Budget 2021 To Position India As Alternative Global Destination For Manufacturing, Innovation
Finance Minister Nirmala Sitharaman has presented a pragmatic budget with positive objectives for long-term growth. Generally, if the government wants to increase its revenues, the easiest approach is to increase the direct and indirect taxes.
However, with the Union Budget 2021, Finance Minister, Nirmala Sitharaman took a bold step by not burdening the innocent taxpayers who are already reeling under the pressure of a COVID-induced recession.
The government instead focused on short term borrowing and raising funds through disinvestment, IPO of LIC, increasing efficiency in revenue collection through digitalisation, at the same also helping the key sectors such as healthcare, textile, infrastructure, agriculture, pharma, IT, banks, MSMEs, etc.
The development of infrastructure is fundamental to the revival of the economy and this continued boost from the government will have a multiplier effect on various sectors that provide material & equipment for construction & development.
We believe that the infra sector will be at a great advantage as each sub-sector, shipping, railways, roads, energy, and power has been addressed with specific reforms.
The benevolent tax announcements would help attract global players in the aircraft leasing and financing business. The hike of 137 percent in the budget towards the healthcare sector was the most important move. The outlay of Rs 35,000 crore towards vaccination will help in stopping the spread of COVID. The Development Financial Institution, Increase in FDI in insurance and the PSE and PSB divestment will provide a much-needed boost to the financial sector.
The introduction of DFI and a Single security market code will enhance the liquidity in the secondary markets and enable smooth capital market operations. Amendment to Insurance Act to allow FDI from 49 percent to 74 percent, will allow a lot of foreign capital investment in the most underpenetrated sector of this country.
Further, excise duty reduction by 5 percent will help gold prices fall by Rs 2,000 per 10 grams and thus offering people to invest in precious metals. Launch of a Rs 1,000-crore start-up seed fund called Start-up India Seed Fund will be a major boost to the various start-up players in India. Infrastructure development will help to bring logistics cost down from 13 percent to 7 percent over the next three years. Implementation of the scrappage policy was a welcome move in helping the stressed auto sector.
3) Also, surprisingly, there were no direct measures taken to help the distressed hotels and tourism sector. Any extension of moratorium or direct tax benefits could have brought cheer in that industry also.
In conclusion, the budget comes when India is trying to get its growth back on track and create enough jobs for its workforce. Hence we think, its overall growth budget providing huge employment opportunities for the Indian economy bringing us closer to the dream of an Aatma Nirbhar Bharat, and positioning India as an alternative global destination for manufacturing and innovation.