Civil Services Reforms and India Inc

Recently, Government of India has directed the DoPT (Department of Personnel and Training) to prepare a proposal over lateral entry in energy and infrastructure related departments of government at mid to senior level decision making. This step of government will not only has bearings upon the civil service personnel, but to a larger scale on the economy and industries also. This is because, still the critical public goods and infrastructure are provided by government only. And lateral entry will directly impact this decision making

Lateral entry is the entry of domain experts from private and social sector into specific government role, will improve the collective knowledge and understanding of decision making group. This will reduce the time taken in decision making by government authorities, bring advance practices into government machinery and more synergy between public and private space. For India Inc, this speed in decision making will save time, money and interests on borrowed money. Energy and Infrastructure sector which has been marred by coal scam and poor decision making (regarding risk allocation in PPP infra projects) respectively, will definitely be benefited by this arrangement.

Also, with entry of private counterparts, civil servants can’t afford to be lethargic and will be performance oriented (given senior level posts are open to both public and private individuals). This will improve the situations in other fields like contract enforcement, getting electricity connection and registering land titles etc. All these will have direct bearing on India Inc, and in positive way. But, this reform has many lacunae and issues that need to be sorted out first.

One of the major issues with lateral entry is whether it will be contractual or instill individuals permanently. If contractual, what are the limitations on further employment of individuals after end of contractual period? Are they allowed to be hired by private enterprises as lobbyists, or affect decision making of government (since he/she would be an insider) like that of Tony Blair hired by consulting firm and PE firm as adviser? And given India’s lack luster Judiciary, it will be very tough to enforce discipline amongst contractual entrants.

If permanent, will it not be a deterrent for already serving civil service personnel? Will it not de-motivate the serving civil servants? Also, given the varieties of post created with no distinct division of power, how effectively will be the decision being taken by inducted lateral entrants? For example, construction of road requires coordination with land department, utilities department like CPWD and other, in absence of trust how only one infrastructure department can bring change with lateral entrants?

Including this, there is also the major concern of nepotism and favoritism by political bosses. Questions are many, but solutions are also out there in form of case studies and practices in advanced nations.

Strong regulatory institutions, upright professionals into regulatory bodies, responsive judiciary are few need of the time for making this initiative successful. Together they will enforce discipline and with clear guidelines, they will enforce transparency in selection of late entrants. In the past, we have few such initiatives and it has provided us with stalwarts like Manmohan Singh, Montek Singh Ahluwalia, Viay Kelkar and others; and if continued with right intentions, it will create wonders.

**Political reforms however is the prerequisite to large scale civil services reforms

Can Capitalism bring Inclusive growth?

In the recently concluded Millennium Development Goals of UN, inclusive growth has been put at the forefront. The yearly data on GINI ratio that measures the inequality specific to countries further highlight the growing inequality in world. The most famous book of twenty first century “The Capital” by Thomas PIketty also highlight this inequality (lack of inclusive growth) and how it has grown since last three centuries. The problem is clear, to achieve inclusive growth; and the method to achieve that are many from capitalism model of development, socialist model of development or mixed economy. But what’s the best solution? Before answering this question, we should rather look into these model of development.

Capitalism involves private ownership of the factors of production with prices and allocation of resources is determined on basis of supply and demand, to be precise by the market. Capitalism further includes different models of development like laissez faire model, state capitalism or welfare capitalism. Socialism involves state’s control over the factors of production and price fixation. Erstwhile USSR was a good example. And mixed model is in between the previous two, with both private and public involved into economic activities. India is currently following this model of development.

Here, we are limiting the case to capitalism. Capitalism in its true sense means laissez faire model or free market economy. Here, decisions are taken as per market forces and private individuals are the owners of all decision making activities. It works on the principle of Survival of the fittest. The most competitive firm survives and thus it gives rise to innovations, development and discoveries. But at the same time, since decisions are taken on principles of demand and supply of market; needs of people who are unable to pay are not served. The poor are marginalized in such systems and it heightens inequality. The low GINI index of USA represents the poor inclusivity in American growth story. India on other hand has better GINI index although with one-tenth size of US economy and triple of its population.

