Budget 2021 is ‘visionary’: India Inc.

Finance Minister, Nirmala Sitharaman tabled the 2021 Union Budget in the Parliament on Monday, February 1. She introduced a slew of reforms for various sectors, from finance to automobiles, to power and green energy. The major thrust of her speech, however, was on healthcare. India Inc. has welcomed the Budget. Here are some reactions.

Encouraging budget. The avoidance of a covid cess was much appreciated. Clear focus on infrastructure and stimulating growth. Fdi in insurance a big long awaited ask. Now the government's task is to ensure the quick and efficient implementation and ensure outcomes.

Allowing fpis to provide debt funding to inVits and Reits is an extremely positive step and opens up large pools of much needed funding. The announcement of the arc with an amc will succeed provided the amc has top class professional management, independent directors and third party non psu investors. Or else the intent will not be achieved. The conciliation process to resolve construction claims will be very welcome. The government is basically saying: we have taken the first step. Now, India Inc and the world: it's your turn.

In her Budget, the Finance Minister has allocated Rs 50,000 crore to the National Research Foundation (NRF) to be spent over a period of 5 years. The NRF has been envisaged as an umbrella body that is expected to fund research across a range of disciplines, from science and technology to humanities. It has also been tasked with seeding and building research capacity at universities and colleges.

While this is a very welcome development, I believe the private sector has a very important role to play in research and innovation in India. A much stronger focus on industry-academia partnerships is an absolute must for a robust research and innovation ecosystem in the country.

The slew of tax incentives announced for GIFT IFSC in today's Union Budget have once again reaffirmed the Govt. of India’s commitment to develop GIFT IFSC as a global financial hub. The tax announcement would help in attracting global players in the Fund business, aircraft leasing & financing business and offshore investment banking sector to set up their base in GIFT IFSC. We thank the Government of India for continuously bringing in measures to facilitate businesses at GIFT IFSC.”

The development of world-class Fintech hub at GIFT City announced in todays’ budget will go a long way in promoting and developing Fintech start-ups. GIFT City would provide a platform to Fintech firms to expand globally. The Fintech hub will facilitate research, innovation and development of new age skills in fintech which will help in creating new job opportunities and attract quality talent to GIFT City.

It is a visionary and growth-oriented budget that provides further impetus to build India’s competitiveness as also foster inclusive growth. The enhanced capital expenditure, particularly on infrastructure, will create livelihoods and provide an accelerated thrust to the V-shaped recovery trajectory. The heightened spends on agriculture and rural infrastructure development are aligned to the comprehensive policy interventions aimed at creating competitive agri value chains to raise farm incomes. These augur well for the economy and will spur a virtuous consumption-investment-employment cycle.

The Union Budget has unveiled a set of well-crafted and robust policies that encompasses the vision of an Atmanirbhar Bharat. The Budget has rightly envisaged a substantial jump in capital expenditure that has a strong multiplier impact on the economy. The decision to open up the insurance sector, setting up a DFI and an ARC, privatizing a couple of public sector banks are all positive steps for the financial sector. Social sectors have received large attention in the budget with a thrust on developing a health and education infrastructure on a mission mode. This will augment human capital, an essential prerequisite for inclusive growth. The Budget has unveiled a flurry of steps covering all infrastructure sectors that are force multipliers and generates employment.

One of the cornerstones of this budget is fiscal numbers that are transparent and has the potential to surprise us on the upside. In principle, the budget has rationalized the off-balance-sheet borrowings and headline fiscal deficit numbers, which will overtly please markets and even rating agencies. The fact that the expenditure announcements in the budget have been matched with the status quo on taxes will please everyone and bolster market sentiments

This budget is a step in the direction towards Atmanirbharta, clearly providing every opportunity that is required for a sustainable economic momentum and growth. The FM has provided for ample opportunity to boost and sustain the gig economy, digital payments and research and development taking place within the country. The focus on innovation and R&D (Research & Development) as an important pillar is a critical step in increasing the export income of Indian IT sector. Along with this, the ‘Atmanirbhar Bharat’ budget also outlines initiatives for gig economy, digital payments, human capital while also setting up fintech hub and National Natural Language Translation Missions. Therefore, with increased allocation towards infrastructure, financial inclusion and healthcare, Budget 2021 promises to provide the much-needed economic velocity to India’s growth cycle.

