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Union Budget 2021: A bold expansionist budget
The easy way out for the Finance Minister would have been to introduce a COVID related cess which was widely expected but the she has chosen the route of asset monetisation and to reinvest the proceeds in infrastructure
Public anticipation towards Union Budget 2021-22 has been extraordinarily high this year especially when the Indian economy and world is grappling with COVID-19 pandemic.
Hon’ble Finance Minister Ms. Sitharaman presented the first ever paperless Budget which focused on nation building, job creation, demand creation and as promised a budget ‘like never before’.
The Union Budget proposals rest on six pillars viz., health and well-being, physical and financial capital and infrastructure, inclusive development for aspirational India, reinvigorating human capital, innovation and R&D, minimum government and maximum governance.
The easy way out for the Finance Minister would have been to introduce a COVID related cess which was widely expected but the she has chosen the route of asset monetisation and to reinvest the proceeds in infrastructure, thus leading to a virtuous cycle which is very similar to people expecting a draw at Gabba but got converted into a victory. We must ensure the execution will also happen the way Pant and team demonstrated.
Also read: Budget 2021 updates
As the Prime Minister rightly said, it is a budget of “Vikas Ka Vishwas”. The Budget provides the confidence to all of us to work towards a better India.
Continuing the focus on the government’s vision of ‘Housing For All’, the Finance Minister announced tax exemption i.e. additional deduction of interest amounting to ₹1.5 lakh for loans taken to purchase an affordable house for one additional year i.e. till March 2022. Also developers building affordable houses were provided with tax holiday for an additional year i.e. till March 2022.
With an aim to address the need of affordable housing for migrant workers, the Finance Minister announced tax exemption for notified Affordable Rental Housing Projects.
This push for the real estate sector especially affordable housing will boost the recent momentum in housing demand and help in creating jobs. Housing is one of the largest employment generators in the economy with linkages to nearly 300 industries — both in terms of direct jobs and the jobs it creates in ancillary industries such as cement, steel, power etc.
The proposal to divest two PSU banks and recapitalisation scheme of ₹20,000 crore will give a strong boost to PSU banks to improve credit growth.
With an aim to effectively implement the National Education Policy, Finance Minister announced to strengthen 15,000 schools initially. These schools will then mentor and work as a model for the NEP implementation across the country.
Finance Minister announced to introduce a bill for setting up of a new development finance institution called the National Bank for Financing Infrastructure and Development with a capital base of ₹20,000 crore and proposed lending target of ₹5 lakh crore within three years time. This will act as an enabler for infrastructure financing for critical infrastructure project.
COVID-19 genuinely exposed our healthcare infrastructure. Finance Minister announced a new centrally sponsored health scheme with viz., the PM Atmanirbhar Swasth Bharat Yojana with an outlay of ₹64,180 crore over the next six years. This will boost and strengthen country’s health infrastructure.
Finance Minister announced a bold and new age budget with number of new ideas have been suggested, execution of these ideas is key. With the real GDP growth pegged at 11% in FY22 as per Economic Survey 2020, GST collection touching a record high of ₹1.19 trillion in January 2021, and the distribution of the vaccines happening at decent pace, I expect Indian economy to back on track sooner than later.
(Renu Sud Karnad is Managing Director – HDFC Ltd)