But at the same time, innovation brought in by Laissez faire capitalism can directs towards inclusive growth. The birth of Sachet packaging is one such innovation of market economy serving needs of the bottom of pyramid. This enabled poor to use best products and improve their quality of living with access to better resources. But the catch here is “ability to pay”. If one is unable to pay, capitalist class doesn’t have the motivation to innovate. And that’s why majority of innovation is into luxurious products. But such growth is unsustainable and dangerous. As Edward Abbey writes

"Growth just for the sake of growth is the ideology of cancer cell"

Further, the surplus arises out of economic activities in capitalist system accrued to capitalists only. And very little benefits trickle down to worker class. This unequal growth has also been highlighted in Alternate theory of Distribution by Ricardo; where surplus accrues to capitalists and landowners.

In the past, mercantilism was one of the previous forms of capitalism, which gave rise to colonialism. And it divided the world into two halves with haves and have-nots. The third world of today comprising of Africa and South Asia is a result of greed of this capitalism. Thus, even on past experiences it has never proved to be inclusive.

However, other models of capitalism like state capitalism and welfare capitalism which involves state intervention in form of regulation do give a way out for inclusive growth. Here in this model, the excess of capitalism gets regulated and the poor are being supported by state machinery. Long gestation development activities for masses which are not undertaken by private players are rather provided by state. The experience of Nordic countries regarding availing education and health to all from surpluses of capitalist economy is one such positive example.

Also, many of welfare economists like Joseph Stiglitz directs responsibility of state in a market economy towards ensuring rights and growth of poor and destitute. And the excess of capitalism like monopoly practices or cartelization which aims towards maximizing profits at the cost of welfare of consumers need to be checked through regulators. SEBI or TRAI or CCI (Competition Commission of India) are some very good examples which ensure welfare of masses against excess of market economy.

Capitalism in theory do has potential to bring inclusive growth with its innovation, best use of resources and accompanied with welfare state. But the baseline of capitalism i.e. profit motive when combined with human greed in real world, all the diversion starts. And similar is the case with other model of development like socialism. The unsustainable inclusive growth of USSR is one such example. Although, in beginning it promises good result but in absence of competition (ensured by capitalism) people had become complacent and innovation died down.

Inclusive growth requires best use of available resources with equal distribution of surplus benefits. Capitalism do provide this opportunity, but in a world dominated by human decision making, realism always overtakes theory. And reality is human emotions, greed and jealousy which need to be curtailed through regulations and legal standards. In absence, no model can guarantee inclusive growth and neither will capitalism.

Will 2016 be the next Recession?

George Soros, a major hedge fund investor who once towed down Bank of England has predicted over next slowdown in 2016 (published in The Economist). And the likely indicators are Chinese slowdown, negative interest rates in Europe and Japan, low commodity prices. But, at the same time there seems to be some bright spots like US and India with decent growth numbers. But is that so? When India is performing below its potential growth rate (8% on basis of incremental capital output ratio) or US showing low consumption demand (recently concluded Christmas month), Can we count on these bright spots? Or when China is putting best effort to shift to consumption driven economy rather than export driven, Can’t we wrong in putting it into dark spot? Let’s start from last century debacle and learning (1930 Great Depression)

The world has followed the learning of 1930s Great Depression crisis in the post 2008 Great Recession through Keynesian approach aided with monetarists (linked with fiscal expansionism and monetary easing). After Great Depression of 1930, New Deal of FDR (Roosevelt) focused on public expenditure adding jobs and increased buying power of people in USA. It was a major event in bringing American economy out of recession. After 2008 recession, following same lines of boosting demand to recover economy has been followed. And this has been tried through monetary easing, buying toxic assets from market by Fed and giving easy money in hands of people (Keynesian approach includes targeting demand rather than supply in an economy). And this approach is based on assumption that public expenditure will crowd in private investment and private production and economy start rolling.

