Tax tinkering may be helping with more cash in people’s hands, but what more needs to be done on the per capita income front?

Rishi Shah: I have a slightly different input on this. At the end of the day, the government is promoting innovation. That has to be the first question. Is it spending on fundamental areas, which will improve the quality of labour or the quality of people in general? So, social expenditure, education, health and basic infrastructure… When you have got many more roads and bridges, people can travel, and think of 10 other things to do [economic opportunities].

So, if the government is doing that and if you are coming up with new ways of pushing innovation, the question of per capita income will take care of itself over a period of time. I don’t think it is a metric that needs to be targeted standalone.

Shardul Shroff: The first issue is going to be tariffs in the short term because if tariffs are high, export markets will keep changing. You had the U.S., now you have Mexico. If the process keeps on happening, a domino effect sets in and your export markets are cornered. Then, you have to focus on the domestic market.

The other issue is that artificial intelligence is a new game because you still don’t have the user benefits, or safety standards. A lot of work has to be done on that score. In relation to the aspects of ESG, we are poised at the right position. If you get all these policies right, there will be a growth pattern, which is continuous.

What can the private sector do about per capita income?

Vineet Agarwal: When we talk about per capita income, the larger question will always come up — what is the quality of life? Even though the per capita income as a country might be lower, in some cases, the quality of life could be better.

So, as long as we can also keep a focus on that, and not just on per capita income, it will make it a little bit more holistic in terms of where we are as a country. Wage growth can also happen with productivity increase. [We need] to figure out where we are losing our productivity and how we can incentivise productivity.

The second is value addition in every sector. How can we move from lower value-added products to high-tech products [in manufacturing], from just basic food products to processed products [in agriculture], and from just general, let’s say, hypothetically, a call centre mentality to AI-driven value-added service [in services]?

All those would mean that, once we start increasing the value addition across the system, automatically, we will see wage growth improve, as well as its impact on GDP.

Pranav Haldea: On per capita income, one important metric which also needs to be looked at is income inequality. I was reading somewhere that if you remove the top 1% of the rich in India, the per capita income drops significantly.

So, we need to ensure that while overall per capita income goes up, the benefits also are spread.

Gourav Vallabh: Globally, there are a number of measures people talk about beyond GDP. [For instance], happiness. Just recently we had done a study on per capita TV consumption, and air conditioner or refrigerator consumption. It is going up phenomenally. So, we have miles to go, there is no argument on that. But we are on that path.

But is that a factor of accessible credit, or income?

Gourav Vallabh: Not credit. It is because disposable income in the hands of people have increased. Television and car sales last Navratri were phenomenal. There were reports that a high-end car was sold every six minutes.

The quality of life, happiness in life, the consumption of white goods per capita had an exponential growth in the last 11 years because disposable income went up. So, we are on track and we will achieve the per capita income on global standards.

Vineet Agarwal: Just to add, in the past, we used to talk about roti, kapda and makaan. Electricity and education got added to it. Now the latest addition is broadband. That is an indicator of per capita income in many ways also.

Where do we really stand on growth with equity?

Rishi Shah: Equity for the global economy as a whole has become problematic. The systems are such that the access to wealth, or capital in general, is becoming easier for the people at the top. And with AI coming in, people who have a certain level of wealth, and capability to exploit the productivity gains from this will actually end up gaining more amount of wealth. But, what about the bottom [of the pyramid]? That is the question theoretical economists are also grappling with, because you don’t really have a system which works very well to uplift the society as a whole. So, how do you bring in sustainability and growth? This may look like a very simplistic sort of answer. But it is a fact that we need MSMEs to grow by making their lives easier in terms of a framework, wherein they do not have to run after getting licences...

How does one empower small businesses?

Gourav Vallabh: No. 1 is systematic deregulation. No. 2 is ease of doing business. Ease of doing business is not just reducing paperwork. It is reduction in the cost of doing business, and time taken to complete the process. This will improve employment and competitiveness in the global market, because MSMEs can take exports to the next level.

Point No. 2 is that we need a cluster approach for MSMEs. Thirdly, we need to ease access to capital for MSMEs. Micro requires good hand-holding and they have a capacity to compete in the global market.

What are the immediate needs for MSMEs? How can they be addressed in the Budget?

Pranav Haldea: One of the biggest challenges for SMEs is capital. It was with this idea that SME platforms of both the NSE and the BSE were launched in 2012. This calendar year (2025), we have had over ₹10,000 crore being raised on the platforms. Still the space remains extremely speculative. Shareholding is narrow, trading is less. So, investors need to be extremely careful. While there are good SMEs which have made use of this platform, there are some bad apples as well.

Since we are talking in the context of the Budget and the larger context is of the developed economy goal by 2047, what are the immediate and extremely important policy agendas?

Vineet Agarwal: The latest discussion around developed economies is that it’s not good to be called a developed economy. Look at the status of infrastructure in the U.S. Being a developed economy, it is completely crumbling.

Goals for us are still very high. On factors of production — land, labour, capital, and enterprise — land is one area that really requires a lot of work. We talked about increasing per capita income or even formalisation of the economy. All of these factors, with land reforms, can be a game changer. If I have to give you one of the largest moves to really get to a developed economy, it would be investment in education and health.

We have to ensure that people rise up from the lowest strata to a much higher level and become real contributors to the economy and the society as a whole.

Shardul Shroff: I think addressing arrears of court cases. They have just ballooned and nobody’s really paying serious attention to how these cases can be brought down. That issue has to be addressed.

It is not about classifying clusters or getting the same issue of law gathered together and disposed in one particular case. We have a massive problem because from the district courts to the Supreme Court, every court has an arrear. So, this has to be an aspect on which attention has to be paid, because if you get the dispute settlement system working, the speed of turnaround is much better.

Gourav Vallabh: Yes, land, labour, and legal are already on the agenda. A lot of work is done. Labour reform has already been initiated. States are going to frame rules for labour codes. Secondly, the capacity India had shown in the last 11 years on rolling out major reforms has to be showcased to the world on the private capital expenditure front.

And point No. 3, on the blue economy and the green economy, we still have to do a lot of things. Those are the way forward for a country like India.

Rishi Shah: I would like to focus on three things. One, the existing focus on innovation should continue. Secondly, can we actually incentivise MSMEs to become bigger? We need to find out ways of helping the small guy become bigger. And lastly, the focus on quality. Can the government actually help SMEs develop those quality norms across some major sectors, starting with a few? If we are able to do these things, it will be a game changer in the long term.

Pranav Haldea: Enforcement of contracts and speedy justice is one. Secondly, the government should really make a push towards getting out of business, privatise and divest, divest aggressively, and have a laser focus on critical sectors, including education, healthcare, infrastructure, and perhaps defence.

Pre-Budget Boardroom

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