BEYOND THE HEADLINES

India's 'viksit' dreams cannot be achieved by making its masses splurge in malls or on e-commerce sites. That will come only through taking on the world through exports

- K. SUNIL THOMAS

The tax exemption on income up to 12 lakh, the last of the six transformative domains that made up this year's Union Budget, hogged all the headlines. But in terms of significance, it might well have been more a desperate step to offset the seething middle-class anger than any visionary policy change to catalyse India's growth story.

"The question is what people will spend this extra income on. If they are spending it on iPhones and imported products, all that tax-saved money will flow out of the country," said Padmanand V., partner at the professional services consultancy Grand Thornton Bharat. "Consumption expenditure can fuel economic growth only to a limited extent." Real growth may still happen, but not because of any spending spree by the masses, but by the reformist intent written between the lines in the budget. "Accelerate growth, secure inclusive development, invigorate private sector investments, uplift household sentiments and enhance spending power of India's middle-class," said Finance Minister Nirmala Sitharaman in her budget speech on February 1, though almost all the attention went just to the last two points.

Perhaps she has got the mix right this time. From pushing for deregulation of many sectors to a strategic rejigging of duties that could help domestic manufacturing and exports, and a conscious push for micro, small and medium enterprises (MSME) through development of industry clusters and easier loans, Sitharaman is hoping to set the stage for a refurbished version of the virtuous cycle she has been dreaming of for long. "This budget would kickstart a virtuous cycle of growth," said Sanjiv Puri, chairman of ITC and president of the Confederation of Indian Industry.

The difference this time is that the government has actually acknowledged the chink in its armour-the factors holding India back-and taken baby steps to fix it.