The industries reacted with joy, enthusiasm, skepticism, and caution to the Finance Minister Nirmala Sitharaman’s Budget proposal 2021-22. Overall, there seems to be a “thumbs-up” from both practitioners and analysts. Here is what they are saying:
Mohammad Athar(Saif), Partner, Economic Development and Infrastructure, PwC India.
The budget has focused on bringing safety, quality and clean transport to the front by announcing a slew of initiatives. The voluntary scrapping policy announced in the budget will, for the first time, bring fitness test as a criteria for scrapping old vehicles. Over one crore light, medium and heavy commercial vehicles with an age of more than 15 years have been plying on Indian roads. The policy will enable shifting of older to new vehicles which will be safer and cleaner, and reduce road accidents.
The scheme to support public bus transport with an investment of Rs 18,000 crore will be critical to enable public transport mobility in Indian cities and reduce ownership of private vehicles in urban areas. Electric and cleaner public bus transport could change the urban transport landscape of the country, and bring in the much-needed quality of life for daily workers who depend on public transport as a critical enabler of their livelihood. Bus transport has remained one of the largest sources of public transport mobility, and the government's commitment to the sector will enable transitioning of the old fleet to new technology driven mobility in Indian cities.
Alternate models of mass transit in the form of metro lite, and metro neo will appeal to cities with narrower right of ways and with higher urban density. The continued investment focus on Kochi, Nagpur, Nashik and Chennai metro will enable completion of various project phases, and investment in the Bengaluru suburban railway network will bring relief to urban transport challenges in the IT and R&D hub of the country.
Madan Sabnavis, Chief Economist, CARE Ratings
The budget in a limited manner has provided some boost to industry through higher capex in roads and railways. This will have a virtuous backward linkage with industries such as construction, steel, cement etc, and help to revive their prospects too. The important thing is the continuation of such expenditures to ensure the sustenance of the growth process. The Budget has not given much on taxation which is a disappointment as a lot was expected to boost consumption and savings. But this has not been done and the focus has been on expenditure only. The fact that there is no hurry to get back to the path of fiscal prudence is encouraging.
Prabhajit Kumar Sarkar, MD & CEO, Power Exchange India Limited (PXIL)
The Union Budget for 2021-22 presented by the Finance Minister Nirmala Sitharaman today, has given a big push to the power sector by announcing close to Rs 3.06 lakh crore power distribution sector scheme.
We welcome this move as it is expected to assist discoms for infrastructure creation tied to financial improvements, including prepaid smart metering, feeder separation and upgradation of systems. Additionally, the government’s proposed framework to give consumers more than one discom choice was a much-needed move. It will help to enhance efficiency in the power distribution sector, induce fair competition and address the monopoly business of discoms.
Besides, we foresee that reforms such as Rs 1,500 crore allocation for the renewable energy sector, 100% railway electrification and expansion of metro rail networks and hydrogen energy mission for generating hydrogen out of green-powered sources will contribute significantly in enhancing the country’s power demand. PXIL, as a national power market infrastructure institution welcomes the budget announcement and is ready to provide an efficient platform for enhanced volume of trading and efficient electricity price discovery in the country.
Niranjan Hiranandani, National President, NAREDCO; and MD, Hiranandani Group
It is a “get well soon” type of budget, the V-shaped recovery being powered by the Covid-19 vaccination programme. On real estate aspects, the proposals for the annual budget reinforce the Government’s focus on affordable housing. For the home buyer, the second extension of the deadline till 31 March 2022 for the additional Rs1.5 lakh tax deduction given on loans taken to buy a house in an affordable housing project is welcome, as is the developer whose affordable housing projects also get an extension for tax benefits, for projects completed till 31 March 2022. Similarly, tax exemption for notified affordable housing for migrant workers, and the deduction on payment of interest for affordable housing being extended by a year will give a fillip to this emerging segment. As affordable housing attracts only 1% GST and Rs 1,000 stamp duty in the state of Maharashtra will augment the production of affordable housing in the state. The enhanced spending on public infrastructure projects like ports, railways, airports, warehousing, gas pipelines, metro, economic corridors is laudable and welcomed by industry that will give impetus to the employment generation and attract the essential investment to lift up the economic revival.
The strong focus on digital covering setting up of a Fintech hub at Gift City, seen in sync with moves to enhance digital payments and use of Artificial Intelligence and Machine Learning etc. in governance, will give a fillip to creation of Digital India.
