The Union Budget has pushed forward the Modi government’s agenda of creating a climate of ease for doing business and investment with the intention of implementing the Prime Minister’s pet projects, viz., Make in India, Skill India, Digital India and Swachh Bharat.

As the existing model of public-private partnership (PPP), particularly in infrastructure sector has not worked satisfactorily to the desired level, it has been planned to revise and revitalize it. As the fiscal space of the Union government is squeezed due to the recommendations of the 14th Finance Commission, the government has become bullish in scouting for domestic private sector investment and foreign direct investment (FDI) to fulfill its ambition of creating more jobs and touch the magic double-digit growth figure.

The Budget, therefore, has given adequate attention to creation of funding institutions and rendering fiscal sops. The government has hiked service tax keeping in view the inherent strength of the sector.  A noticeable change in the new tax regime is that the investor will be taxed and not the investment. Keeping in view the balance between development and Green India, the government is hesitant in imposing Carbon Tax on coal as it has done for petroleum products as this would raise the cost of power generation. Several cesses imposed will fund activities in education, health and infrastructure development.

Apart from proposing to set up the MUDRA Bank and electronic Trade Receivables Discounting System (TReDS) for micro, small and medium sized businesses, the Union Budget has focused on deepening of the Indian Bond market and elevating it to the level of world class equity market. The Forward Markets Commission will be brought under the purview of SEBI to strengthen regulation of commodity forward markets and reduce wild speculations. As part of capital account control, section 6 of FEMA is sought to be amended to provide control on capital flows as equity will be exercised by the government in consultation with the Reserve Bank of India (RBI).

A sector-neutral Financial Redressal Agency will be set up to address grievances against all financial service providers. The Indian Financial Code is being reviewed by Justice Srikrishna panel. Employees will be given options to invest in either the existing Employee Provident Fund or the New Pension Scheme. They can choose any health insurance product recognized by the Insurance Regulatory Development Authority.

For quick resolution of commercial disputes, the government proposes to set up exclusive commercial divisions in various courts based on the recommendations of the 253rd Report of the Law Commission. Government intends to introduce legislations to resolve the issue of transparency in public procurement and public contracts.

The government has concluded a Monetary Policy Framework Agreement with RBI with the objective of keeping price inflation below 6% and for providing liquidity in the market. The RBI Act will be amended allow setting up of a Monetary Policy Committee.

With a view to improve the functioning of public sector banks, the government intends to set up an autonomous Bank Board Bureau which will search and select heads of public sector banks and help them in developing differentiated strategies and capital raising plans through innovative financial methods and instruments. This would be an interim step towards setting up of a holding and investment company for banks.

Disinvestment of government equity in public sector undertakings will be taken up in both loss-making as well as in strategic units.

To provide liquidity, the Budget proposes to monetize about 20,000 tonnes of gold which are not traded. India is one of the largest consumers of gold and imports about 800 to 1000 tonne a year. The new Gold Monetisation Scheme will replace the existing Gold Deposit and Gold Metal Loan Schemes. Under the new scheme, the depositors will earn interest in their metal account and jewellers will get loans in their metal account. Banks and other dealers would also be able to monetize this gold. A Sovereign Gold Bond will be floated as an alternative to purchasing metal gold. The bonds will carry a fixed rate of interest and will be redeemable in cash in terms of the face value of the gold at the time of redemption by the holder.

The government will float Indian Gold Coin which will carry Ashok Chakra on its face and would reduce the demand for coins minted outside India and also help to recycle the gold available in the country.

Keeping in view the need to increase investments from all sources, the government has decided to allow foreign investments in Alternative Investment Funds. The distinction between foreign direct investment (FDI) and foreign portfolio investment has been removed and the both will have composite caps. The sectors that are already on a 100% automatic route will remain unaffected.

However, the government is of the view that public sector investment should lead in infrastructure sector. The government has selected infrastructure as a priority area for investment and has increased outlays for roads and gross budgetary support to railways by Rs 14,031 crore and Rs 10,050 crore respectively. It has increased the CAPEX of public sector units to Rs 3,17,889 crore. The total public investment in infrastructure is pegged at Rs 70,000 crore. National Investment and Infrastructure Fund will also be set up to mobilize resources to ensure an annual flow of Rs 20,000 crore. It will enable it to raise debt and in turn invest as equity in infrastructure finance companies like the IRFC and NHB. Tax free infrastructure bonds will be permitted in rail, roads and irrigation sectors.

Atal Innovation Mission to be set up with an initial corpus of Rs 150 crore will promote a network of world class innovation hubs. A mechanism called Self-Employment and Talent Utilisation (SETU) will be set up to support all aspects of start-up businesses  and other self-employment activities, particularly in technology driven areas in IT and knowledge based sector.

Ports in the public sector will be corporatized and become companies under the Companies Act. Multiple prior permissions for setting up of projects will be replaced by a pre-existing regulatory mechanism.

Government proposes to set up five new ultra mega power projects each of 4000 MW capacity in the plug-and-play mode. All clearances and linkages will be in place by a transparent auction system. Such play-and-plug projects will be considered for roads, rail, ports, airports.

Government proposes to introduce a regulatory reform law that will bring about a cogency of approach across various sectors of infrastructure.

To make Make-in-India programme a success, skill development is imperative and the Budget has proposed some initiatives in setting up of institutions for skill development. According to the budgetary proposals, a new National Skills Missions will be launched to consolidate skill initiatives spread across several ministries and standardize procedures and outcomes across 31 sector skill councils.

For skill development in rural areas, Deen Dayal Upadhyay Gramin Kaushal Yojana has been set up with a corpus of Rs 1,500 crore. An IT-based Student Financial Aid Authority is proposed to be set up to monitor scholarships and educational loans. Five All India Institute of Medical Sciences (AIIMS) will be set up in Jammu & Kashmir, Punjab, Tamil Nadu, Himachal Pradesh and Assam, while Bihar will have another AIIMS-like institution.

An Indian Institute of Technology (IIT) will be set up in Karnataka and the Indian School of Mines at Dhanbad will be upgraded to the level of an IIT. A post-graduate Institute of Horticulture Research and Education will be set up in Amritsar.

Two Indian Institute of Management (IIM) will be set up in Jammu & Kashmir and Andhra Pradesh. The National Institute of Speech and Hearing in Kerala will be upgraded to a University of Disability Studies and Rehabilitation. Three new National Institute of Pharmaceutical Education and Research will be set up in Maharashtra, Rajasthan and Chhattisgarh. Two Institute of Science and Education Research will be set up in Nagaland and Odisha. A Centre for Film Production, Animation & Gaming will be set up in Arunachal Pradesh while two Apprenticeship Training Institute for Women will be set up in Haryana and Uttarakhand.

Under Digital India, the National Optical Fibre Network Programme (NOFNP) of 7.5 lakh km networking 2.5 lakh villages is being further speeded up by allowing willing States to undertake its execution on reimbursement of cost.

The Finance Minister has made a humble beginning to make the Prime Minister’s pet project Make-in-India a success. The outcome is awaited.