The Union Budget coming in the wake of COVID 19 has been given thumbs up by the industry. There is a huge boost for healthcare, infrastructure, start-ups, Education Sector and Insurance. This will in turn increase spends and also bring in a positive consumer sentiment.
Views of Industry Leaders across sectors:
Jyoti Prakash Gadia, Managing Director, Resurgent India Limited.
To usher, in the Dawn of a new era with a holistic approach in mind, the FM has announced 3 pronged strategies for the development of infrastructure. Proposal for the setting of a separate DFI(development financial situation) exclusively for funding infra projects a massive program for monetization of completed/ running projects which will help in creating required resources through the instruments like INVITs, which functions in a manner similar to the mutual funds. In addition over a 34% increase in direct expenditure to infra with new highway projects in select states is a welcome step to take the economy to a new trajectory of growth.
These steps will have a far-reaching positive impact on growth over the midterm, although some immediate expenditure on construction is also called far.
Setting up a Separate Asset Reconstruction company for dealing with the gigantic problem of NPAs, is a step in the right direction, which will help in better recovery and prompt the banks to boost credit, which is the need of the hour.
Recapitalization of PSBs with Rs20000 crore is also a welcome step as this will strengthen the banks to inturn raise credit creation capacity.It is a bold and historic budget that will facilitate the quick revival of the economy, to take it to a higher growth trajectory.
The procurement of resources through steps like monetization of assets and disinvestment and in turn spending them on capital expenditure, in critical areas like health and infrastructure is a very defining and welcome move. To Supplement the funding of infrastructure through the national infrastructure pipeline (NIP), setting up of a separate DFI is a step in the right direction. The encouragement of instruments like INVITs and REITs for raising resources and simplifying conditionality’s for foreign funds shall also bridge the gap of resources.
Setting up a separate Asset Reconstruction company, for handling the gigantic problem of non-performing assets is going to be a game-changer in the financial sector. This will not only facilitate the recovery process but also help the banks in focusing on fresh credit growth, which is the need of the hour. The recapitalization of banks and the proposed privatization of some PSBs will further improve the efficiencies in the banking sector.
The budget also proposes steps towards ease of doing business, more support to the MSME sector, and simpler compliance culture, which are welcome steps. Besides, no major tax burden on the public has been imposed which will help in boosting retail spending and Govt is going to rely more on long-term borrowings.
The crucial part shall however be timely and effective implementation of the schemes for delivering the desired results.
Divam Sharma, Co-founder, Green Portfolio, SEBI Regd. Portfolio Management services
Setting up of Development Financial Institution for lending over 5 lakh crores over the next 3 years to the Infrastructure sector is a welcome step as infra companies have been continually facing challenges in raising bank debt, high leveraged balance sheets, and lesser initial interest of investors in InvITs. This will help the incumbents move hand in hand with the higher infra development targets by Government over the coming years.
Creation of Government entity sponsored InvIT’s for road assets, power assets, railways assets, airports, oil and gas pipeline, warehouses, sports stadiums and then monetizing them to investors will generate further interest from FPI’s and domestic institutions and will generate capital for the Government to fund the increase in Infra spending. This is a welcome move as the higher infra spend creates a high multiplier impact on the GDP and supports the Government initiatives to “Make in India” and increasing FDI in manufacturing.
Fintech is an important leg for financial inclusion and has also helped India raise a high amount of FDI in recent years. The creation of a Fintech hub in GIFT ISFC will help such entities step up their activity, raise more funds, and create more collaboration for growth.
Insurance India is one of the fastest-growing Insurance markets. Insurance tech has also generated high investor interest in recent years with companies like policy bazaar, acko, digit raising high amounts of FDI. Incremental foreign capital will enhance the penetration of Insurance in India and will also gradually help in reducing the insurance cost with higher volumes.
This budget is a huge positive for the markets in the long term. As also emphasized in the economic survey report, the Government has undertaken a higher fiscal deficit target of 9.5% and emphasized infra spending, capex push, attracting
foreign capital, and privatization. Investors can look at pharma, agriculture, chemicals, infrastructure, insurance sectors for huge gains in the next 5 years. Divesting 10-20px of LIC can generate over 1 lakh crores in itself. There is already a high interest from global Sovereign funds, pension funds, and institutions for participating in the issue.