The government has prioritised spending on growth at this stage, in the hope that such growth would help manage the fiscal deficit subsequently. A substantial increase announced in the expenditure on healthcare and infrastructure will help boost economic growth, including the MSME sector and generate employment. Overall, it was a growth-centric Budget aimed at securing India’s long-term economic interest.

Overall, the 2021 Union Budget attempts to achieve the difficult balance between structural populism and prudent measures, and demonstrates a reasonable level of policy stability, with some strategic positive interventions which are critical during times of upheaval. The voluntary vehicle scrapping policy for example will provide a fillip to the auto sector which is important not only because it is one of the largest organized sector employer, but also since it sustains a lot of retail lending from banks and NBFCs. The multiplier effect of this policy on the back of a period that witnessed a good crop yield in rural areas combined with the pent up demand from the pandemic and increased disposable income, will be beneficial for the auto sector. Investments in infrastructure are also consistent, and the proposal to establish a Development Financial Institution will hopefully boost infrastructure related projects which require financing and are not getting adequate interest from the banking sector.

We welcome the measures announced by Hon’ble Finance Minister in Union Budget 2021-22. The budget rightly strikes a reasonable balance between addressing the key pillars of Health & Well-being, Inclusive Development, Human Capital, Innovation and R&D, apart from laying the path for a robust economy by providing a major infrastructure boost. The array of measures announced are in line with people as well as market expectations and will go a long way to bring the nation back on track by boosting spending on infrastructure and rural development while fighting the pandemic through health focused measures.

As far as the financial sector is concerned, further recapitalization of Rs 20,000 crore for PSBs in the FY 2021-22 is a welcome step. The other measures which are expected to strengthen the sector are as under:

1) Various measures have been announced on the infrastructure front, which are expected to take the economy into a new trajectory of growth. In addition to over a 34% increase in capital expenditure, new highway projects have also been announced.

2) Setting up of a professionally managed Development Financial Institution will catalyze infrastructure funding.

3) Creation of an ARC and Asset Management Company that will take over the stressed assets and sell to Alternative Investment Funds (AIFs), is also welcome as it will help improve the health of the banking sector through impact on price discovery and improving competition in the market.

4) The NCLT system will be strengthened and e-Courts will be adopted and alternate mechanism of debt resolution will be set up.

5) The massive program for monetization of completed/ running projects will help in creating required resources through the instruments like INVITs.

6) Other important announcements of bringing in the IPO of LIC, hiking the FDI limit in insurance increase to 74% from 49%, strategically divest 2 Public Sector Banks and 1 general insurance company, are steps in the right direction.

The voluntary scrapping policy proposed for discarding old commercial vehicles will boost the automobile industry. The gross borrowing programme is also helpful to maintain the fiscal health of the economy, while providing necessary funding towards growth and development of the infrastructure.

The Union Budget 2021-22 has brought in the much-needed good news for startups. The proposal to extend the tax holiday for start-ups for one more year till March, 2022 will be extremely helpful for start-ups in these difficult times. Additionally, the extension of capital gains exemption for investment in start-ups by one more year will also incentivise investment in start-ups and help them bring in funds into these companies. Also, a one-person company and relaxing the number of days for NRIs will help start-up the creation and help in ease of doing business.

The proposals to promote and encourage fisheries will also be helpful for companies like us. The proposal for the development of five major fishing harbours as hubs for economic activity will help companies in the fish and fresh foods sector. The development of modern fishing harbours and fish landing centres and Multipurpose Seaweed Park to be set up in Tamil Nadu. Also, The move towards digitization and enhancing digital payments and the use of AI and ML in governance will provide a great platform for digital India.

The Finance Minister also announced that the government would further expand the Bharatmala Pariyojana by awarding another 8,500 kilometers of roads by March 2022 and complete an additional 11,000 km of national highway corridors. This will go a long way in enabling a smooth movement of goods which is extremely helpful for companies dealing with perishable goods. The proposal for the Western Dedicated freight Corridor and the Eastern DFC by June 2022 will also be a big positive for the logistics sector and will bring down logistics costs.

