Budget 2015: Five Most Urgent Reform Priorities For Modi

Investment sops: Likely

Balancing the demands of a welfare state and encouraging business is tricky for any government. The Modi government wants to increase business and also keep its tax gains steady. Therefore, it is very likely that some but not all industries will receive tax breaks. The railway and defense industries will probably have lower tax rates. The high potential consumer electronics industry can also expect tax breaks as it fulfills two criteria of the government: local manufacturing and high growth potential.

Subsidy cuts: Likely

With its financial deficit, there will be many sections of society clamoring for an end to subsidies.  The Modi government has been fortunate in implementing the change due to decline in global crude oil prices. Subsidies will therefore cost the government less.

However, farmer subsidies that were historically difficult to eliminate will not be any easier now.

Privatization: Not very likely

So far, it doesn’t look like the state is trying to privatize any of its assets, even the badly managed ones. Companies like Air India are struggling, and would be better in corporate hands.

So far, the government has only sold minority stakes in some of its better-run companies to private investors. Separating the state run lenders leadership from politics would be a much welcomed move.

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