In 1930s it was direct government involvement or fiscal route while in post 2008 it was through monetary route. This easy money has been offloaded to developing nations like India, China and ASEAN in search for better returns. And since financial markets are dominated by few investment giants (in words of Piketty, another case of rising inequality), this has not been a difficult task. As a result, crowd in effect has not been that substantial as expected. And recent low consumption data and poor output data in US points to same (US still not recovered). What was successful in 1930s and subsequently can't be repeated again in this financially connected global economy.

In aftermath of 2008, there appeared many other dark spots in various other parts of world. The Europe has still not recovered of Greece crisis of 2010-11 owing to poor coordination, negotiation and understanding. And recent Refugee crisis of 2015 has imposed existential threat to Euro area with ban on free movement of labour. Also, low commodity prices specially of crude oil has further limit the development expenditure of oil rich nations (like OPEC and Russia). This has negatively impacted the infrastructure firms to its maximum (like that of L&T, with major orders in Gulf countries). This very low (<$30) price of oil is although good for importing nations like India and China; but on global level this is hurting. In fact, crude oil price <$40 and >$80 always hurts the global economy. Too low a price, hamper global expenditure while too high a price, a drain of resources.

Amidst all this, China which was earlier the major bright spot of world economy (when India was suffering with scams and policy paralysis) has also cooled down. With global demand declining for Chinese exports (US and Europe distress) and production shifting to consuming nations (thanks to 3D printing technology alike), Chinese economy is shifting its gear towards consumption driven. And change of economy fundamentals is time taking and rough. If not handled soundly, China can become the trigger of another slowdown.

The only bright spot available are India and Africa, but they are too small to boost the global economy. They are always in the shadow of political instability or policy paralysis.

Taking account of all the recent events, data and economic health of nations; the world seems to be at the brink of another recession. And so is any normal economy, which runs on a knife edge equilibrium of trusts and faith between suppliers and consumers. If that trust and faith are being restored by political class of world, there will be instead a growth story. And that faith can be restored through easy landing of Chinese economy without hampering other nation’s growth (through avoiding deliberate devaluation), making monetary decisions on global cues and not just domestic, global mutual solution to refugee crisis and economic interests over political ones (US-Russia and Iran-Saudi Arabia enmity). 

Interview Transcript

Board: Ms. Kilemsungla Ma'm
Date of Interview: 21/05/2015


(The transcript is created based on memory. The interview actually was more unstructured and I fumbled with member 4 and member 2)


Me (reaching at the chair) : Goof Afternoon Ma'm, Good afternoon sirs
Chairman: Please sit
Me: Thank you ma'm

Chairman: What is the economic policy of India?
Me: At the moment?(how can she ask such a subjective question in the beginning only)
Chairman: Yes
Me: (thinking a while) Economic policy of India is towards indicative planning, where govt. is facilitating the private individuals to start with economic activities and involve in manufacturing and services. With the new govt. coming to power after last year elections, emphasis has been led upon manufacturing which has not been given due emphasis to. Emphasis has been given towards fulfilling gaps in infrastructure.

Chairman: Will Land acquisition will bring development into India?
Me: (Such a debatable topic) Yes man

Chairman: Why you feel so?
Me: It will increase the manufacturing and mining activities, which will create jobs and enable movement of disguised employed in agriculture to more productive activities. The concern is there regarding lack of inclusive growth which for long decreased faith of locals into these developmental activities whose concern should be taken care of. They need to be benefited from these activities.

Chairman: Corruption is very acute problem of India despite presence of RTI and Lokpal....(some more enlightening words) ...What do you think?
Me: (forgot the gist of question, only corruption remained in mind) Ma'm Corruption is existing because of shortcomings from both supply and demand side. (Seriously, what I have said, just now)  From demand side, institutions need to be strengthened reformed to implement the provisions like Lokpal more effectively. While from supply side, general public still not aware of benefits of RTI and need to be aware.

