Budget 2021-22 Is it PRO-GROWTH & PROGRESSIVE?
The Union Budget 2021-2022, presented on 1 February, 2021, by Finance Minister Nirmala Sitharaman, was most awaited by many across India, at a time when the country is going through unprecedented economic stress brought about abruptly by the Covid-19 pandemic. Here is a look at how corporate leaders and stakeholders from across industries and domains reacted to the budget
Best foot forward in times of uncertainty
The Union Budget 2021, being the foremost budget of this decade was largely influenced by the global contraction caused by the pandemic. We believe the government has put their best foot forward to stabilise the investors and stakeholders in times of uncertainty. The budget seems to be well allocated at a macro level for all relevant sectors that would act as an enabler to India’s economic growth. We believe the introduction of the National Asset Monetisation Pipeline with a focus on relevant sectors was an exceptional move to augment revenues of the government.
The proposed new DFI would certainly go a long way in helping infra projects and will play a key developmental role. A vision for Atmanirbhar Bharat in the initial part of the budget, the announcement of Urban Swachh Bharat 2.0 Mission was justified to be launched at an outlay of Rs.1.41 lakh crore over five years. We hope to see revival and sustainability of PVC pipes sector through the medium of Jal Jeevan Mission Urban, which is to have an outlay of Rs.2.87 lakh crore. Further, boost to the housing sector by extension of tax holiday, increase in agricultural credit target, increase in contribution to rural infra development fund and increase agriculture infra fund made available to APMCs will provide the much-needed liquidity in the rural economy. We are certain that timely implementation of well-targeted budget announcements will hold the key for supporting the burgeoning growth revival of the Indian economy.
PRAKASH CHHABRIA, Chairman, Finolex Industries Limited
Fully democratise transportation and its reach
India adopting global standards for scrapping vehicles will only create a more holistic ecosystem for the industry. No country has ever achieved economic freedom until it has fully democratised transportation and its reach. From the USA to Western Europe and China to Japan all have unleashed their economic growth due to the adaptability towards automobiles and world-class road infrastructure.
SANDEEP AGGARWAL, Founder & CEO, ShopClues & Droom
Comes in as a big support to automakers
Personal vehicles older than 20 years and commercial vehicles older than 15 years to undergo a fitness test is indeed focused on phasing out older vehicles. It will, in turn, promote the use of more eco-friendly vehicles. The specifics of the policy will be announced by MoRTH in the days to come. The annual budget brings in good news for commercial vehicles as well with 18,000 crore to be allotted for procuring and maintaining 20,000 buses as well as the construction of road infra to support the sale of commercial vehicles. It is, therefore, the highest ever allocation of 1.08 lakh crore to MoRTH for capital. We further welcome the FM’s move on increasing custom duties on some auto parts by 15%.
SUNIL GUPTA, MD & CEO, Avis India
Look forward to India thriving and surviving
Budget 2021 is truly a budget for growth with next-gen reforms. Focus on healthcare, infra and financial sectors, a stable tax regime, higher borrowings for CAPEX, opening up of insurance and specific reforms helps boost India’s self-reliance. I believe that we will be able to do for India in this decade what the IT sector did in the last decade. So, healthcare is poised to create a significant boost to the economy. I would also like to state that this speed of our vaccine rollout is directly proportionate to the speed of our economy’s recovery.
So, let’s all push towards that and ensure that India becomes one of the world’s largest economies. I think India has already shown the world not only in terms of our very effective Covid-19 treatment but also the ability of the Indian manufacturers to bring out vaccines which can serve about 50 to 60% of the world. A 137% additional allocation for healthcare, also Rs.35,000 crore being set aside for the Covid-19 vaccine; with an outlay of Rs.2,23,846 crore as the overall health care budget is truly significant. It is up from the earlier about Rs.94,452 crore.