In the backdrop of a pandemic year, the budget rightly has put prime focus on Healthcare. With a 2.23 lakh crore spend which is a hike of 137%, India is readying itself for a future where countries can handle large health crises better. Allocation of 35000 cr for COVID-19 vaccine shows how crushing an impact such pandemics can have on a country.

With the economy staring at a contraction of 7.7 % last fiscal year, the government seems to have its focus set on growth. A hike of 34% in Capital Expenditure should spur growth in almost all sectors. Higher spend on Infra will also put pressure on GOI to pursue Disinvestment within the stipulated target date of 2022. All these much-needed steps in the right direction.

Education and Skill development get ₹99,300 crore and 3000 cr respectively. Strengthening 15000 schools and setting up 100 new Sainik schools is step in the right direction. A higher education commission should help guide technical education in the right direction. Skill development is the need of the hour for a developing economy like us, an allocation of 3000 Cr will help support the Training and Assessment ecosystem keep the pace of their work.

Setting up a Gig Worker Portal is a great idea. Having a centralized database of all Gig workers across multiple sectors will help the Industry employ them. It will also ensure all workers get a comprehensive social security cover.

The overall direction of Union Budget 2021-22 looks like a rational one with measures towards promoting investment. The focus on the Atmanirbhar package will also boost Indian companies. Some of the measures like increasing the threshold limit for small industries and increasing the FDI limit for insurance are progressive. But the good thing is that contrary to expectations, there will be no new taxes or increase in corporate income tax and other levies because of pandemic pressures.

The allocation of ₹35,000 crore for the development of the Covid-19 vaccine in BE 2021-22 comes as a sigh of relief. This makes, transporting vaccines across the country the next challenging step. Hence, digitalization of core vaccine transportation activities will be critical, especially when it comes to mitigating risks like theft and damage and gaining micro-level visibility.

The Union Budget 2021-22 has proposed some forward-looking measures for the education sector in the country. The proposal to set up 100 new Sainik schools in partnership with NGOs, the private sector, and the states will not only expand the school base in this area but will also bring in synergies from the NGO and private sector. The proposal for creating new formal umbrella structures in 9 states will also be good for coordination of states and bringing in synergies. There are also some good proposals for higher education including the registration of the Higher Education Commission to act as an umbrella body with 4 separate vehicles for standard-setting, accreditation, regulation, and funding. The government has also announced several proposals for scheduled caste and scheduled tribe students which will help bring them into mainstream education. This includes the establishment of 750 Eklavya model schools in tribal areas and the allotment of ₹35,219 crore for the benefit of these students for the next six years. The outlay for the Eklavya schools has also been increased.

The budget is a major step in the right direction. It outlays a strong focus on infrastructure, healthcare, capital spending, disinvestment, monetization, job creation and digitization. These measures are not only progressive and recovery-led, if implemented correctly would ease the burden on the economy and lead India towards the projected v-shaped growth and development. The budget talks about structural reforms in banking, enhancing debt financing and credit limits for businesses and asset monetization. This will lead to an increase in government spending, which, in turn will spur demand, therefore net positive for the industry. The several initiatives around job-creation, startups, reskilling, rural development and better quality of services to people are positive as a Nation cannot progress without care for the environment and inclusive all-round transformation.

The Budget announcements were in line with expectations. There is a continuance of large outlay on Infrastructure creation, Building & Improving large tracts of Highways to facilitate Road Transportation, all of which support the Logistics Industry directly & indirectly.
When seen in combination with the record budgetary allocation for rail infrastructure toward the freight corridors, the importance of Rail & Road Multi-modal will become increasingly important.
In the medium term, the share of Railways in overall goods transportation will increase substantially and it will enhance the competitiveness of Indian supply chain across industries by lowering the cost of transportation and also improve connectivity between production and consumption markets - mainly domestic but also global.

A strong Budget, it lays the foundation for an economic reset and revival by focusing on core priorities of infrastructure and healthcare development. With a clear path forward on disinvestment, formation of a DFI and the “Bad Bank” the budget continues the reform process. Overall, the Budget underlines the need for greater spending to support an economy emerging from a significant contraction. It envisages broader measures aimed at enhancing the ease of doing business in India and attracting foreign investments, aspects that will play an important role in positioning India as an attractive emerging economy, and a key player in global supply chains, in a post pandemic world.

