Indian Finance Minister Nirmala Sitharaman presented the budget. Infrastructure push in Tamil Nadu, West Bengal, Kerala and Assam. Also, emphasis on Startups, Railway Plan 2030 and a lot more. Incentives to startups is a welcome measure and so is the INR 35,000 Crore for Vaccines. Sensex and Nifty gained positive momentum as the Finance Minister read further. Well, what do the sector experts have to say?
We spoke with a few business leaders specific to infrastructure, healthcare, travel, logistics, insurance and financial services. Here are their comments
Motilal Oswal, MD & CEO, Motilal Oswal Financial Services
The FY22 budget has been much better than the market’s expectations. The feared and anticipated measures around Covid-Cess/higher capital Gains tax/Wealth Tax etc did not materialize. This will provide a huge relief to market and economy and help in sustaining the buoyant sentiments in the economy. Government has clearly articulated the focus towards Infra and Capex spending with five key measures:
[1] Capex spends proposed to go up by 26% in FY22 vs. FY21 RE.
[2] Setting up of Development Financial Institution.
[3] Setting up of ARC/AMC to deal with stressed assets.
[4] Asset monetization plans in various segments
[5] List of CPSE’s for divestments. We believe this will push the CAPEX spending in the economy and augur well for the overall economic revival of India. The significant increase in allocation to the Healthcare sector should lift the general well-being in the economy, in our view.
Separately, the honourable FM also announced several measures for relaxation of compliance and procedural burdens in multiple spheres of activities (taxation being the most prominent). The extension of tax exemption schemes in Affordable Housing is also welcome as it can provide a good multiplier effect on the GDP. All in all, a very good budget which avoids the pitfalls of raising taxes and at the same time provides a boost to the CAPEX/infra spends in the economy.
Vishal Suri Managing Director SOTC Travel
Union Budget 2021 focused on infrastructure, agriculture, healthcare, education and industrial sectors. While the Union Budget 2021 did not directly address several of the demands being made by the travel and tourism industry, it addressed a relatable need that acts as a medium for growth of the infrastructure sector. More economic corridors are being planned to boost road infrastructure with an allocation of 1.18 Lakh Crore.
The government has set an ambitious target of building infrastructure in the country with special scheme to nudge states to spend more of their budget on infrastructure, providing Rs 1.10 Lakh Crore for railways, privatizing of airports and Indian railways national rail plan for India to prepare a future-ready railway system by 2030. These contribute towards sustainable growth within the tourism sector. With airports to be privatized in tier 2 and 3 cities, it will improve regional connectivity. Addressing concerns like immediate waiver / rationalisation of 5% TCS for outbound tourism, rationalisation of taxes will create the necessary boost for the tourism segment.
Mr. Niraj Kumar, Chief Investment Officer, Future Generali India Life Insurance Company Limited
The imperativeness of the Life Insurance sector in the economy has gained paramount importance in the aftermath of Covid and has reinforced the need for wider penetration of insurance in terms of protection and building a safety net. Budget 2022 has indeed taken cognizance of this and has taken the bold step of increasing the FDI limit to 74% from the incumbent 49% which will provide an immediate backstop in terms of capital for growth and improve the insurance penetration and financial inclusion in the economy. Also increasing insurance penetration would pave the way for generating employment opportunities, which in turn would augment the efforts of the government to revive the economy.
Sandeep Sharma, President, R K Swamy Media Group
It is a good progressive budget and has considerable positives to driving India‘s growth post covid era. The increase in capital expenditure added spending on roads & infrastructure, augmenting railway infrastructure, urban infra will give an impetus to industry activity and generate jobs. Further direct tax reforms and easing the tax compliance are a progressive step forward.
Going forward industry would look forward to rationalizing GST further and increase spending power in the hands of the common man by a cut in personal income tax rates. Nowadays reforms are an ongoing process and budget is meant to be a macro statement of policy intent and to that extent it has been a good & balanced budget.
Dr. Inder Maurya, Founder & CEO, FOREIGN OPD™
Just the symbolic placement of the sector in the first section of the budget speech shows the government’s commitment to enhance the health infrastructure for the wellness of all citizens. An increase by 137% in the budget outlays shows that the Government is serious. We have all seen that the country has almost led the globe in COVID war and it is gladdening that the healthcare infrastructure will see further robustness. I am sure with these benefits, the systemic gaps currently in the system are annulled.
Seema Prem, CEO and Co-Founder, FIA Global
The budget this year has given a significant support to startup ecosystem that will help turbocharge their growth. The concept of OPCs with an option to convert into any other type of company at any time, reducing residency limit for an Indian citizen to set up an OPC from 182 days to 120 days, and allow also non-resident Indians to incorporate OPCs in India will certainly boost innovation. Collateral free loans and fund of funds for MSMEs will stimulate growth and provide solace to MSMEs hit by the pandemic.
The portability of One nation, one ration card will be a boon for migrant workers and speedy implementation will ensure that migrants can move across boundaries without worrying about access to ration. The additional allocation to MNREGS will provide substantial relief to workers whose livelihood has been impacted by the pandemic.