Chairman: (clarifying his question over my vague answer) But why these institutions are not being successful?
Me: (thinking for a while) Institutions and stakeholders need reforms in human resource management which should provide them motivation to ensure transparency and accountability by setting targets and linking them to their growth inside organization. (Why I am saying all this, such a vague answer)

Chairman passed it to Member 1

M1: (Very well dressed, cordial and elegant) You have billiards as your hobby. But it is said, billiards is a proficiency of misspent youth. Do you agree?
Me: (Unable to get his questions) Sorry Sir, can you please repeat the question (smilingly)
M1 repeated it again

Me: No Sir, I don't agree with it. Billiards is a sport that teach us a lot from concentration to a balance between body posture and sport. Although, the infrastructure required for the sport is expensive and not easily available in general. And available only at few selected clubs.

M1: What do you think US foreign policy is? I am giving you four options: moral, pragmatic, self interest and stupid?
Me: (Don't know why I misinterpreted it as US economic policy) Sir, Can I take some time to think over it.
M1: Yes Sure, you can have some water also.
Me: No Sir, Thank you. (after a while, realized my lips were dry like hell). I think I should. (drank whole glass of water with everyone watching me closely)

After a while
Me: Sir, US economic policy is more towards self interest where capitalism is the main guiding principle. It's main emphasis on individuals to start with their firm and business.

M1: But I asked you about foreign policy? (asking smilingly)
Me: Oh, Sorry sir. I am very sorry. I feel US foreign policy is guided by self interest.

M1: And why do you think so?
Me: Sir, the US action in Iraq and Middle East in early part of last decade was motivated with oil diplomacy. with no development of shale reserves in US. But in later half, with shale oil development, they refrain from interfering into Yemen crisis. (some more lines on saudi arabia interference into Yemen)

M1: And what's the other?
Me: US forming Trans Pacific Partnership in pacific ocean with countries like Japan, Phillipines but sidelining China. As China is seen to be a growing competitor to US.

Passed on to member 2

M2: Are you aware of the electricity charges collected by distributing firms? What is the mechanism behind the tariff rates?
Me: Sorry Sir, I am not fully aware of the mechanism behind this. I know that there is electricity regulatory authority which decides upon the limit of tariff and if distributing firms have any issue with tariff, they bring it to authority

M2: What is ponzi scheme?
Me: Ponzi scheme is the practice of alluring investors with huge return with no underlying asset, where money is returned to first set of investors from money garnered from second set to claim authenticity and chain continues. At the end, the scheme is wrapped overnight. (didn't able to remember clear definition, so explained what I knew then).

M2: Why its in news recently?
Me: It's in news because of scams like Saradha in west bengal.

M2: What is microfinance?
Me: Microfinance is the practice of lending small loans to poor people of society like village vendors, rickshaw pullers in order to start a micro businesses and have a dignified life.

M2: Any other countries where it has revolutionize the living of poor people?
Me: Yes Sir, Our neighbour Bangladesh is a clear example of this

M2: Which is the organization involved?
Me: It is probably Grameen Bank

M2: Who is the person involved?
Me: I am not sure, Sir, but probably he is Mohammad Yunus.

M2: Do you know, who is Thomas Piketty?
Me: Yes Sir, infact at the moment I am reading his book "Capital in the 21st century" but not finished it yet.
M2; (smiling and looking at ma'm) And what's it about?
Me: Sir, It is about economic inequality which as per book has been increased in the last two three centuries.
M2: And how he explained that?
Me: He explained that rate of return on capital being in the hands of affluent group has been higher than the growth rate of the economy which decides the growth rate of middle and lower income group of people.
M2: Is there any learning from that?
Me: Yes Sir

Passed on to member 3

M3: (explained about water shortage in Gaya and Palamu) Because of which there is poppy cultivation being practised. (Me surprised look with this fact) Are you aware of this?
Me: Sorry Sir, I am not aware of this. But it is opium cultivation?
M3: Yes it is opium cultivation. What do you think it should be allowed or not?
Me; (thinking for a while) No Sir, I don't think it should be allowed.

M3: Why?
Me: This region is marred with lack of development, illiteracy, lack of employment. And with easy availability of opium locally, it would be a greater social problem in the future.

M3: But, it would be a loss of income for poor people?
Me: But there are other opportunities also like there are crops which can be grown in less availability of water. Also with government programmes implemented honestly, it can be contained.