Coming out of the pandemic year, the Finance Minister has laid down a well-rounded Budget.Focus on setting up of Fintech Hub at Gift City, enhancing digital payments and use of AI in governance—all provide a strong platform for Digital India. Allocation of Rs 50,000 crore towards National Research Foundation will work towards boosting India’s Innovation Quotient on the global map and is a welcome move. Allocation of funds as incentives for promoting digital payments is also a step in the right direction and a significant step in ease of doing business. Lastly, increase in allocation for highways and railways will lead to employment generation and boost the economic growth of the nation.

Considered ‘the Margaret Thatcher moment’ for the FM, Union Budget 2021-22 was literally a make-or-break event. The circumstances are unprecedented - it is the first budget presented after a pandemic which shattered the economy globally, and in India. The impact of the pandemic has been catastrophic with early govt. estimates indicating a 7.7% contraction in FY 2020-21 – the biggest GDP growth plunge in over four decades. Expectations across sectors were at an all-time high, though the fiscal pressures on the finance ministry are nothing short of crippling.

As expected, healthcare got the highest priority in resource allocation and policy support including INR 64,180 Cr outlay under PM Aatmanirbhar Swastha Bharat scheme. It bodes well for healthcare facilities and wellness-oriented real estate.

Further, FY 2021-22 capital expenditure outlay at INR 5.54 lakh crore to ensure that the target of becoming a USD 5 trillion economy by 2025 is well on track. This will positively impact infrastructure, connectivity of Tier II cities, and job creation for SMEs and MSMEs – thereby benefitting the target customers of affordable housing.

For the ‘Aam Aadmi,’ personal tax relief by way of tax rate cuts or favourably readjusted tax slabs topped demand and the FM failed to deliver on it. An upward revision in the deduction limit under Section 80C (at INR 1.5 lakh a year) was long overdue and increasing this limit would have increased disposable incomes, inevitably pushing up consumption. It would have also helped improve consumer sentiments across sectors – the real need of the hour.

As anticipated, affordable housing and rental housing got a big boost with the govt. extending the period for extra deduction of INR 1.5 lakh available for loans up to 31st March 2022. This will keep demand buoyant for affordable housing in 2021 as well. Further, the extension of the tax holiday for affordable housing projects for one more year will help bring in more new supply within this segment. As per ANAROCK Research, affordable housing already accounts for more than 35% of the supply across the top 7 cities in the country.

Infrastructure got a major push. Infra works proposed include building 8,500-km of highways by March 2022. There were big infra sops announced for poll-bound states including West Bengal, Tamil Nadu, Kerala and Assam. The govt. also announced the Bill to set up Development Finance Institution (DFI) providing INR 20,000 Cr to boost infrastructure projects. The Modi government has not lost sight of its USP of infra creation, which will help connect more areas and thus open them up for real estate development.

Customs duty on steel reduced to 7.5% will create some space to real estate developers who may not be in a position to increase prices immediately.

The announcement to set up 7 mega textile parks with plug-and-play facility in 3 years will unlock the potential of new markets for development and provide an impetus to real estate assets, including logistics and warehousing.

Post the pandemic, the chances of NPAs growing are significantly high. The Budget announced the setting up of ARCs to help banks to cushion the impact of the pandemic. Besides the setting up the long-awaited bad bank, the government will also infuse INR 20,000 crore into public sector banks as part of its recapitalisation plan.

All in all, the budget was broad-based with special emphasis on building robust healthcare infrastructure, physical infrastructure and affordable housing. It will result in job creation in the informal sector, which was severely impacted by the pandemic. Creating buoyancy in the job market will benefit the Indian economy in the long run. The focus on rural job creation will also give a boost to affordable housing, which will help increase housing demand in tier 2 & 3 cities.

Overall growth-oriented Budget. key positives are:

1) No major negative – for corporates, capital markets & individuals

2) Higher spend and allocation to capital expenditure

3) Continued reforms as highlighted by plans to privatize PSUs including banks.

