The Indian economy is expected to grow at around 8-9 percent after the pandemic-induced contraction it suffered in 2020-21. The moderate upsurge in the goods market in the last few months is due to latent demand which was suppressed during the pandemic. Budget announcements for further boosting consumption will be welcome. Such measures, coupled with key reforms and the production-linked incentives for key verticals, would augur well for growth in capital expenditure, infrastructure, and investment. Smart policy steps can also offset the onslaught of increased crude oil prices and rising inflation.

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Budget 2022 must focus on reforms that can trigger investment and result in job creation. Economic reforms invariably lead to rationalisation or enhancements in parameters that increase either the investment attractiveness or the ease of doing business. The pace of reforms requires a higher velocity, and all political parties will hopefully realize that good economics eventually make good politics.

Land acquisition has remained an irritant for large investors since the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. Various projects which could propel the economy sometimes get stuck during the land acquisition stage. The cost of land being acquired has also shot up substantially over the last decade. Investors feel that it is time this law is reviewed, and the budget must address this expectation.

Tweaking of labour laws during the pandemic was at best a stop-gap measure. Stringent laws have made businesses’ exit quite difficult which often leads to the informalisation of labour. The government must complete the rationalization and simplification of 44 central laws into four categories — salary and wages, social security, health and occupational safety, and industrial relations. In addition, a model unified labour law must be drafted to replace many outdated state-level laws for time-bound adoption.

India must boost its trade-to-GDP ratio. Unrealistically high import tariffs intended at protectionism for domestic industry end up promoting local products even if those are of poorer quality. Looking at the entire value chain of manufacturing, they adversely affect large-scale exports of superior and better-priced products from India. It is imperative to negotiate and secure trade agreements with major global economies. Such an announcement of intent in the budget would indeed be a vital confidence-building signal for investors.

Challenges in managing healthcare have surfaced time and again given that India spends around 1.5 percent of its GDP on public healthcare. Similarly, public spending on education and skill development is barely 3 percent to 3.5 percent of India's GDP. Healthcare and education pull down India's human development index ranking substantially. Government must spend at least 3 percent and 6 percent of its GDP on health and education, respectively. The budget can surely send a signal on these fronts.

India barely spends 0.69 percent of its GDP on scientific research and development – the lowest amongst the US, China, South Korea, BRICS, and OECD countries. This must be gradually enhanced to three percent of GDP. Intellectual property and patent development are critical for higher economic value-add to accrue to a nation. Unless India treats the scientific research sector with the seriousness it deserves, success on this front would continue to elude India. Let this budget herald a shift on allocations for scientific research bulk of which happens under the government canopy.

Indian courts are unable to handle contractual disputes due to a lack of expertise and bandwidth, and therefore, mechanisms for their fast-track settlement must be dealt with in the budget. The concessional long-term capital gains tax could be extended for investments in start-ups. Finance Minister Nirmal Sitharaman may also consider extending the sunset date for tax benefits for new companies from 2023 to 2025. More sops for small businesses will be welcome given the distress in the sector. A bigger disinvestment target would surely be a step in the right direction.

Looking at India's environmental commitments recently announced by Prime Minister Narendra Modi in Glasgow, a concessional tax regime could be considered for companies investing in green technologies. The Finance Minister (FM) should also announce tax incentives for the electric mobility sector. The budget should also outline its focus on infrastructure projects with higher outlays for roads, highways, affordable housing, and smart cities. In the social sector, allocations for MNREGA and free food grains for the poor would require enhancement.

While India's ease of doing business has improved, we need to quickly jump to being amongst the top 10 nations on this indicator. In addition, investors, particularly overseas ones, expect a certain regulatory certainty in the country. If the Finance Minister addresses these subjects in her Budget speech, India would stand brighter as a destination to multinational manufacturing firms which are contemplating relocating a part of their manufacturing supply chains to destinations other than China.

- The article is authored by Jayant Krishna is a senior fellow (non-resident) with the Center for Strategic and International Studies (CSIS) in Washington DC. He is also the CEO of the Foundation for Advancing Science and Technology (FAST India). Views expressed are personal