FM Nirmala Sitharaman presented her first paperless union budget and announced a slew of measures on healthcare and infrastructure to give an impetus to the Covid-hit economy. Union Finance Minister Nirmala Sitharaman presented the General Union Budget of 2021 on Monday. Dubbed as the most crucial Budget of India in recent years, the Budget has come in the backdrop of the largest gross domestic product (GDP) contraction India has suffered post-Independence due to the COVID-19 pandemic. India has been among the worst-hit major economies due to the virus-induced lockdown, with the economic growth contracting by a massive 23.9 percent year-on-year (YoY) in the June 2020 quarter, the first GDP contraction in over 40 years. There are only four occasions in India’s history when GDP growth has suffered a contraction: 1957-58 (1.2%), 1965-66 (3.7%), 1972-73 (0.3%) and 1979-80 (5.2%). The FM’s budget focused on higher spending, healthcare expenditure, infrastructure development and public sector bank privatisation, while no major income tax relief has been provided to the common man. Markets have surged nearly 4 percent particularly led by the private sector banks. Here are few post budget reactions from the India Inc.
Shri CH S. S. Mallikarjuna Rao, MD & CEO, Punjab National Bank for Union Budget 2021-22
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:
- 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.
- Setting up of a professionally managed Development Financial Institution will catalyze infrastructure funding.
- 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.
- The NCLT system will be strengthened and e-Courts will be adopted, and alternate mechanism of debt resolution will be set up.
- The massive program for monetization of completed/ running projects will help in creating required resources through the instruments like INVITs.
- 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.
Shri Rahul V Karad, the Visionary Educationist, and the Managing Trustee & Executive President, MAEER’s MIT Group of Institutions & Executive President, MIT World Peace University (MIT-WPU)
I welcome the budget announced for this year by our Finance Minister Nirmala Sitharaman. The budget aims at the overall economical revival with a major thrust on infrastructure, healthcare and agriculture along with other sectors. The decision to introduce IND-SAT to invite Asian and African students to study, will make India the preferred destination for education. It will also introduce more diversity amongst the student population. Introducing FDIs in the education sector will further help ramp up this sector and help meet global standards. The young engineers getting the internship opportunity for a period of 1 year by the Urban Local Bodies of India will further build a greater industry connect for our engineering graduates. As a university that is proactively bridging the industry-academia gaps, this is a welcome change. What is also path-breaking is the government’s decision to introduce degree-level full-fledged online education programs by the top 100 institutions listed in the NIRF. This will make good quality education accessible to aspiring students especially in the rural regions of our country where there is a lack of education infrastructure. The idea of attaching medical institutes to a district hospital in the Public-Private Partnership (PPP) mode will address the future demand for doctors and healthcare professionals in our country and also provide them with a better exposure early in their careers. This year’s budget has taken into account some of the challenges faced by the Indian education sector and presents opportunities that can be turned into strengths to make our nation Atmanirbhar, as India will have the largest working age population in the world by 2030.
Ravi S Raghavan – Tax Counsel from Majmudar & Partners Law Firm
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
Mr. Kamal Khetan, Chairman and Managing Director, Sunteck Realty
“The Union Budget has packed some great ideas and a definite direction for strong economic growth ahead, especially through infrastructure, capital expansion and banking and financial services. For real estate, the move to extend the tax holiday available for the purchase of affordable houses as well as for the affordable rental housing projects is a welcoming move as it would further strengthen the confidence among both developers and homebuyers. The move will certainly prompt more demand, especially among first-time buyers who generally fall in the lower and mid-income segments. Also, the extension of the tax holiday on affordable housing projects for developers by another year will increase the project launches in this segment as they would get additional time and resources. Apart from this, the mega infrastructure development and upgradation to be undertaken across India will add much value to the real estate sector.”