I am neutral or slightly ok with this 2021 Budget announcement. Relaxations like senior citizens of above 75years not required to file an income tax return with pension income is appreciable. Also, now the government has increased the limit of auditing in the case digitized transactions from 5 crore to 10 crores is impactful for those who were in the bracket. The reduction of assessment time period from 6 years to 3 years will drastically lower the paper handling so it is far better now from the previous rule.

Nothing much has been introduced in the taxation industry but we have gathered strength from the previous budget so there is not much issue, however, some of the clients from healthcare & infrastructure have told us that they are happy as of now and we have equally responded to them. It is to be seen the impact of Budget in the coming days for a clear picture ahead.

137% increase in health budget, and allotment of ₹64,180 cr towards PM Atmanirbhar Swasth Bharat Yojana will provide the much-needed boost to our country’s health infrastructure. With healthcare at the forefront, and health & wellness taking a centre stage, the 17000 rural & 11000 urban centres are expected to pave the way for a new era in preventive health for India.

As a result of this investment, our country’s digital health ecosystem will leapfrog into the future, and empower every Indian - whether living in rural or urban areas to access healthcare. The new health systems and integrations will help unlock the opportunities for telemedicine as well. This will be one of the world’s largest digital health ecosystems. With this impetus & motivation to health systems, we have the opportunity to lead & set an example for the rest of the world.

The consolidation of securities laws and the proposed decriminalization under the LLP Act marks an important move. On the tax front, providing tax exemption for aircraft leasing companies that are set up in the IFSC has the potential to boost foreign investments. Reducing the timelines for reopening past tax cases will lead to reduced tax litigation however removing the allowability of depreciation on goodwill that had the blessings of India’s Supreme Court will be a major dampener for M&A transactions.

The budget was awaited with a lot of expectations and of that most have been met. Infrastructure & healthcare were the main spotlights of budget 2021 and a large investment has been allocated for the expansion of the road network. Also, just like it was predicted, Startups were given importance in this budget as well. The tax-exempt on the revenue, as well as investments, have been increased by one more year which will be beneficial for the startup growth in the country. On the other hand, the investment in MSMEs and the moratorium on loans of up to 2Cr will also play a crucial role in for the Indian corporates. Privatization of several government-related sectors such as ports will also add to the economic growth and employment generation.

It’s heartening to see the increased budget outlay of 2.23 lakh crore, with a whopping 137% increase from the last year. Additional healthcare spending of Rs 64,180 crore under PM Atmanirbhar Swasth Bharat Yojana will enable Indian Healthcare ecosystem to plan better for curing new and emerging diseases.

The focus on public health is very visible with the setup of Integrated public health labs in every district and the goal to have 17,000 rural and 11,000 urban health and wellness centers. This will go a long way in increasing access at primary, secondary and tertiary levels, with focus on preventive and diagnostics-based healthcare for the masses. A key challenge however will remain in reaching this goal efficiently, keeping key quality targets in mind.

The spending on COVID of 35,000 crores, though expected, would go a long way in helping everyone deal with this pandemic and help India emerge stronger, reading to a speedy recovery.

Reducing import duty on gold to 7.5% is a step in the right direction and in line with the long-standing demand of the gems and jewellery industry. Higher import duty was not only indirectly promoting illegal gold transactions but also eroding government’s revenue. The import duty reduction will make trade compliance. Moreover, the government should also focus on strengthening the e-governance system to beef up the tracking mechanism of illegal transactions of gold. All in all, a transparent trade always boosts consumer confidence.

Budget 2021 has clearly outlined the government’s intent to lay a sustainable roadmap for plugging India’s fiscal deficit and laying a clear roadmap for accelerating its economic growth and development. With an allocation of Rs, 1,000 crore to solar energy corporation and Rs, 1,500 crore to renewable energy development agency, the government has demonstrated its resolve to remain steadfast on its path to increase the share of renewable energy in the national energy grid. With the announcement of the hydrogen energy mission, the government has reiterated its commitment to transition to a zero-carbon fuel regime and reduce the country’s carbon footprint. The unambiguous focus on incentivising the production of renewable energy will facilitate fuel diversification, bolster national energy security and help conserve the country’s fragile natural resources.

