Budget 2020 with Zee Live: FM Nirmala Sitharaman tables Economic Survey; key takeaways
Budget 2020 with Zee Live: FM Nirmala Sitharaman tables Economic Survey; key takeaways
Budget 2020 is just a day away as the Budget Session of the parliament is already in motion. President Ram Nath Kovind has completed his joint parliamentary address and the Finance Minister Nirmala Sitharaman has tabled the Economic Survey of India as well. In this survey, the Gross Domestic Product (GDP) growth rate has been expected to remain 6 per cent to 6.5 per cent for FY21. You can catch all updates of Budget 2020 with Zee.
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Policies that enable ease of doing business and flexible labour regulation enable new firm creation, especially in the manufacturing sector. As the manufacturing sector has the greatest potential to create jobs for our youth, enhancing ease of doing business and implementing flexible labour laws can create maximum jobs in districts and thereby in the states.
Grassroots entrepreneurship is not just driven by necessity as a 10 percent increase in registration of new firms in a district yields a 1.8 percent increase in GDDP. Thus, entrepreneurship at the bottom of the administrative pyramid – a district – has a significant impact on wealth creation at the grass-root level. This impact of entrepreneurial activity on GDDP is maximal for the manufacturing and services sectors.
Reflecting India’s new economic structure, i.e. comparative advantage in the Services sector, new firm creation in services is significantly higher than that in manufacturing, infrastructure or agriculture.
Entrepreneurship and Wealth Creation at the Grassroots
World Bank’s Data on Entrepreneurship confirms that India ranks third in the number of new firms created. The same data shows that new firm creation has gone up dramatically in India since 2014. While the number of new firms in the formal sector grew at a compounded annual growth rate of 3.8 per cent from 2006-2014, the growth rate from 2014 to 2018 has been 12.2 per cent. As a result, from about 70,000 new firms created in 2014, the number has grown by about 80 per cent to about 1,24,000 new firms in 2018.
Targeting Ease of Doing Business in India
India has made substantial gains in the World Bank’s Doing Business rankings from 142 in 2014 to 63 in 2019. It has progressed on seven out of the 10 parameters.The Goods and Service Tax (GST) and the Insolvency and Bankruptcy Code (IBC) top the list of reforms that have propelled India’srise in rankings. The trajectory of India’s performance over the last decade.
Revenue from Privatisation jumps from Rs 1,560 cr to Rs 4,653
On an average, the gross revenue of privatized firms increased from Rs 1,560 crore to before privatization to Rs 4,653 crore after privatization, signaling an increase in income from sales of goods and other nonfinancial activities. DiD analysis attributes an increase of Rs 827.65 crore in gross revenue due to privatization.
List of Selected companies for stake sale
The Economic Survey of India lists Hindustan Zinc, Bharat Aluminium Company (BALCO), Computer Management Corporation (CMC), Maruti Suzuki, Indian Petrochemicals Corporation Ltd. (IPCL), Tata Communications and Lagan Engineering that the Modi government has selected for stake sale to raise funds for its ambitious projects.
Privatization and Wealth Creation
The recent approval of strategic disinvestment in Bharat Petroleum Corporation Limited (BPCL) led to an increase in the value of shareholders’ equity of BPCL by Rs 33,000 crore when compared to its peer Hindustan Petroleum Corporation Limited (HPCL)! This reflects an increase in the overall value from anticipated gains from consequent improvements in the efficiency of BPCL when compared to HPCL which will continue to be under Government control. This chapter, therefore, examines the realized efficiency gains from privatization in the Indian context.
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