Given the challenged scenario, the proposed annual budget has been largely positive, no major taxation enhancement is something that is welcome. As the Prime Minister pointed out last year saw mini budgets across the pandemic impacted time frame; the unsaid thing for most industries across the economy is that similar steps may happen with more positives in the offing. Continued focus on 'minimum government, maximum governance' will enhance 'ease of doing business', this government spending will provide stimulus for GDP growth, and is laudable.
Vimal Kejriwal, Managing Director & CEO, KEC International Ltd.
The 2021 budget is a budget for an Aatmanirbhar Bharat; a forward-looking budget focusing on construction and capex-led economic recovery. Significant allocation towards creating a future-ready Railway system, 100% Railway Electrification by 2023, focus on DFCs and Urban Infra, including new Metro projects and emerging technologies, infra creation for Power Distribution companies, expansion of Gas Distribution network to 100 new cities, thrust on Renewables, developing one lakh Digital Villages through BharatNet, and the creation of a Development Financial Institution for infrastructure financing augurs well for KEC International Ltd.
Anshul Singhal, Managing Director, Welspun One Logistics Parks
Government’s focus on capital expenditure and infrastructure development will be a shot in the arm for the warehousing and logistics sector in the country. The proposed Development Finance Institution will act as a provider, enabler, and catalyst for infrastructure financing. Also, the budget has earmarked a sharp increase in capital expenditure at Rs 5.54 lakh crore in 2022, from Rs 4.39 lakh crore in 2021. A planned boost to road infrastructure across the country and seven port projects will aid in job creation and income generation. Overall, the large-scale infrastructure augmentation coupled with asset monetization program of core infrastructure assets will go a long way in realising the national infrastructure pipeline, thereby benefiting the logistics sector.
Himanshu Chaturvedi, Chief Strategy Officer, Tata Projects Ltd
We believe that robust infrastructure is a prerequisite for national development, economic growth and improving the lives of citizens. Hence, it is good that the government has reiterated its commitment to achieving targets laid out under the national infrastructure pipeline. But creation and augmentation of infrastructure requires long term financing at reasonable rates. The setting-up of a professionally managed Development Financial Institution with targeted lending portfolio of Rs 5 lakh crore within three-years is therefore a welcome move since it shall act as a provider, enabler and catalyst for infrastructure financing.
The sharp increase in capital expenditure to Rs 5.54 lakh crore which is 34.5% more vis-à-vis current year showcases that the government’s focus is upon infrastructure and allied sectors. In addition, the Rs 2 lakh crore being provided to states and autonomous bodies for their capital expenditure will further reinvigorate infrastructure creation at the state governmental level across India. This is especially important since the financial health of states and autonomous bodies have been hit badly due to the pandemic thereby restricting their ability to upgrade and augment infrastructural amenities.
Focus on national highway corridors, railway lines including electrification, and metro rail lines will lead to easier and cost effective transport of people and goods across the nation. The Rs 287,000 crore Jal Jeevan Mission (Urban), which aims at universal water supply in all 4,378 Urban Local Bodies with 2.86 crore household tap connections, as well as liquid waste management in 500 AMRUT cities will provide enormous opportunities in this important sector.
The AtmaNirbhar Bharat–PLI scheme, wherein the government has committed nearly Rs 1.97 lakh crore, over five-years starting FY 2021-22, will be a gamechanger, especially since it will provide a major fillip to construction of industrial and manufacturing facilities – both greenfield and brownfield. Continuation of tax benefits for affordable housing and tax exemption to rental housing will spur activity in the realty sector thereby providing support to a key industry and creating thousands of new jobs.
The long term prospects of India’s construction and infrastructure sector was always good because the nation needs better and augmented infrastructural amenities. With the impetus provided in this budget through policy and financial support – it will usher in higher growth across the construction and infrastructure sector.
Warren Harris, CEO & MD, Tata Technologies
With a significant outlay on Infrastructure spend and the much-needed Vehicle Scrappage policy, the government of India has finally set the tone for recovery of Auto Sector which has been significantly impacted by the pandemic. This will not only help boost the demand for production of Commercial vehicles but also support the entire transportation ecosystem. Also, while it would have been good to see some more initiatives to promote Electric Vehicles in this budget, we are glad that the government has noted India’s critical role in the global automotive supply chain post Covid-19. Specific initiatives through Production linked schemes, creation of infrastructure for R&D and enabling skill development in new-gen technologies such as artificial intelligence (AI) and Machine Learning (ML) will help drive investment in Engineering and Research.