The Rs. 1500 allocation to boost digital payments announced in the Budget will most certainly help in wider adoption of digital payments over cash. Investment focus areas should be internet infrastructure in Tier II and Tier III cities and also in financial and digital literacy initiatives. Rationalising the zero MDR policy will also be critical to ensure that on the supply side, there is continued innovation and the providers of payment solutions are able to develop platforms that generate revenue and are economically sustainable.

As expected health has been given a prominent platform and was the first pillar of the budget speech and has increase in allocation of around 138% is definitely a welcome move. There are other steps which are on the expected line - the increase in FDI limit for insurance companies from 49% to 74% was over due. However the response is to this is to be seen since still majority in board and conditions of independent director have been stipulated. The setting up of DFI is inevitable if the infrastructure target is to be met. 5 lac cr of debt portfolio has been set over a period of 5 years has been set.

The same might have to be increased but it’s a good start. The asset reconstruction company to buy and resolve stressed portfolio is much needed one especially with stressed assets expected to reach 14%. Recapitalisation of 20000 crores seems to be on the lower side. The permitting of one man company with flexibility to conversion to any other constitution definitely would support ease of doing business. Increase in capex by around 35% to 5.54 lac crore but as done in the FY 20 - 21, the spending is expected to be over and above this limit. The fiscal deficit has been much higher than expected at 9.5% for 20 - 21 but in the ensuing year it is estimated at 6.8%. More importantly the government has spelt the road map of fiscal consolidation and to achieve less than 4.5% of GDP by FY 25-26.

The infusion of money for road development in four states is a welcome move for smooth/faster logistics transport. This move will further ensure greater connectivity in tier -2 /tier-3 cities in these states. This is a very welcome move from the respected Finance Minister. Further the highest financial package for railways will add to the smooth connectivity between different points of country and easy and faster freight movement.

The Union Budget targets 100 percent electrification of broad gauge railways to be achieved by 2023. As of August 2020, 65 percent electrification has been achieved. This is a welcome move by the government as it will reduce dependence on conventional fuels and increase efficiency. It is hoped that a significant part of this will be from renewable energy. Significant focus on asset monetisation including PGCIL and other transmission assets will enable unlocking value and also generate additional revenue for transmission companies that can hopefully be partly shared with consumers to bring down tariffs.

A revamped scheme with an outlay of over 3 lakh crores would be launched for distribution turnaround through infrastructure creation and interventions such as Smart Metering, feeder separation, etc. While providing for this scheme, the Budget also puts additional pressure on Discoms to improve by providing the choice of suppliers to consumers through a special framework. This has been pending for a long time and is welcome and will require the separation of carriage and content.

There is an enhanced outlay for the renewable energy sector through SECI and IREDA, which will enable larger focus on augmenting renewable energy. In addition, a comprehensive National Hydrogen Mission to be launched to generate hydrogen from renewable sources is a welcome move. Certain initiatives for overall infrastructure sector like setting up of a Development Financial Institution for debt financing and setting up of a central asset management company for taking over stressed assets will benefit the power sector in a big way.

The consolidation of securities laws, existing decriminalisation of offences under the Companies Act and the proposed decriminalisation under the LLP Act marks an important move towards making Indian corporate legal framework, simpler, business friendly and ultimately (hopefully) reducing compliance costs. The securities market code is in line with previous discussions on the NFRA. It marks a step towards streamlining the multiple laws, ordinances, guidelines and regulations. If drafted and executed in a proper manner, it will be helpful to market participants and remove any possible conflicts in the regulatory framework and will provide clarity in policy making to investors and stakeholders.

The proposal to have Stressed Asset Resolution ARC and Management Company can reduce the stress on the banks and can be a game changer. One will have to wait to see how effective this proposal will be.

Special focus on Manufacturing will also assist in inviting FDI in this sector. Substantial push to Business Trusts by conversion of assets and opening the same for FPI will provide new channels for alternative funding.

If 2020 has taught us something, that's the importance of good health. Not just ours but of people in general. And the key to good health is strong immunity. Apart from Covid-19 vaccine coming in, many other measures need to be taken to educate people on having strong immunity. Also, to have a hygienic lifestyle. And for that investing in the health sector and human capital is of utmost importance.