Shrinivas Rao, CEO-APAC, Vestian
The Union Budget 2021 continues to provide impetus to ‘Aatmanirbhar Bharat’. Coming on the heels of a global health crisis, the focus is on providing a fiscal push to revitalise the economy. It lays emphasis on strengthening infrastructure—connectivity, health and rural economy, while also emphasizing on industrial growth and global competitiveness, to attract foreign inflow to the country, mainly by way of proposing to increase FDI limit in the insurance sector to 74%. Additionally, the fact that suitable amendments would be carried out to enable debt financing of InVITs and REITs by foreign portfolio investors, bode well for infrastructure and real estate sector as this will ease access to finance.
The budget also proposes the setting up of a Development Finance Institution (DFI) capitalised with Rs 20,000 crore. This comes as a pertinent measure to ease financing of real estate infrastructure and to help overcome the pandemic-induced constraints, considering that very few commercial lenders are willing to take on infrastructure risk now. While extension of tax holiday on affordable housing for another year is aimed at maintaining momentum in the residential sector, the government has reiterated its commitment to affordable rental housing for migrant workers by allowing tax exemption for notified affordable rental housing projects. Another significant announcement enhancing the country’s business environment is the extension of tax holiday for start-ups by one more year, while also proposing to reduce margin money requirement to 15%. Overall, the budget strives to touch upon several key issues impacting the economy and going forward, it would be interesting to understand the new developments.
Union Budget & Infrastructure Sector : Pradeep Misra, CMD – REPL, (Rudrabhishek Enterprises Ltd.)
As it was expected and much needed, there is massive emphasis on infrastructure in the union budget. The number of projects under NIP (National Infrastructure Pipeline) has been extended to 7400, which will help in generating immediate employment. Focus on Affordable Housing section continues with the extension of eligibility to avail benefits for another year.
Plan to set up ‘Development Financial Institution’ with fund infusion of Rs. 20,000 crores for financing infrastructure & development projects will further help in mobilizing the long term capital, especially through debt instruments. This should be vital in pulling out the projects that are stuck or slowed down.
The aim to complete 11,000 Km of National Highways; seven Port projects worth Rs 2,000 crore in PPP mode; extending metro in Tier 2 cities and peripheral areas of Tier 1 cities etc. will collectively create a vibrant economic conditions of growth. As mentioned by the Hon’ble Finance Minister, fund infusion in infrastructure sector will have to be accentuated by multiple measures, including monetization of assets, creating institutional structure as well as raising the union & state governments’ budgetary allocations. Overall, the budget has set the tone of intense infrastructure development in FY 21-22 and following years.
Anil D. Yadav, Group Chief Finance Officer, IRB Infra Group
We welcome the Budget. The move to increase allocations for Roads & Highways Segment in the Infrastructure Sector will definitely facilitate the set development agenda. Road development has always been a proven strong Vaccine for economic boost, since it has direct impact on land prices, facilitate urban development, creates direct employment and immediate capex generation above all. To overcome existing pandemic scenario this is inevitable and hence, well done.
Rajesh Neelakanta, ED & CEO, BVC Logistics
The logistics industry was looking forward to this year’s budget speech. We were expecting an update on the long-awaited National Logistics Policy. However there have been some hits and misses for us. Certain good points to look forward are reduction in timelines for reopening of assessments from 6 years to 3 years. Businesses can now breathe relatively easy because of this announcement. Boost to infrastructure development by allowing TDS exemption for investments in to INVITs. Rationalizing custom duties on gold and silver is a welcome move. The focus on logistics through the development of road and highway projects will encourage economic transformation and seek to improve connectivity that is much needed for the growing economy.
Pankaj Poddar, CEO-Cosmo Films Limited
The Union Budget 2021-22 is a decent budget with a focus on infrastructure, inhouse manufacturing, healthcare and others. There are positives with respect to the movement towards simplicity and rationalization. Increase in custody duty and incentives to inhouse manufacturing are the need of the hour. The government could have focused on providing more incentive to industries having export potential and providing PLI incentive similar to the textile Industry. The aggressive government borrowing plan for FY 21-22 may cause interest rate increase.
Rajiv Bhalla, MD, Barco India
The budget is a major step in the right direction. It outlays a strong focus on infrastructure, healthcare, capital spending, disinvestment, monetization, job creation and digitization. These measures are not only progressive and recovery-led, if implemented correctly would ease the burden on the economy and lead India towards the projected v-shaped growth and development. The budget talks about structural reforms in banking, enhancing debt financing and credit limits for businesses and asset monetization. This will lead to an increase in government spending, which, in turn will spur demand, therefore net positive for the industry. The several initiatives around job-creation, startups, reskilling, rural development and better quality of services to people are positive as a Nation cannot progress without care for the environment and inclusive all-round transformation.
Amitoz Singh, Founder & CEO, Nirvasa Healthcare Pvt. Ltd
The COVID-19 pandemic exposed gaps in India’s healthcare system especially in terms of preparedness to handle contingencies. Clearly, healthcare needs additional focus and higher monetary weightage in the upcoming budget. The government must not only focus on ramping up medical infrastructure and subsidize healthcare providers but also consider private companies as a partner in generating better health solutions. A few months after the COVID-19 breakout, private companies made India self-sufficient in terms of the availability of PPE kits, essential dietary supplements, masks and sanitisers amid an ever-spiralling demand. The government is expected to ease out restrictions for them in accessing lands and funding. So that India’s healthcare setup puts a strong foot forward in the times to come. This would help expand the reach of premium healthcare products in regions which have less access to quality healthcare, especially tier 2 cities and rural belts.
Well, the list doesn’t end here. We have more industry stalwarts who gave rave comments on the budget. Do not miss the opportunity to read further.
