Context: The budget treads a fine balance in incentivizing all stakeholders or sectors in the economy to propel growth and actualize aim of Aatmanirbhar Bharat.
Key Focus Areas of the Budget 2021-22
Healthcare: A holistic approach towards health and well-being through following measures-
Improving nutritional outcomes via Mission Poshan 2.0.
Reducing environment pollution through-
Vehicles scrapping policy of old and unfit vehicles (it will also provide impetus to the automotive industry by spurring demand).
Budgetary provision for waste management and clean air.
Increase in budgetary allocation for healthcare infrastructure( 224% higher than in FY2021).
It will provide the foundation for Aatmanirbhar Swasth Bharat Yojana and improved Human Development Index (HDI) through right governance.
Infrastructural push: recognizing multiplier effects of infrastructure, to crowd-in private investment and raise medium-term productive capacity and growth potential through following measures -
Creation of a Development Finance Institution (DFI).
Rise in capital expenditure budgeted outlay by 34.5% over 2020-21.
Emphasis on the National Infrastructure Pipeline and Public infrastructure Asset Monetisation Pipeline.
Public-Private Partnership (PPP) in urban transport and ports.
Debt financing ofInfrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs).
Zero-coupon bonds by Infrastructure Debt Funds (IDFs).
Banking Financial Services and Insurance (BFSI) sector: budget aims to improve independence, professionalism and operational and financial efficiencies of BFSI through following initiatives-
Single securities market code.
Privatization of Public Sector Banks (PSBs) and general insurance company.
Setting up of asset reconstruction and management companies to address stressed loans.
Increasing FDI limit in insurance from 49% to 74%.
Ease of doing business and investments: inducing investment through following initiatives-
Result-linked power distribution scheme to promote competition in the power distribution.
Production Linked Incentive (PLI) scheme is strengthened with Rs2 lakh crore allocation.
Direct tax proposals, faceless assessments and exemption for startupsand ‘one-person companies will reduce compliance burden.
Asset monetization of Government-owned operating assets such as highways, power transmission and even sports stadia - can quickly raise capital and open up a new debt market.
Fiscal transparency: an expected fiscal deficit of 9.5% of GDP in 2020-21 and 6.8% in 2021-22 reflects transparency in accounts and finance food and fertilizer subsidy through budgetary outlays.
Way Forward
Legislative provision for REIT and InvIT: to further deepen the shallow debt market and creates a new asset class for debt raising.
Focus on agriculture infrastructure.
Develop a national hydrogen policy: India is lagging the world in defining a hydrogen policy.
Reduce stressed assets in PSBs: recapitalization of PSBs to the tune of Rs20,000 crores may fall short of returning them to financial health and instilling in them confidence for onward lending.
Recognize intellectual and financial capital: treat Non-Resident Indian’s (NRI) at par with resident Indians on matters like investments in strategic sectors including defence (not as proverbial 12th man)
Reinvigorated disinvestment programme: with a delineated role for PSUs in four strategic sectors to further enhance the allocative and productive efficiency of invested capital.