With focus on Aatmanirbhar Bharat, announcement of establishment of 7 textile parks by Modi government in Budget 2021 should be welcomed with open arms. It's a big boost for the local textile industry. And, this will help India become a world leader in textile sector.

Hon'ble Union Finance Minister Nirmala Sitharaman in her Union Budget 2021 has clearly conveyed a message that this government believes in giving a big shot in the arm of textiles and local manufacturing with special focus on Vocal for Local.

To ease access of finance and augment funds for the infra sector, the proposal of providing FPIs an entry into debt financing of REITs and InvITs will open up a large source of fresh funding for the infrastructure and real estate sectors. This will also open up a new avenue for FPIs to invest in a growing market like India.

Increase in FDI limits from 49% to 74 % for the insurance sector is a welcome step and will help insurance companies to raise funds to ensure their solvency is maintained in line with growing business needs. This will also augment foreign inflows and help attract more foreign companies.

It is very encouraging to see the focus on healthcare in the budget and a 137 percent increase in outlay in healthcare and wellness over last year. There appears to be an integrated attention to epidemiology, diagnostics and treatment at all levels including district and blocks.

We welcome the annoucement on voluntary scrappage policy and it’s likely to increase demand for new commercial vehicle (CV)and Passenger vehicles(PV).

Scrappage policy though voluntary will likely become mandatory as fitness certificate will be made mandatory. It's a soft step towards coming up with mandatory.

In dearth of a proper infrastructure, just introduction of a fitness certificate may not be enough. The government will also need to build the necessary infrastructure to get this to action onground.

Strong push in Infrastructure building - roads, railways, economic corridors will help boost demand for heavy & medium duty CV’s.

Recapitalisation is one side of the coin. INR 20000 crores is a relief for PSUs, albeit a little lower than expectation, but the banking sector looks at other measures of NPA relief which RBI will need to implement.

Setting up of ARC and AMC has been in the pipeline and using AIFs in this sector would certainly lead to a significant impact in price discovery and competition in the the NPA market.

The Governments decision to increase the FDI limit in the insurance sector from 49% to 74% is a welcome move as it was a long standing industry request and will help attract greater foreign investment and strengthen the insurance sector.

The measures to clean up the NPAs in the banking sector by creation of an ARC and Asset Management Company that will take over the stressed assets and sell to AIFs is also welcomed as it will help improve the health of the banking sector.

Financial Sector:

"The budget has made a few important announcements in financial sector reforms. It has permitted 74% FDI in the insurance sector which is expected to lead to higher investments and consolidation in the sector. While another Rs 20,000 Cr has been allocated for capital in public sector banks, it has also announced its intent to divest its stake in 2 public sector banks and one general insurance company. This is surely a significant step ahead but government's ability to execute it in a timely manner needs to be seen. Lastly, an ARC and an AMC is proposed to be set up to buy out stressed assets of the banking sector. We, however, will need to wait for the details in this regard before we can comment on the efficacy of such a bad bank in providing capital relief to the banks with high GNPAs."

Infrastructure Sector:

"As expected by the market, the budget has given high priority to infrastructure investments in line with the National Infrastructure Plan (NIP). Significant step up in national highway projects is in the anvil; significantly higher allocation has been made for railways and urban infrastructure including public transport systems. The city gas distribution network will be expanded further to smaller cities. Importantly, the National Monetisation Pipeline for refinancing of operational projects has been contemplated which will start with the InviTs from PGCIL and NHAI. The decision to set up a separate DFI with an equity capital of Rs 20,000 Cr and with a loan target of Rs 3.0 Lakh Cr over the next 3 yrs is also another timely measure to facilitate adequate funding for the sector."

Healthcare Sector:

"We had expected higher allocation for the health sector given the vulnerabilities in the health infrastructure exposed by the pandemic. India's public spending on healthcare needs to be stepped up from the current 1% of GDP to around 3% of GDP. The plan to set up 17,000 rural and 11,000 urban health centres along with public health labs is a step in the right direction and will also generate significant employment in the health sector."