DR SANGITA REDDY,
Joint Managing Director, Apollo Hospitals and President, Federation of Indian Chambers of Commerce & Industries (FICCI)
Holistic approach to strengthening preventive, curative and well being areas
While it was widely expected that the expenditure on health would be increased, an allocation of INR 64,000 crore over six years to the PM Atamanirbhar Swasth Bharat Yojana, with the holistic approach to strengthening all the three areas of Healthcare delivery - Preventive, Curative and Well-being - is a most welcome step. As is the continuation of the Poshan Abhiyaan in its new Mission Poshan 2.0 avatar. Both will go a long way in reducing morbidity and ensuring a fitter India.
VANDANA LUTHRA, Founder and Co-Chairperson, VLCC Group
The 2021 budget didn’t have the shocks as expected
The 2021 Budget didn’t have the shocks as expected in terms of a corona cess or increase in other taxes which also lifted the spirits.
On the tax front: Now you will be talking to your income tax official via video conferencing, a good step to make the whole faceless assessment process more seamless. Senior citizens above the age of 75 are not supposed to file their tax returns from the financial year 2021-22. The timeline to reopen any assessment under income tax will be reduced to three years from the present six years. Now, the advance tax with respect to your dividend income would be payable only after the declaration or payment of dividend unlike earlier.
On the investment front: : Like the tax charter, there will be now an investment charter to help reduce the prevalent mis-selling. Customs duty on Gold and Silver is reduced to 7.5% from the existing 12.5%. This should work in favour of gold buyers. Now, the interest earned on your PF contribution above Rs.2.5 lakh annually, will be liable for tax. So, for example, if your salary income is say Rs.60 lakh then your basic salary would be around Rs.30 lakh. And your PF contribution would be 12% of your basic salary which would be Rs.3.60 lakh in this case. Now, you will need to pay the tax on interest earned above Rs.2.5 lakh, that is on Rs.1.10 lakh in this case. And with the current PF interest rate of 8.5%, you will be liable to pay a tax on Rs.9,350 interest amount.
RISHABH PARAKH,
Founder & Former Chief Gardener, Money Plant Consultancy and Author of the book titled “Financial Spirituality”
Promoting the ease of doing business
The capital gains tax exemption for investing in startups and the tax holiday for startups has been extended by another year, which is much-needed, particularly in the wake of Coivd-19’s impact. The proposed creation of a world-class fintech hub in Gujarat and allocation of 1500 crores for promotion of digital payments-both of these announcements can provide impetus to the thriving fintech startup ecosystem. Apart from these, the government has suggested measures to incentivise incorporation of one-person companies, allowing them the flexibility to convert into any other type of company without restrictions on paid-up capital or turnover. Tax audit limit has also been increased from 5 to 10 crores to enhance the ease of doing business for MSMEs. Overall, the budget has been positive as far as ease of doing business is concerned; the measures announced will set the tone for a much-needed economic recovery.
LALIT KESHRE, Co-Founder and CEO, Groww
Encouraging proposals for the country’s real estate sector
The Union Budget 2021 was a balanced one with several encouraging proposals for the country’s real estate sector— more economic corridors are being planned to boost the development of roadways to improve inter-state as well as intra-state connectivity. Plans were also announced to expand the metro coverage as part of additional budgetary allocation towards the development of infrastructure across India, with a special focus on developing Kochi Metro, Chennai Metro Phase 2, Bengaluru Phase 2A and B, Nashik and Nagpur Metros, among others. These proposals are bound to improve real estate projects in tier-2 and tier-3 regions by enabling a more seamless movement of people and resources to and from the urban centres. The proposal to amend InvIT & REIT structures for debt investors to drive greater ease of fundraising & providing the much-needed momentum to the commercial real estate asset class.
AMIT AGARWAL, Co-Founder & CEO, NoBroker.com
Expected to focus more on the financial backbone
Although the major focus being healthcare, infrastructure, and agriculture, the financial institutions could have got a cushion from the government. Looking at the fiscal deficit for 2020-21, which is approx. 9% range, the government now needs to find the means to execute the emphasised projects, with ease. The budget missed out on the supply chain enterprise that keeps the consumption drive intact. Cash requirements for the short run, especially for small as well as large business houses remain untouched. Besides, the additional cess has been proposed on both petrol and diesel, which will only add to the cost of goods and services. In fact, the focused projects announced for infrastructure, which may help stimulate demand, in the long run, will also be subject to implementation effectiveness.