M3: As a DM, What would be the 3 steps being taken by you?
Me: Three steps: 1. Implementing govt. social welfare programmes specially in those regions like MGNREGA, IAY. 2. Rejuvenation of closed industries of the region like cotton mill in Gaya and cement factory in Daltonganj.....

M3: Don't you think, you should implement legal measures against opium cultivation?
Me: Trying to explain my point on providing better options to them.

M3: (Getting furious) Don't you think it's necessary to implement legal measures?
Me: Yes Sir, there is the need of that one. Thank you Sir

Passed on to member 4

M4: What do you think of reforms in Indian Agriculture? Tell three in priority order.
Me: 1. Investment into agriculture infrastructure

M4: What do you mean of agri infrastructure?
Me: irrigation, availability of roads, warehouses. 2. Investment in R&D, and bringing them on to field (explained a bit) 3. Uniform national market to enable farmers to get benefited directly.

M4: (explained about potato shortage in West Bengal) Bengal govt has restricted export of potato. Is it justified?
Me: In the emergency situation, this is justified.

M4: But don't you think that it will against the federal structure of India. Tomorrow, Orissa can say that it will restrict Chickenpea.
Me: But Sir, This is an emergency situation and concerns of local states need to be taken care of.
 (A lot of conversation was there with M4 and M5 too)

Chairman: Thank you
Me: Thank you Ma;m, Thank you Sirs Thank you Sirs

The best part was "Chalo beizaati to nahi hui naa". And no questions on personal, which was a big relief. 

MUDRA Bank: New Initiative

Introduction

MUDRA bank the term coined in this year Union Budget 2015-16 stands for Micro Units Development and Refinancing Agency. This public institution has been created with the aim of funding the unfunded 5.2 crore micro and small business spread across the length and breath of India employing more than 12 crore individuals. It has been formed with a corpus of 20000 crore INR and credit guarantee of 3000 crore INR (2000 crore claimed by few sources too)

What is micro and small business?

As per the definition given by the RBI, micro units are those where the investments into plant and machinery is not more than 25 lacs INR (for manufacturing, production or processing) and less than 10 lacs INR in case of services. So who all comprises micro businesses? They are none other than tailor shops, cycle repairing shops, electrical and electronic repairing shops, weaving shops and industries and many others.

Same is the case with small businesses, with only difference of investment limit which is between 25 lacs and 5 crore for manufacturing and in between 10 lac and 2 crore INR for services. Local soap factories, paper industries (recycling of paper) are few examples for these.

Why them?

These micro and small businesses employ more than 12 crore unskilled, low skilled and skilled individuals (majority of work force) but only 4% of them have access to bank credit. They usually borrow from individual lenders at exorbitantly high rate (to the tune of 36% per annum) and thus very less fund available to them to invest in training their employees or in machinery. This on one hand reduces productivity of labor (calling for Skill India Mission) and technological backwardness of industries on other hand (calling for investment in R&D).

Funding these businesses can serve multiple purpose like skilling India and innovation in manufacturing and services. Also, it's the MSME sector only who are responsible for bringing new technology and innovation in industries which later on followed by bigger firms.

The other benefits include more jobs creation, increased savings, increased standard of life style and sociological change towards uplifting depressed section of society (as many of them are owned by people from lower and downtrodden section of society).

Hasn't Government done anything for them?

Government has taken many steps towards this direction and SIDBI is one such initiative. SIDBI (Small Industries Development Bank of India) and Mahila Bank (credit to women entrepreneurs) are such few initiative. SIDBI lend to public sector and private sector banks for their exposure to MSME sector and also through direct credit to needy units and achieved success in few industrial clusters.

But, given the large number of needy units in MSME; one SIDBI is not enough and more such institutions are required. Also, because of political interference in disbursal of loan through public sector banks (local MLA directing list to poor bank managers regarding beneficiaries) only a certain group/community reap the benefits. It has also been responsible for high NPA for PSB and RRB. And thus there is need for autonomous institutions with no government influence and can distribute  credit directly to needy individuals.

