Mr. Dinesh Pangtey, CEO, LIC MF
In his views he has elaborated on the macro and micro aspect of the budget announcement and its respective long term benefits to various sectors.
“Transformational leadership of Finance Minister Nirmala Sitharaman begets Path Breaking Union Budget 2021. Infrastructure, Health, Agriculture and Allied, Divestment, and Atma Nirbhar Bharat- these are the core to the recently launched the budget....
Finance Minister has looked beyond conventional means to focus on growth acceleration, at the same time signaling adherence to fiscal consolidation in medium term. Better resource allocations towards capital formation and fiscal funding by asset sales in the form of infrastructure monetization, disinvestment (with target of Rs1.75 lakh cr), strategic sales etc. will contribute to a better growth potential in the medium term.
Capex-led stimulus over a consumption-focused stimulus is the key, as it has the larger multiplier effect on employment and growth. With aggressive 34% capex growth on a base of 30% growth last year to Rs5.4 lakh crore, centre’s capex will jump to 2.5% of GDP.
Higher duty on mobile parts to promote domestic value addition, duty inversion corrections in textile, solar, auto parts have all been rationalized in line with mandate of import substitution and domestic value addition to make Atmanirbhar Bharat. Government's target of increasing the credit to 16.5 lakh crore for Agriculture and Allied Sectors with special attention to Animal Husbandry and Aquaculture is a welcome move. Clear focus on health infrastructure especially in the light of what we had gone through last year is a welcome and much needed move. We will see a growth due to this in the Rural economy and digital initiatives will ensure MF rural penetration fast.”
Dr Harsh Kumar Bhanwala, Executive Chairman, Capital India Finance Ltd (CIFL)
For the MSME segment, the Atmanirbhar Bharat programme has opened up much needed room for the financial institutions to lend easily. The Finance Ministry's fund of Rs 15,700 cr, which is 2x times higher than last year will help revive closed down units and job losses as a separate line of liquidity would now be available. The introduction of a special framework for MSME litigation will also support small companies to overcome legal hurdles.
NBFCs: Small and medium scaleNBFCs who are at the forefront of the lending cycle will have better days ahead as the budget has prioritised growth. This would mean further augmentation of liquidity and hence, we can expect more credit disbursal. The introduction of bad bank would also provide a much-needed cushion in order to tackle NPAs and provide quicker resolutions.
Fintech’s: The allotment of Rs 1,500 cr for the promotion of digital payments would help Tier II & Tier III cities better infrastructure. The Government's proposal to reduce the margin money requirements for start-ups from 25% to 15% will further boost the entrepreneurial spirit in the country. Launching of a world class fintech institution would be a big confidence booster for the market participants, particularly for the bond market that will also help in streamlining debt securities.
Development Finance Institute: The proposal to set up a Development Finance Institution (DFI) with a capital of Rs 20,000 crore would certainly help the MSMEs to get further credit support from the Government. This would in-turn catalyse financing the infrastructure projects such as national infrastructure pipeline am ambitious world-class project that would improve the quality of life for citizens.
Infrastructure: The budget allocation for the affordable housing, overall infrastructure, will bring sustainable impact to these segments. Lending in the construction sector should become easy as recoveries would become better due to increased sales, especially in the non-metro cities. The announcement of Rs 1.10 lac crore to critical infrastructure areas like Railways, national highways and privatising of the Airports would ease the sector related issues, as lending is the key to address needs of the overall infrastructure sector.
B.S. Sivakumar, President & Key Leadership Team member, Kotak Mahindra Bank Ltd
"Stemming from the positive growth of India's agriculture sector and its contribution to the GDP last year, certain measures introduced in the union budget were focused on propelling this growth further. The increase in agri credit, provisions to rural infra development, increased cess on some commodities such as cotton, peas, kabuli chana, Bengal gram, lentils, et al, to be used towards improving agriculture infrastructure and other development expenditure, INR one lakh crore fund for the infrastructure development of state-controlled mandis and more - is a well-rounded and welcome move towards India's agricultural development. The budget also brought good news for budding entrepreneurs who wish to single-handedly start a business in the agri & food processing industry. The allowance of a one-person company without any paid up capital or turnover restrictions, coupled with benefits to MSMEs, is expected to encourage an entrepreneurial mindset & ideas within the agri industry. Such announcements indicate India's increased focus on the priority sectors, something that's been in the offing for quite a while now."
Tarun Chugh, MD & CEO, Bajaj Allianz Life on Budget
The government has announced an increase in FDI for insurance sector from 49% to 74%, which is a positive move and will help in the growth of the sector. However, the move on taxation change for ULIPs (of higher ticket size; annual premium of more than 2.5 lakhs) would have an impact on such investments. Tax benefits still remain in the event of death of the life assured or in the case of ULIP policies where annual premium is INR 2.5 lakhs or below. This tends to reduce the competitive advantage that ULIPs enjoyed as compared to other short term investment vehicles.