RAM KEWALRAMANI, Co-Founder & MD, CredAble
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 five 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. The vision of ‘Atmanirbhar 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 incentivisation of digital payments will ignite the sector through means of customer confidence, convenience, and fair practices.
BANWARI LAL SHARMA, CEO, CarWale & BikeWale
Will augur well for India’s farmers and farming industry
The budget will augur well for India’s farmers and farming industry over the short, medium and long term. The rural Agri fund will help drive greater outlay and build a world-class Agri infrastructure. These investments will reduce farm-to-fork wastage and usher scientific crop growing and post-harvest facilities. Mandi digitisation will facilitate tech intervention in agriculture, leading to greater efficiency, enterprise and predictability in the sector. Agri credit will bridge the gap in rural credit and enable the development of the agriculture sector and its dependent industries. Initiatives such as the expansion of irrigation facilities and the inclusion of more perishable items under the Green scheme will increase agri-efficiencies. The R&D through agricultural hubs will foster the industry’s competitiveness on a global scale.
AMITH AGARWAL, CEO & Co-Founder, Agribazaar
Commitment to boost startup ecosystem
The Budget 2021 though positive, left us wanting some more from a startup and MSMEs perspective. The government’s decision to bring in institutional investors to invest in startups is a positive move and will help encourage more investment into the startup community. Of course, the startup community needs to see and understand the fine print. Registration of one-person firms with no limit to paid-up capital will boost the startup ecosystem—that helps small entrepreneurs to take the leap. Government has doubled its expenditure allocation towards MSMEs to Rs.15,700 crore in FY22. This is an excellent move for companies like us that work with a large number of MSMEs. Another boost is the extension of tax holiday for startups by one more year. This will help get startups on their feet as they grapple with cash flow and investment. In the near future, we would want the FM to give a concrete plan on ESOP taxation and hope that the initial deliberation of a five-year term to pay tax on ESOP is implemented and there is a rationalisation.
JOJI GEORGE, Co-founder, Gonuts
Hitting the right areas
We are happy to see the impetus given to the infrastructure development throughout the nation, which in turn provides a push to the real estate sector. Additional expenditures on infrastructure will boost trade and open employment opportunities too. While the real estate sector did not have many announcements, the continued tax holiday for affordable houses on purchase and loans will create a conducive atmosphere for developers to construct and encourage buyers to invest. It is heartening to see the government introduce new initiatives for women, it will enable more women to contribute actively to the GDP. Furthermore, migrant labourers will also witness some relief with the first of its kind affordable rental housing scheme, this is in line with nations’ housing for all vision and further, propel the affordable housing sector. Additionally, the One Nation One Ration card brings easy access to food for migrant workers. Overall, the budget has identified the priority areas like healthcare and infrastructure that needed a push to propel the nation’s growth engine and drive positive consumer sentiments for a faster recovery.
ASHISH R PURAVANKARA, , MD, Puravankara Ltd
Progressive and aimed at reviving the economy
The Budget will lead to investments in developing infrastructure and driving the manufacturing sector, but the ability to implement will be key. This should also help in creating jobs and providing a good alternative for India to be a global sourcing hub. The auto sector will see tailwinds but moving quickly to Electric Vehicles (EV) will ensure sustainability.
We did not see much for Startup India, Digital India, including Taxation. An opportunity clearly missed. Budget will get inflationary, and the country needs to keep the economy open with no Covid-19 second wave. Overall, the key challenge with the budget will be how well States and Centre together implement the Budget; I strongly believe some new underdeveloped States will emerge winners.
VINEET PATNI, Investor, Advisor, Board Member
Should further converge the existing bands of GST rates to three
The economy has witnessed a positive recovery in demand across most segments since the last quarter. Building on this, we believe the government’s tax policy can be effectively further leveraged to support sustainable demand and consumption, macro-economic growth and investor sentiments. With reference to indirect taxes, the introduction of GST was a much-needed tax reform for India. We are happy that the government has reduced the GST bands to five, but we believe that the budget lends itself well to further converge the existing bands of GST rates to three in a phased manner.