Can MUDRA solve this?

Answer to this question lies in its implementation. For now, MUDRA acting as NBFC under the guidance of SIDBI also given the task of micro-finance regulator. In future, if MUDRA would not be kept out of government influence the fate would be similar to SIDBI with little benefits reaching to micro businesses and more NPA.

Also, given the task of regulating MFI (micro finance institution) as well as funding micro businesses can be contradictory for MUDRA bank effective functioning. Alone, it can't serve the vast needs of 96% of 5 crore businesses and more such institutions are necessary (both in public and private sphere) to augment their businesses.

HDI and Union Budget 2015

The topic seems a bit strange but when at international level, development of a country is measured through indices prepared by various world organizations like UN, World Bank etc. And Union Budget is an exercise (planning exercise) by union government of India regarding growth of economy and benefitting every citizen of India. Then why not, judging the decisions taken under Union Budget in the light of those indices. And how the steps taken under union budget umbrella will make us improve our indices (representing growth and prosperity)

Now, Human Development Index (HDI) is one such index calculated by United Nation Development Programme (UNDP) that not only measures the economic growth of a country but also emphasize on people and their capabilities. HDI is the aggregator of health of an individual, knowledge level of people and standard of living of the citizens. They are calculated through:

1. Health is assessed through the life expectancy at birth (minimum value of 20 and maximum of 85 years)
2. Education is assessed through average year of schooling for adults till 25 years and expected years of schooling for children entering in school.
3. Standard of living is assessed through gross national income per capita adjusted for their PPP (Purchasing power parity). Logarithm of income is taken to take into account of diminishing importance of income with increasing GNI

Now judging the Union budget decisions under the light of these three criteria:

Health: Health of an individual is dependent upon sanitation, water, healthcare facilities and nutrition. Now, there is no need to mention the Swachh Bharat Mission, AYUSH, ASHA (Accredited Social health activists). However, government steps in budget regarding Swachh Bharat is commendable with 100% tax benefit in contribution to Swachh Bharat fund (susceptible to corruption and lackluster use) and high duty on polymer bags. Government has also emphasized on the construction of toilets with target of 6 crore units and health insurance through PMSBY (Pradhan Mantri Suraksha Bima Yojana) and establishment of more AIIMS and research institutions in medical field. As it seems government has lost its will to renovate the public health care system and trying to cover private health expenditure bill. 

On comparison at international level, India is still spending only 1% of its GDP on health while countries like China spend 3% and US spend more than 8% of its GDP on healthcare.

Education: Education requires infrastructure both in form of schools, colleges and in form of trained teachers and professors. Besides this, it requires social security to families that enable children to attend schools (MGNREGA is one such example in places where it has been successful). This year budget has led to opening of IITs, IIMs, AIIMS and other educational and research institutions with few in north Indian states (institute for film in Arunachal Pradesh), increased expenditure on MGNREGA by additional 5000 crore INR and allocated approx 68000 crore to education.

But the main problem of Indian education is its quality (highlighted in ASER report by Pratham NGO) and it has not even been addressed in budget. In fact, regarding the educational infrastructure the problem is regarding the governance rather than funding and resources. Also reviving the syllabus, making it more close to job skills are few of important concerns to be taken into account by government rather than just increasing numbers (either of colleges, schools and universities)

Living Standard: This is dependent more on the earning potential and actual earning of the individual. Regarding the potential which is more dependent on skill level and for actual earning the requirement is available of opportunities in industries, production, infrastructure and entrepreneurship. This budget seems to have a lot in this direction from encouraging entrepreneurship and MSME through MUDRA bank, incubator with 1000 crore under NITI for startups and easy availability working capital finance; to emphasis on developing skills of the youth through Deen Dayal Grameen Kaushal Yojana, National Skill Mission and scholarships. The budget has incentivized private corporate to invest through reduction in corporate tax and generate employment (what happens if they spend on labor reducing technology as usual since 1991).

The budget seems to prioritize growth through industries over education and health. May education and health find its true worth in next year budget or in governance improvement initiative throughout the year. And only then, we can expect of improving our HDI rank with respect to other nations.

