NATION GETS BOOSTER SHOT

Finance Minister Nirmala Sitharaman's Budget proposes higher spends in infrastructure, doubling of healthcare spend and increased FDI

NEW DELHI: Finance Minister Nirmala Sitharaman on Monday proposed a sharp increase in expenditure on infrastructure, doubling of healthcare spending and raising the cap on foreign investment in insurance in her Union Budget for the next fiscal in a bid to pull the economy out of the pandemicinduced trough.

From Sitharaman reading out her 110-minute speech from a tablet to seating arrangements in tune with pandemic times, there were quite a few firsts during the presentation of the 2021-22 Union Budget on Monday. Also, for the first time, the Budget went paperless and members were provided soft copies of the speech. Clad in a red and cream-hued saree with patterns, Sitharaman continued with the practice of carrying the red-coloured 'bahi khata'. It was also the shortest speech by Sitharaman, compared to last year. Reading out her third straight Budget speech, Sitharaman quoted from works of Rabindranath Tagore and Tamil classic Tirukkural while some Opposition members made certain remarks during the speech. Sitharaman proposed a vehicle scrappage policy, Rs 20,000 crore recapitalisation of public sector banks, divestment of some state-owned lenders and sale of non-strategic PSUs with a view to bolstering an economy that plunged into its deepest recorded slump amid the pandemic outbreak.

Stock market cheered the Budget announcements, with the biggest jump in indices on a budget day in over two decades while India Inc hailed Sitharaman as a reformist. In the Budget for 2021-22, Sitharaman made interest on employee contributions to PF over Rs 2.5 lakh per annum taxable, effective April 1, 2021

In a relief to senior citizens, those above 75 years of age with only pension and interest income would no longer have to file income tax returns, subject to certain conditions. For the agriculture sector, she maintained the reform momentum such as the extension of farm credit provision to farmers, commodity expansion under 'Operation Green' and extension of Agriculture Infrastructure Fund (AIF) to APMCs. Foreign direct investment (FDI) limit in insurance was proposed to be raised to 74 per cent from the current 49 per cent.

This budget has a feel of reality and confidence of development as well and showcases India's self-belief. It's a pro-active budget that gives a boost to wealth & wellness

—Narendra Modi, Prime Minister Forget putting cash in the hands of people, Modi government plans to hand over India's assets to his crony capitalist friends

—Rahul Gandhi, Congress leader

CHENNAI: At 11 am today, almost everyone expected a Shakespearean tragedy to unfold in the central hall of the Parliament and a pall of gloom to surround the budget speech. The FM put paid to everything within the first thirty minutes or so with announcements that thundered spends by government far exceeding the most optimistic expectations.

With her listing out of the fairly critical reforms in the financial sector, infrastructure outlays and opening the insurance industry to additional foreign investments the Sensex already on light wings got more aviation fuel. While it was quite expected that Tamil Nadu and West Bengal will get more attention than usual, the pointed announcements of significant infrastructure investments should make the industry in the respective states quite energised.

The budget presented in the backdrop of an unprecedented crisis displays great vision and boldness on the part of the government and effectively silences the critics and doomsayers. The standout feature has been a big increase in the budgeted expenses of the government for FY 2021 which has effectively held the economy together these nine months and ensured that the pain of contraction was significantly cushioned by the fisc.

The fiscal deficit of 9.5 per cent for the FY 2021 carries a spend of an additional Rs 4.6 lakh cr for the current year over the budgeted spend of little over Rs 30 lakh cr. The estimate for next year which is approximately Rs 35 lakh cr should be appreciated in this light. The budgeted borrowing of Rs 12 lakh cr allows for additional allocations to the states and factors in significantly higher spend on healthcare almost touching Rs 2.5 lakh crore for the FY 2022. The numbers toted out regarding spends on MSP compared to what the previous regime did has stolen the thunder out of the farmers fight over the new laws. The allocation for FY 2022 is not only encouraging but also expected to have a significant multiplier effect.

The budget has taken a long-term view of achieving economic growth with distributive justice and making sure all boats rise together. The measures to improve governance through privatisation of many of the PSBs and opening up of the insurance sector to long term global capital are strong pillars on which future growth can be expected. And the most admirable aspect is that there have been no additional tax measures as feared in the media to offset the outlay. The FM has been quite pragmatic in accommodating a higher deficit which in the global context is quite par for the course.

Many policy announcements that embrace liberalisation of state electricity distribution system, improving the agricultural infrastructure together with an unprecedented thrust on healthcare spend proposed are measures that should accelerate improved welfare and better lifestyle even at the bottom of the pyramid. The purported push for privatisation and asset monetisation are the other cornerstones of the current budget. There have been pointed criticisms that the government was slow off the block in the current year and missed the market buoyancy to hawk off its assets. Hopefully, the present budget should keep markets up for more time and give the government an opportunity to monetise assets at rich valuations. The moderations in customs duty rates are encouraging as some of the changes should help industrial inputs are reasonable rates and improve competitiveness and keep inflation low in the country. The relative silence on the part of the opposition benches really tells the true story of where this budget stands in the eyes of the nation. One also hopes that no part of the enthusiasm wanes when the fine print is gone through.

There is always worry about fine prints in the budget documents but barring some corrective amendments to tax procedures, there is little by way of an unpleasant surprise on the taxation front. Thankfully, COVID bond or cess as feared by the market rumours didn’t materialise leaving more smiles on the face of everyone when the speech ended. While it is difficult to please all, perhaps there are exceptions when a Nirmala in a red saree presents the country’s budget.

While the spurt in government expenditure would be a cause for concern for fiscal management, it is comforting to observe that the main purposes are asset creation and income-generating avenues. This is a growth-oriented budget that promises resilience and recovery through stimulating broad-based consumption

— Srivats Ram, President, Madras Chamber of Commerce & Industry With its thrust on capex with higher outlays on healthcare, roads, railways and infrastructure, the Budget has combined and addressed the needs of today. If the promised capex on infrastructure, roads, metro, railways takes place, I see substantial increase in demand for cement

-- N Srinivasan, VC& MD, India Cements Today, the Finance Minister said health was her first pillar and her announcements to develop primary, secondary and tertiary healthcare systems, greatly gladdened my heart. This ground-breaking focus on health which will provide access to medical care for all in our country, fuel job creation and boost economic momentum

— Dr Prathap C Reddy, Chairman, Apollo Hospitals Group The FM announced an infusion of Rs 20,000 crore into PSU Banks. This will provide a very boost credi growth. Also proposed is takeover of bank’s stressed assets by Asset Reconstruction Companies whic will help the banks to free their books of bad loans and thereby more funds f lending

— Padmaja Chunduru, MD & CEO of Indian Bank