Mr. Rajesh Sharma, Managing Director, Capri Global Capital Ltd
“The Budget has clearly kept the focus on boosting economic growth. Emphasizing to make India self-reliant and strengthen the country’s position in the global economic landscape, the honorable Finance Minister has given systematic importance to the NBFC sector through a slew of measures that will ease the lending business. The reduction in the loan limit from Rs 5 million to Rs 2 million under the SARFAESI act for NBFCs, with a minimum asset size of Rs 100cr and above, would mean that the debt recovery can enforce the security interest for lower ticket size loans. This will help the NBFCs to improve their ability to recover smaller loans and strengthen the overall financial health. Allotment of 20, 000 crores for bank recapitalization and setting up an ARC to take care of NPAs of stressed banks and manage through alternative investment funds would securitize the irrecoverable loans. Extend the eligibility of erstwhile tax sop on a home loan by additional one year up to FY’22 is a welcoming support to de-bottleneck issues surrounding the affordable housing segment.”
Mr. A Ganesan, Group Vice Chairman, Neuberg Diagnostics
“The honorable finance minister has presented a very progressive budget. With a substantial increase in healthcare outlay, the government has given a much-needed shot in the sector’s arm. With a substantial increase in healthcare outlay and key emphasis on public-private partnerships, the entire value-chain in the healthcare sector will gain new momentum and will see major collaborations amongst stakeholders. The announcements of centrally funded – Aatmanirbhar Health Yojana will strengthen our primary, secondary and tertiary healthcare, and setting up of 15 health emergency centers with a focus on curative and preventive health and wellbeing will scale up the delivery of affordable healthcare services”.
Dr. Harsh Kumar Bhanwala, Executive Chairman, CIFL
“This is an infrastructure focused budget in urban and rural area with an emphasis on Capex. This will pay dividends in the long run. The professionally managed DFI to catalyze infrastructure financing is a huge boost for the sector. It is a much-needed step to fill-in the financing gap and make it more organised. To enhance the infra pipeline, the sector requires a strong capital inflow. Further, an increased outlay for rural development, the RIDF will accelerate the infra growth for agriculture and allied activities.”
Ms. Preethaa Ganesh, Vice President, Vels Group of Institutions, Chennai –
“We acknowledge the initiative taken by the central government to make India as a preferred destination for higher education. Towards the same, the proposal of Ind-SAT comes in as a boon as this will help in boosting the education scenario in India by bringing in more foreign candidates. Enhancing online education by introducing a full-fledged education programmes will majorly benefit the students of deprived section of the society. Increase in apprenticeship embedded degree/diploma courses by March 2021 will result in providing more internship opportunities to fresh engineers thereby creating a wholesome job environment. In addition to this, we feel that the sum allocated for skill development and training of teachers will give us room to create a better work environment and deliver higher quality of education.”
Dr. Alok Khullar, CEO, Gleneagles Global Health City, Chennai –
“The budget’s focus to strengthen the Indian healthcare infrastructure is really welcoming as it will help us to be well-prepared to handle disease outbreaks/pandemic. This move will reduce the burden on the healthcare workers and ensure increased accessibility for receiving critical and emergency care. Initiatives to promote fitness and sanitation will help in preventing lifestyle issues and reduce the probability of disease outbreak among the rural areas. The proposed set-up for a viability gap funding window to set up hospitals in PPP mode will help healthcare institutions to expand their network to smaller districts. The PM Jan Arogya Yojana would be a real boost that would help the Indian population to receive advanced technology care in their hometowns and reduce their burden of travelling to metro cities. However, the decision to levy a 5 percent cess on import of medical equipment could have been avoided, as it’s used for advanced life-saving measures and helps India to be abreast with high technologies used around the world for healthcare.”
Dr. Arun Kalyanasundaram, Director, Pro-med Hospital, Chennai
“The increased allocations for healthcare will boost the country’s healthcare sector and help in generation of more jobs and availability of skilled professionals that would help in meeting the increasing demand for accessible and affordable healthcare. The budget has adequate importance to preventive healthcare which is the need of the hour. After a difficult year for the healthcare sector, we hope that the announced measures would reduce the burden in the sector and we also look forward to working with the Govt to ensure quicker and faster administration of Covid-19 vaccines for all. The set-up of increased number of healthcare facilities will improve the healthcare network and reduce the turnaround of avoidable mortalities.”