How I see this Budget (Part1)

It has been said that there aren't big bang reforms in this budget. The point here is, we are living in a democracy and in a democracy government's future (parliamentary and assembly elections) is dependent upon majority. In India, this majority is formed by middle and lower class people. And they must be taken into account while formulating budget. Subsidies can't be wiped out in one go without building institutions to streamline distribution of subsidies. And institution building takes time. JAM (Jan Dhan, Aadhar and Mobile)  as coined in Economic survey as best tool for limiting the leakage in subsidy will take time to be resilient and successful.

Tax benefits can't be provided leniently without compromising with government revenue (many expecting tax limit to increase to 3 lacs). At the same time, government needs more fund to invest in infrastructure and minimize deficit. But still, government has given hint of following direction of fiscal expansion by reducing fiscal deficit to 3% by next three years instead to 2 years.

Now looking at the measures announced:

1. Ease of doing business

• Bankruptcy laws help resolving insolvency (one measure of easing of doing business)
• Other measuring units are getting electricity, registering property, getting credit, enforcing contracts, paying taxes, protection of minority shareholders, dealing with construction permits. Improvement in these require more of governance reforms rather than budgetary reforms
• Few of the governance measures announced includes encouraging compliance and dispute resolution, simplifying tax procedure and implementing recommendations of TARC (Tax Administrative Reforms Commission)

2. Agriculture

• In urgent need of public investment towards capital building like irrigation, there is also growing demand of making a national market for agriculture products. Both these need has been addressed in this budget
• 25000 crore fund to Rural Infrastructure Development Bank, 5300 crore to Micro Irrigation Programme, watershed development and PMKSY (Pradhan Mantri Krishi Sichai Yojana)
• Farmer's credit to the tune of 8.5lakh crore

3. Infrastructure

• Infrastructure bottleneck is due to lack of funds, non viability and litigants in PPP projects, delay in land acquisition
• Funds problem has been tried to solve through 70,000 crore additional fund to Infrastructure from Union government, tax free bonds, and revitalizing the PPP projects with government bearing maximum risk
• To improve the functioning of public sector ports; they will be encouraged to come under Companies Act.
• Emphasized Research through Atal Innovation Mission with 150 crore to foster culture of innovation in development of infrastructure.

4. Financial Sector

• Indian financial sector that enable the companies and developmental organizations to raise funds for investment and infrastructure building and opportunity for investors has many shortcomings (insider trading,
• Forward Market Commission (which looks after commodity trading) is proposed to be merged with SEBI (can be said to be moving towards one uniform regulator)
• For a very long time now, economists have been arguing in favour of an independent debt management office, which in the Indian discourse is called " National treasury management agency" or debt management agency, so that RBI can be relieved of the burden of being the Centre's investment banker. And Public debt management agency being formed is one of the recommendation of IFC (given by  Financial Sector Legislative Reform Commission)
• PJ Nayak Committee has recommended Banks Board Bureau for appointment of chairman to PSU banks to ease them off government controls. This has been approved of in new budget
• Gold imports has been a major concern since last two to three years for India; to case off gold monetization has been attempted through Sovereign Gold Bond (equal to holding gold) and Indigenous gold coin with Ashok Chakra

5. Industries

• At present, India has seen a surge in entrepreneurial activity across the sectors. These activities bring innovation in industry and need to be promoted. Indian democracy can be best justified if it enable its weakest individual (financially)to dream of becoming a millionaire by just business. And establishment of Mudra bank with initial capitalization of 20,000 crore to finance micro-finance firms  who lend to small units.
• Regarding the high class educated entrepreneurs willing to start in technology related business, SETU incubation programme  has been launched with funds coming through NITI.
• Regarding the big corporate houses, corporate tax will be reduced to 25% over four years (nothing in this year) with end to all the exemptions phase wise (exemptions are responsible for reducing effective tax). It is believed that this will boost investment; but when already companies are sitting on pile of cash worth 8-9 lacs crore and not investing, this justification seems questionable.