Budget 2021 presents a strategic, balanced focus on social and physical infrastructure while giving due importance to the critical aspects of the economy, with the intent of boosting consumption and sustaining the momentum for a vibrant economy.
This Budget reflects the new ‘Atma Nirbhar’ resilient India with focus on essential sectors such as health, water, sanitation, agriculture, and critical infrastructure. Furthermore, the government seems to have built on the recommendations of the latest Economic Survey and has gone in for a countercyclical fiscal policy in a way that would be beneficial for the economy.
Healthcare has seen major thrust in the Budget with the announcement of the PM AtmaNirbhar Swasth Bharat Yojana, a new scheme which would primarily focus on developing the existing capacities of primary, secondary, and tertiary care health systems, while also concentrating on building institutions that would specifically cater to the detection and cure of new and emerging diseases. This would be a major boost for both the sector and the overall economy.
The Budget also focusses on health and well-being needs, that is, water availability and sanitation. After the Jal Jeevan Mission (Rural), the Budget has announced the Jal Jeevan Mission (Urban) which will enable 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. Also, building on the success of SBM Urban, SBM Urban 2.0 was unveiled with specific focus on fecal sludge management and waste management—a much-needed positive step in this direction.
The push to build infrastructure via investments in core areas such as national highways is likely to pay rich dividends, reducing logistics costs and thereby leading to improved business outcomes. There are more positives in the infrastructure space, such as setting up of the Development Financial Institution, which can enable the National Infrastructure Pipeline (NIP) announced in December 2019. The attention to urban mobility through announcements of additional investments in metro rails and city bus services is also a welcome and necessary move.
The unveiling of a ‘National Monetisation Pipeline’ of potential brownfield infrastructure assets will be a significant move as it can enable profitable utilisation of existing assets.
The Indian economy is on the cusp of a historic recovery as it will possibly rebound from a contraction in GDP of 7.7% in the current fiscal year to double-digit growth of around 11% in FY22. While the road map has already been laid out, the government’s next steps should focus on the successful execution of these programmes and initiatives through dedicated, sector-oriented digital platforms and strategic solutions.
Views are personal. The author is Partner and Head of Government Advisory, Infrastructure, Government and Healthcare (IGH) Practice, KPMG in India.