Sucheta Mahapatra, MD India – Branch Personal Finance App
Union Budget of 2021 is showing big promises towards resuscitating the economy post the pandemic. Salaried citizens can breathe a big sigh of relief, thanks to no changes from individual Income tax. We also welcome the decision on allocating the 35,000 Crs for Covid-19 vaccination procedures. This shows commitment from the government for immunization that can further help the nation get back on track at the earliest.
Privatization and disinvestment would be important for the coming FY, While the implementation of these remains key, the economy would see a boost with private players coming in and the government has funds to spend on infra and other projects.
We are in particular happy about the Tax Holiday for startups. This will help in putting less pressure on the Startups Ecosystem which hasn’t seen a fruitful year.
Last but not the least, we are also expecting a lot more employment creation across all sectors, which will boost the lending and banking sector for both institutional and retail segments.
Suman Varma, Chief Marketing Officer (Medicine Division), Hamdard Laboratories
We welcome the honorable Finance Minister’s focus on the Healthcare sector which is the need of the hour. Considering the unprecedented impact of the COVID pandemic on the economy, it is encouraging to see that the government has given much need boost to the health sector in its budget. The 35,000 Crore COVID care fund will play a large part in bringing the nation back to its feet, the impact of which will be greatly felt and welcomed across all sectors. It shows great foresight from the honorable Finance minister on her part since it is more than likely that we will have to continue to live with the virus for a while longer.
The addition of more health care centers and the overall increase in health was also awaited to improve the healthcare infrastructure capabilities of the nation. It is encouraging for us to see a 137% increase in the overall investment in the health and wellness sector from the government. With this budget, the healthcare sector will get benefited and as a health and wellness brand, our focus will continue to be on reinventing ourselves and relentlessly working to provide better and healthier products to our consumers. We believe this budget is a positive dose for the economy and will certainly build the economic health of the country.
Aneel Gambhir – CFO, Blue Dart
We are pleased to know that the Budget is in line with our expectations. The industry is eagerly waiting to see the results of these measures in our field of work. The proposed solutions include a succinct focus on improving road and railway infrastructure; investments in National highway corridors and economic corridors will aid in the speedy movement of goods and improve turnaround time which, in the long run, will bring down logistics costs significantly.
The National Highway work planned in Tamil Nadu, Kerala, West Bengal, Assam will further assist in the final goal of last-mile delivery and we are eager to see its results on our business. In the long term, all the expenditures could be assisted with the proposed introduction of the DFI which will speed up the infrastructure development in India.
Apart from this, the focus on the manufacturing sector in the budget would also help the logistics sector grow further. While the budget carries good news for the logistics sector, we are also happy to see the Government’s efforts in propelling areas such as healthcare, infrastructure, and employment, all of which require a special focus going into 2021. With COVID-19 continuing to be a significant threat to the world, India is providing the vaccine against COVID-19 to over 100 countries across the world which is a commendable effort. With the Government also providing 35,000 crores towards the Covid-19 vaccine in 2021-22, we are sure to bid adieu to the virus sooner rather than later.”
KE Ranganathan, Managing Director, Roca Parryware
Our Hon’ble FM has given the near-perfect ‘Vaccine’ to the Economy for faster recovery. The ‘jab’ will be very effective as seen from the huge jump of +35% in Capex spending and the fiscal deficit widening from 6.8% to 9.5. Indeed a bold step to pull the demand side up through these higher allocations for spending.
The ‘Jab’ will spread to all parts of the Economy body: agriculture getting a big target of 17 lakh Cr funding, urban infrastructure, railways and roadways a major chunk of over 3 lakh Cr allocation, affordable housing with tax breaks, Swacch Bharat with 1.15 lakh allocation, textile getting a big boost etc. On the people side good to see GIG / Platform workers getting protected with better social security benefits. Relief for senior taxpayers from filing returns is in the right direction.
Overall the health of the Indian economy will re-bound faster with this well-thought-out vaccine.
Farman Beig- founder and CEO of Wat-a-Burger a dynamic burger joint.
Industries like restaurant chains have suffered the pandemic blow the most, even more, if they were start-ups. In this situation, Budget2021 has provided little support in terms of the tax holidays. However, benefits like easy loans at better interest rates with simpler procedures could make it a lot easier. The input tax credit was expected to be brought back into the restaurant system. Without which we are paying more than GST to the government and we end up increasing our operations cost by 15 %.