Mr. Saranavakumar Rajan, General Manager – Operations, Rainbow Children’s Hospital, Chennai
“The holistic approach towards healthcare in this year’s budget is really commendable. Measures to tackle problems of air pollution and sanitation will aid in preventive healthcare and improve one’s well-being. The budget’s focus towards improving the health of the mother and a child with the Poshan Abhiyan scheme to enrich their nutritional intake, will create more awareness on the importanc e of consuming a well-balanced meal for a healthy living. We look forward to work together with the Govt in its efforts to strengthen the healthcare infrastructure among rural parts of India. This move would help in reducing the maternal and infant mortality rate as their deaths often occur as a result of inaccessibility to hospitals.”
Prof. Amiya Kumar Sahu, Associate Professor (Finance), Goa Institute of Management
“The Finance Minister presented a forward-looking budget that would boost economic growth and investors’ confidence. I am particularly impressed with the resource allocations on Healthcare, Education, and Infrastructure. The fiscal deficit targets look pessimistic. The government would do better as economic activities normalize. The GST collections figures for January 2021 is a good signal. I expected excise duty cuts in petrol and diesel. The capital market has reacted positively, but the realities will unfold only tomorrow and further during the week. The focus of infra-push on election-bound states looks to be a big-promise. My rating is 7/10.”
Dr. Alok Roy, Chair, FICCI, Health Services Committee and Chairman Medica Group of Hospitals
“India Inc. and especially the Healthcare industry which has been battling the demon of COVID-19 and its aftermath should consider this year’s budget a blessing. Quite rightly, the budget has focused on health and well-being, infrastructural reforms, development of human capital and minimum government and maximum governance. The very fact that Government has put health as the first pillar shows that finally it is being considered as the prerequisite to ensure economic well-being of the country. Budget 21-22 seems realistic, constructive, and Hon’ble Finance Minister showed her commitment towards the healthcare sector, which needed a boost urgently. The Aatmanirbhar Health Yojana in addition to the National Health Mission with an outlay of INR 64,180 crore over six years is a welcome move, towards strengthening primary, secondary and tertiary healthcare in the country, addressing the Preventive, Curative, and Wellbeing of the population. This will also intend to develop capacities of health care systems, develop institutions for detection and cure of new and emerging disease as the first step to boost rural health and keep country ready for emergency handling of pandemic situations. Further, increasing access to pneumococcal vaccine to all states and budget outlay for health and welfare by the allocation this year of INR 2,23,846 crore in the healthcare sector a rise by 137% as compared to previous year will prove to be a major increase in the public health and pharmaceuticals sector. This will definitely strengthen the National Centre for Disease Control and make India future ready for any further health crises. With the incorporation of 17,788 rural and 11,024 urban health and wellness centers, the budget rightly addresses the need to reach the last mile population. The decision to set up integrated public health labs in all districts and 3382 block public health units in 11 states along with critical care hospital blocks in 602 districts and 12 central institutions is creditable but more might be required in a country where the patient doctor ratio is abysmally poor. Expansion of the Integrated Health Information Portal to all States/UTs to connect all public health labs is a step ahead towards digitalization and is a positive move. India has done exceptionally well considering the density of populace in talking the pandemic. Setting aside INR 35,000 crore and more if required for COVID-19 vaccination drive is laudable and shows that Government has prioritized the sector. India unfortunately has the highest mortality rate for children, the decision to launch Mission Poshan 2.0 is a praiseworthy move to prevent over 50,000 child deaths annually. The INR 2,217 crore outlay for 42 urban centers to tackle air pollution, one of the deadliest pandemic which is obliterating mankind for years and acts as slow poisoning is also commendable. The resolution to set up integrated public health labs in each district about 3,382 block public health units in 11 states is noteworthy. Establishing critical care blocks in Hospitals is essential from our learning from the recent pandemic and a right move by the Government. Overall the proposals made in the Budget 21-22, would make quality healthcare accessible and affordable, besides standardizing healthcare infrastructure across the country. We await the on ground implementation and operational details of the scheme now.”