S SUNIL KUMAR, President, Henkel India
Acknowledges the grave situation
The large spending plan for healthcare by the Government announced in the Union Budget 2021-22, acknowledges the grave situation of the ever-increasing high treatment costs; every minute 100 people get hospitalised in India and 30 health insurance claims are filed. Seven out of 10 middle-class population in India do not have any health insurance and those who do are typically under-insured and have an average cover of Rs.5 lakhs or less. We are, therefore, pleased that crowdfunding is helping the Government in its mission of improving the healthcare system in India. While the health and healthcare of a nation cannot change overnight, consistent efforts can help yield better results.
PIYUSH JAIN, Co-Founder and CEO, ImpactGuru.com
Augurs well for the overall healthcare in India
The most noteworthy aspect of the healthcare outlay this year is a distinct integration of health and well-being with causative factors such as nutrition and clean air. This is a marked departure from the previous budget where curative features received the lion’s share of the outlay. This change in approach, driven by the once-in-a-century pandemic, augurs well for the overall healthcare landscape of India. The massive 137% increase in the budgetary outlay with a dedicated corpus of Rs.35,000 crore for Covid-19 vaccines was a much-needed step and I congratulate the government on stepping away from the stock approach to healthcare.
KAMAL NARAYAN OMER, CEO, Integrated Health and Wellbeing (IHW) Council
Will improve insurance penetration and financial inclusion
The imperativeness of the life insurance sector in the economy has gained paramount importance in the aftermath of Covid-19 and has reinforced the need for a wider penetration of insurance in terms of protection and building a safety net. Budget 2021-22 has indeed taken cognisance of this by taking 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 insurance penetration and financial inclusion in the economy. Increasing insurance penetration would pave the way for generating employment opportunities.
NIRAJ KUMAR, Chief Investment Officer, Future Generali India Life Insurance Co. Ltd.
Proposed PPP model will help create employment
The allocation of Rs.18,000 crores for the public bus transport services has come as a relief for bus manufacturers who have been caught in the doldrums since 2019. The proposed PPP model will help the sector to create employment as well and overcome the adverse impact of the pandemic. We are looking forward to the details of the vehicle scrappage scheme which will be an added advantage for the auto sector. The government’s thrust towards green energy generation has further been consolidated and initiatives such as SATAT aimed towards setting up biogas projects will see speedy deployment.
NISHANT ARYA, Executive director, JBM Group
We were looking for production linked incentives
After one of the toughest years for the economy, the biggest positive of the budget is that there are no negatives like a major increased burden on the business with special Covid-19 cess, taxes and the like. Despite granting ease of doing business with less compliance in terms of reopening of cases, motivation for MSME and startup with tax holiday extension and higher coverage limits; the footwear industry has seen no major benefits. We were looking for production linked incentives being announced for footwear and leather, as it is considered one of the top employment sectors of the world. The major con is that there are no major benefits for MSMEs & business sector to support them in one of their worst crisis.
ASHISH JAIN, Director and CEO, iatric Industries Pvt Ltd – Von Wellx Germany
Minimum government, maximum governance
Overall, I felt that the budget shows signs of growth and harmony. Out of the six pillars of this year’s budget, three of the major pillars that hold utmost importance for startups such as are: physical and financial capital, and infrastructure. Second, innovation, and research and development. And third, minimum government, maximum governance. A major focus has been given to energy transition. The announcement on the launch of the National Hydrogen Mission in 2021-22 will be a big boon for next-generation clean fuel which India as a country must welcome.
The announcement on a special portal to be created for gig worker is a great step and will be a backbone for new-age employment in India. This portal will give all the information on gig workers which will help provide social security in form of benefits such as health, credit (easy financing), food, and others. Innovation, and R&D, has been given a budget of INR 50,000 crore. This is the greatest pillar to push India towards becoming a forward-growing country. Minimum government, maximum governance will ensure ease of business to all, especially the startups.