struggling to recover from its longest growth slowdown in a generation. Also, other indicators of India’s economy are not as rosy as GDP data suggests. Earnings of the country’s top 100 companies shrank by 6% in the last quarter, private investment and consumer demand are weak and merchandise exports are falling.

So sure, everyone was expecting new ideas and reforms but not entirely of the kind as announced on Saturday before last. Consciously moving away from the commonly held perception about this Modi led BJP government – it believes in minimizing the role of the government in managing economic affairs – no where did Mr. Jaitley talk about a reduced footprint of the state or any meaningful privatization of state’s assets/corporations that are not performing to satisfaction. If anything, the government investment both in terms of quality of management and financial resources in the economy is going to be enhanced, e.g. A pledge to invest $137 Billion in Indian Railways, since it is considered to be the “backbone” of the economy and will need to be modernized if indeed India is to achieve its economic goals. In fact if anything, the government plans to ensure generating the growth momentum by substantially enhancing its own role in the short-term in driving the Indian economy – doubling of its direct investment in infrastructure development through a series of global finance partnerships and by significantly increasing the scope and funding of its on-going public welfare and poverty alleviation schemes; these to only name two such initiatives amongst quite a few that were announced. In essence, this government of India intends to kick-start the investment process in the country through a governmental investment push and by using a sort of investment-funneled quantitative easing that goes on to create an investment environment, which also side by side captures the imagination of the private sector. And the RBI (Reserve Bank of India) is going to be the architect here where its charismatic Governor, Raghuram Rajan, has already announced a number of new credit schemes to allow easy access for India’s exporters, new start-ups and the SME(Small and Medium Sized Enterprises) sector.

What the budget and its subsequent plans aim to do is to:

a)     Ease undertaking of both domestic and foreign investment, mainly FDI (Foreign Direct Investment)

    through a host of policy decisions that remove investment barriers. And to also cater to the long awaited demands of Indian businesses to improve ease of doing business in India (currently India’s ranking is 142). These measures relate to property acquisition, governmental reporting, removal of redundant and unnecessary British era laws, permissions to enter business sectors which previously were exclusively reserved for domestic players, financial reforms, cutting of red tape, etc.

b)     Labour reforms which allow businesses to operate more freely and efficiently.

c)     Run state enterprises and state bureaucracy more efficiently and responsibly. Here laws will either be relaxed or re-framed to induce professional management structures.

d)     Allow the Indian States a greater share of the centre’s pie and induce them to seek improved tax collection banking on the principle of reciprocity.

e)     Mainly, improve India’s competitiveness.

As mentioned above, the Indian economy will already be registering a growth of 7.4 percent in the current fiscal year, which ends on March 31, 2015, so clearly the momentum has started to build and the bar is being raised further - Target for 2015-16: 8.1 to 8.5%. More importantly, in getting to its goal this BJP government seems to have suddenly turned cautious about its image of being mainly a big-business friendly party. What we see in its first full fiscal year budget is that surprisingly it is not privatization or ambitious taxation drives that it has chosen to raise revenues or to spur growth, but it is in fact the very opposite route for progress that they have instead tried to chalk out. And it is in this new way that this budget strives to generate both investment and employment by: enhancing India’s competitiveness, making India’s government and its institutions more efficient, and last but not least by incentivizing business returns by way of improving ease of doing business in the country and by allowing due space to the private sector to help unleash its entrepreneurial juices and to allow it to flourish freely.

Now one may not entirely agree with Mr. Jaitley’s recipe in context with what needs to be done here in Pakistan, but at least on his end he is prepared to take risks and be enterprising. Can we say the same thing about Mr. Dar?

 The writer is an entrepreneur and economic analyst. He can be contacted at kamal.monnoo@gmail.com