Pankaj Sharma – Country Head – MGID, India.
The Union Budget 2021-22 is no doubt bold, and it shows that the government has recognized the critical areas where immediate action is required. It is heartening to see that a lot of focus has been put on improving infrastructure whether it is healthcare or public transport. Critical sectors for economic growth like banking, digital lending, and Fintech have also been given due consideration and it shows that the government is cognizant of the role that these sectors will play in the future. Start-ups have been given a boost with tax exemption holidays till 2022 and this is essential for a truly ‘Atmanirbhar Bharat’. Overall the budget looks promising and positive for long-term growth.
Vivek Sharma- Founder and CEO, Fixcraft
The budget has slightly opened the window for startups by allowing OPCs for NRIs. This might indirectly attract investors which is the need of the hour for the entire startup community. Further, incentivizing OPC is going to help startups at an early stage. Extension of tax validation for startups is definitely a step that was needed as a lot of entrepreneurs and businesses have been starving due to pandemics and this brings some relief to them. However, there was definitely a wider scope of financial support given that everybody is on the road to recovery.
Kushang, CEO and Co-Founder, SupplyNote, a supply chain automation startup
The budget does provide ways that could attract talented entrepreneurs and investors by allowing OPC for NRIs. However, the startup market requires immediate financial support too. Extension of Tax Holiday provides relief but the pipeline that could provide more cash in the ecosystem is still missing. Nevertheless, relief from capital gains is a welcome move. It has been a balanced budget for 2021 overall.
Diwakar Nigam, Managing Director, Newgen Software.
The first “paperless” union budget underlines our government’s focus on three key areas, including innovation, skill development, and digital governance. The budget has come with encouraging announcements for the healthcare, infrastructure, and innovation ecosystem. The move to provide a greater impetus to R&D with an outlay of Rs 50,000 crore in the next five years will foster a culture of innovation, growth, and research. Furthermore, the focus on digital education, re-aligning the existing scheme of training programs, and partnering with UAE and Japan for skill development will help India in producing high-quality digital talent. The proposal to build a world-class fintech hub, digitization of railways, and first-ever digital census, reconfirms the government’s emphasis on creating a digital economy. Furthermore, the emphasis on technology, such as data analytics, artificial intelligence, and machine learning-driven platform to enable e-courts and compliance management will go a long way in accelerating the nation’s digital initiatives.
Moving ahead, we look forward to the expansion of the scope of corporate tax across the board, simplification of GST, and special monetary incentives for product software companies.
Prasun Sikdar MD & CEO Manipal Cigna Health Insurance Company Limited
Health today is top of mind and the government’s announcement of Aatmanirbhar Health Yojana with an outlay of Rs 64,180 crore, and allocation of funds worth Rs 35,000 crore for COVID-19 vaccine, in these unprecedented times, will certainly accelerate the transformative healthcare changes our country needs, as well as enhance the health, well-being, and peace of mind of millions of people in India. Also, the government’s move to increase the FDI limit to 74% for insurance companies, will further attract foreign capital where required, ensure higher penetration and bring a new wave of transformative change to create a more value-based affordable healthcare for all Indians.
Farman Beig- founder and CEO of Wat-a-Burger a dynamic burger joint.
Industries like restaurant chains have suffered the pandemic blow the most, even more, if they were start-ups. In this situation, Budget2021 has provided little support in terms of tax holidays. However, benefits like easy loans at better interest rates with simpler procedures could make it a lot easier. The input tax credit was expected to be brought back into the restaurant system. Without which we are paying more than GST to the government and we end up increasing our operations cost by 15 %.
Ramesh Baliga, CEO Watertec India, India’s leading polymer enabled bath solutions brand
The budget has primarily pushed for growth. Out of the six pillars mentioned, our industry has two distinct advantages. First is a major boost on an affordable segment of housing which we hold a major part of and second, push on manufacturing and MSME wherein job creation will have a good impact on the growth and spend which will further boost the economy and GDP growth. The skill India will also give us an opportunity to have trained people both for manufacturing as well our service providing plumbing fraternity. Overall the budget has been a step towards the growth of the construction industry.