Overall, despite the fall in tax and revenue collections due to the economic contraction in FY21, the government has not introduced any major increase in taxes, and supported on the expenditure side (esp. for capex). This is quite positive, and shows the intent of the government in supporting the growth recovery. The budget has given precedence to growth recovery by allowing some amount of fiscal slippage. It is an inclusive one, encompassing different segments of the economy, with the focus, and higher allocation, on infrastructure and healthcare.
Mr. 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.
Mr. Marthesh Nagendra, Country Manager - India & SAARC, NETGEAR
"Substantial increase in health budget will ensure that India successfully beats Covid-19 and no more lockdowns which in itself is a big boost for business. The Government has also stressed upon the digital connectivity to promote digital mode of payment which is certainly a huge step for the internet companies. We at NETGEAR feel that each and every individual and organization must be equipped with tools and solutions with better internet connectivity as most of the industries would be more dependent digitally in near future"
Mr. Sanjay Jalona, CEO & MD, LTI
“We welcome the increased focus on Innovation and on ease of doing business. This budget appears to have set the right pace for India’s journey to a digital first approach. From an IT services perspective, the industry is facing an intense global competition and needs tax incentives and digital infrastructure support to ensure seamless work from anywhere ecosystem, which is the new normal. This is a critical requirement for the sector that employs nearly 4.5 million professionals, contributes 8% of the country’s GDP, has created high-quality jobs during the pandemic, and is the face of Brand India across the world.”
Mr. Banwari Lal Sharma, CEO, CarWale & BikeWale
“Firstly, we would like to applaud the Government for rolling out a budget that is progressive, remedy-inclined and development focused. The much-anticipated scrappage policy will give a boost to the automotive sector by generating demand for newer vehicles. This will curb environmental stress caused due to pollution in the long run and will also catapult the adoption of e-vehicles in the next 5 years. Increased focus on road infrastructure, research and development, and PLI among others will open floodgates for innovation leading to the increased capacity of both passenger and commercial vehicles. Also, the vision of 'Atma Nirbhar' Bharat coupled with increased impetus on FDI will boost domestic manufacturing of automotive components in India. Allocation of funds on building rural and agricultural infrastructure will also trigger demand for automobiles in smaller and lesser connected markets. Furthermore, simplification of GST and the incentivization of digital payments will ignite the sector through means of customer confidence, convenience, and fair practices. Directionally, it’s a great budget as it has set the perspective for the coming years.”
Mr. Alok Bansal, Country Head, Visionet India
"Budget 2021 looks hopeful and empowering as it focuses on the revival of the economy with a “minimum Government, maximum governance” approach. With a targeted fiscal deficit of 6.8% of GDP, the government has attempted to bring the economy back on its pre-Covid-time impressive growth path by boosting public expenditure on infrastructure, healthcare systems, and financial institutions. This will have positive long-term effects on economic growth. The new policy changes will boost entrepreneurial spirits and a digital-first economy as these focus on start-ups and ‘one-person’ companies providing them no restrictions on paid-up capitals.
The allocation of a sizable amount of Rs. 15,700 crore to the MSME sector, more than double of last year, is a great motivation for mid-sized companies. The allocations for Covid vaccine aims at immediate fiscal support to the sector and it will have significant effects on reviving demand in other sectors".
Mr. Prashant Kumar - MD & CEO, YES Bank on the Union budget 2021
"Against the backdrop of the COVID-19 situation, the Union Budget provides hope on rekindling of overall economic development. At the outset, with reiterating the need for counter cyclical fiscal impulse the Government revised the fiscal deficit for FY21 to an all-time high of 9.5% vis-à-vis the initial budget estimate of 3.5%.
With an assumption of a strong nominal growth rate, optimism on tax collections, prospects of healthy non-tax revenue and aggressive asset sales, fiscal deficit has been budgeted at 6.8% for FY22. The budget arithmetic appears to be credible as it has allocated achievable targets under key heads.
As widely expected, the healthcare sector has taken a center stage with the Government increasing the outlay by ~137% to INR 2.23 trillion for FY22. Further in conjunction with the farm sector reforms announced last year, the Government reiterated its support to the rural economy to enhance farmer’s income and improve productivity. This concerted policy push will eventually help in bolstering farm incomes and thereby consumption.
On the investment front, increase in capital expenditure to 2.5% of GDP in FY22 generates hopes of crowding-in of private investment. Higher government expenditure towards Railways, Urban Development and Roads & Highways should dovetail well with the earlier announced policy of National Infrastructure Pipeline. Further introduction of Development Financial Institution (DFI) is a step forward in improving the investment climate as it would act as a catalyst for infrastructure financing.
In terms of financial sector reforms, creation of Asset Reconstruction and Management Company along with Privatization of two public sector banks is a positive move, that will help strengthen bank balance sheets and overall financial health of the economy.
Overall, the Government seems conscious of triggering positive growth impulse with the Union Budget striking the right chords in terms of reviving consumption and boosting investments."