Davos 2023: Budget should focus on vulnerable groups, more investments in healthcare needed, urge industry experts

Industry experts have called for a renewed focus on vulnerable groups, employment opportunities and more investment in healthcare in their pre-Budget recommendations.  

In a brainstorming session, on the sidelines of the ongoing World Economic Forum (WEF) meeting in Davos, Switzerland, panelists from various Indian industries discussed the ongoing economic situation amidst the pandemic with Rahul Kanwal, news director, India Today and Aaj Tak. 

“This Budget has to be about continuing to focus on growth with reasonable fiscal. The government has played a very strong role with capex investment in infrastructure in the last few years. We hope like last year, this year too, we will see a growth from the government’s side on capex,” said Sajiv Bajaj, President of Confederation of Indian Industry (CII) and Chairman and Managing Director of Bajaj Finserv Limited. 

“At this time, the growth should be on the individual side, especially at the lower income groups for people who have got hit the hardest first from the pandemic and then inflation is biting into their pockets. So, a rationalization on personal income taxes would help,” he added.  Bajaj said that the fiscal stimulus that the government provides is still required with a focus on vulnerable groups.  

When asked about apprehensions that the government might not have the appetite for big ticket reforms with election cycle coming in soon, Chandrajit Banerjee, Director General of the CII, said that government seems committed to the reforms and the states have to work in tandem with the central government for the implementation.  

“The issue is how do we take the states along and how do we get the states to play ball when it comes to really implementing some of the reforms such as labor and land,” said Banerjee.  “I hope that budget will stay on the path of reforms to make it more growth oriented. But we would really like to see a formation of certain consultative committees like the GST Council, in areas of agriculture and labour,” Banerjee said. 

With big cleanup of balance sheets of Indian banks, both public and private, over the last several years, the panelists also discussed about the investment in India’s growth story. When asked about the steps that should be taken by the government in this budget in order to ensure enabling India to start investing more aggressively in the India story, Dinesh Kumar Khara, Chairperson of State Bank of India (SBI) said that, as far the banks are concerned, the balance sheets have been cleaned up and they have been very well capitalised. 

“There is a significant strengthening of the risk management practices, which are being adopted and also for whatever impaired loans are there, they have been adequately provided. So that way the banks are actually very well poised to support the growth story of the country,” said Khara.  

Khara said that the banks have seen a decent credit growth, which was there in the second quarter of this financial year. As the third quarter results are still being presented, he expects almost similar kind of attraction going forward.  

“There is a definite improvement in the demand side, and also the supply chain constraints are getting addressed, capacity utilisation is also improving. And there's a renewed focus for the renewable energy and infrastructure spending,” said Khara.  

Bajaj said that similar to the Production Linked Incentives (PLI), the government may also consider a scheme like Employment Incentive Scheme. Talking about the indication of recession coming to India, Khara said that 2023 is going to be the year of contrast. He said that the during the first half, India might see some of the recession coming in.  

“But the second half, we'll see the recovery from the recession,” he said, adding that the US might get into the shallow recession, and as far as the second half is concerned, they'll be out of it.  

“That time-period might differ from the continent to continent, but this is likely to be the scenario,” said Khara. “The only thing is that if at all the global recession might impact our export sector, it might disrupt for a very short while, as far as exports are concerned," he added.  

Talking about inflation in India, Khara said that from the peak, inflation in the country has already come down by over 200 basis points. “For us it was more of an imported inflation as compared to the domestic inflation. As far as the supply chain concerns are concerned, they have also been addressed. Rural sector and agricultural production is quite on the upswing,” he said.  

“Inflation is something which is manageable; we might have to face some kind of a global impact into [our] indices. If the Fed increases the interest rate, we might have to increase but I would expect that soon thereafter there should be pause which will go a long way in terms of supporting the growth initiatives,” he said.  

The panelists also discussed whether the Covid situation, especially as seen in China, would impact India and what the country can do about it.  

“If the country is going to continue to stay resilient, especially the way we were during the Covid-19 in the past, we will have to start making good investments,” said Shobana Kamineni, executive vice-chairperson of Apollo Hospitals. 

Kamineni said that digital health is here to stay, and the government has also realised it and more and more into this sector will be done. “India really is the fastest growing health insurance market in the world. And this is something that people realize, but we need to be able to incentivize them to get diagnosed earlier to get treated earlier,” she said. 

Also read: Davos 2023: Stars aligned in favour of India, says Tata Steel CEO T V Narendran

Also read: Davos 2023: Global recession most likely in 2023, say economists at World Economic Forum