By Dominick Rodrigues
Mumbai :Union Finance Minister Nirmala Sithraman’s Budget 2021 came in for whole-hearted praise from a wide section of Industry including startups calling it a +game-changer+; +landmark+ budget with the government meeting the sky-high expectations of equity markets and the general public+, “momentum creator” for the financial infrastructure domain, textile industry calling it a “shot-in-the-arm,” Gem & Jewellery exports becoming globally competitive, generating generate massive demand for e-vehicles in the market, reducing litigation while promoting investment, support equity market, amplifying the digital rush through stability in business operations etc.
Key industry players echoed the Budget as “simple and effective; “best possible balancing act addressing the need for sustained fiscal support to foster faster recovery, growth and fiscal consolidation to the extent possible”; putting economy on right track against COVID-driven disruptions,” pushing growth drivers of the economy; creating a bad bank for stressed assets to give banks the elbowroom they need to start lending; boosting travel sector; startups also given importance; lead to sustained recovery for indigenous brands; helping Indian OEMs and manufacturers to make India self-reliant towards Green mobility.”
Ajay Piramal, Chairman, Piramal Group, while describing Budget 2021-22 as “designed to put India’s ongoing business cycle recovery on a much more solid foundation, said “The Budget’s high focus on public capital expenditure, relaxing fiscal deficit targets and concrete plans to support financial markets through recapitalisation of public sector banks, and an asset reconstruction company for bad loans, will provide the necessary impetus to restore economic growth. While the Budget is cognizant of the country’s immediate economic needs, it also lays out a medium-term vision of 3-5 years. Furthermore, the introduction of a Development Finance Institution (DFI) to fund long-term projects will complement the high focus on infrastructure. With banks remaining evasive towards long-term institutional exposures, the DFI is expected to ensure availability of credit for projects with long gestation periods.”

The Confederation of Indian Industry (CII) Karnataka welcomed Budget 2021-22 with its Chairman Sandeep Singh highlighting it as a “growth-and-consumption-oriented budget focusing on job creation by allocating funds to all key sectors while giving emphasis on infrastructure development. “I think this is the right step towards reviewing the economy. Overall, the budget is focused on optimal usage of all the resources, recapitalization is a good step and allocation of funds are at the right places. However, timely implementation is required by the government.”

Amit Kumar, CII Zonal Chairman, Mysore and Prakash Kalbavi, CII Zonal Chairman, Mangalore said the budget comprised everything for every citizen with huge allocation for power and infrastructure sectors, focus on health & vaccination, skills, training, innovation, R&D, simplification of GST, and announcement on contract labor that would help industries in tier-II cities like Mysore & Mangalore.

Shanti Ekambaram, Group President – Consumer Banking, Kotak Mahindra Bank Ltd., said the budget focused on investments over the medium-term all aimed at revitalising economic growth with key highlights being spends on healthcare and wellness infrastructure; investments in physical infrastructure by way of allocation to roads, highways, railways, ports, urban infrastructure amongst others; strengthening and consolidation of the financial infrastructure, including a fintech hub at GIFT City; introduction of a single securities market code; a corporate bond institutional framework; the creation of an AMC structure for stressed assets; setting up of Development Finance Institution for funding infrastructure projects and increase in foreign ownership of Insurance firms with some safeguards.

“Fiscal deficit is pegged at 9.5% of GDP this year and is estimated at 6.8% of GDP in FY’22. Clearly, the Government has prioritised bringing the economy back on track, even through its higher borrowings – an additional Rs 80,000 crore this year and gross amount of Rs 12 lakh crore in FY’22. Higher spends and investments is the need of the hour to bring normalcy and growth back to post-pandemic levels, even if it is at the cost of interim fiscal deviation. The path to fiscal consolidation was indicated – i.e., below 4.5% by FY 25-26,” she said, adding “To raise resources, an aggressive disinvestment and privatisation plan was announced including the IPO of LIC and privatisation of two public sector banks. In a major relief to all, there was no announcement of any “Covid” tax, wealth tax or tax on capital gains which was a concern in the run up to the budget.”

Thanking the Finance Minister for considering the industry’s recommendation to reduce the basic custom duty on precious metals such as gold and silver, Colin Shah, Gem and Jewellery Export Promotional Council (GJEPC), said “The reduction in duty from 12.5% to 7.5% will help Gem & Jewellery exports become globally competitive, and provide the sector a much-needed boost in moving to the next level. In fact, high duty on precious metal had made our exports uncompetitive — leading to the large Indian diaspora /NRI moving to Dubai, Hong Kong or other centres to buy jewellery, which was largely impacting the employment and business in India. The FM has also announced setting up of a new SEBI-regulated gold exchange and we welcome this move as this will ease marketability and sale of gold.”

H P Singh, Chairman & Managing Director, Satin Creditcare Network Limited, noted that at a time when India is recovering from the Covid-19 crisis, the budget focused on revival rather than survival, accelerating growth, amplifying the digital rush by bringing in stability in business operations. “Measures like introduction of tax-efficient zero-coupon bonds for infra debt funds, setup of a professional managed ‘Development Finance Institution’ with have a strong lending portfolio, statutory backing, and Rs 27,000 crore capital as well as the development of a world-class fintech hub will act as a catalyst in the growth of the NBFC sector and likely unplug potential for last-mile lenders,” he said, adding “The setup of an Asset Reconstruction and Management Company for stressed assets to take over bad loans will significant bring down NPAs, easing the woes of the NBFC sector. The strengthening of the NCLT framework will ensure the resolution of bad loans where the clients can avoid losing their business while continuing to pay the debt.”
Capt Rahul Bhargava, COO, Essar Shipping Ltd., said “FM has announced a new scheme to be launched for flagging of merchant ships in India by providing subsidy support to Indian Ship owners. The fund allocation of Rs 1624 crore — to be provided over 5 years — will boost Indian ship owners in acquiring ships to service tenders floated by Ministries, resulting in increase of Indian flag ships and creation of more job opportunities.”

“FM announced Indian ship recycling has acceded to Hong Kong Convention and most of the recycling yards are now compliant to new convention. By 2024, the capacity of the yards will be doubled, leading to creation of skilled and unskilled jobs. SCI privatization — as part of the Government’s disinvestment scheme for its CPSE units — will bring in foreign investments for overall improved impact on Indian shipping industry. Under the AatmaNirbhar Bharat programme, renewed trade flows will come into existence with reduced dependence on China,” he added.
Jeetender Sharma, Founder/Managing Director, Okinawa Autotech, said Budget 2021-22 effectively sets the roadmap for next five years with measures for overall economic growth. “The customs duty increase on automobile parts will encourage domestic manufacturing. We are thrilled to see the highest ever CAPEX of Rs. 1.08 trillion for the Ministry of Roads. Evidently, the budget comes with an increased focus on strengthening the infrastructure of the country, which is a welcome move. Furthermore, the commitment of ₹1.97 lakh crore for PLI schemes covering 13 sectors, also comes as a cheer for the industry.”

Raghunandan Saraf, Founder & CEO, Saraf Furniture, said “Sharp increase in Capital Expenditure thus providing Rs 5.54 lakh crores will develop momentum for financial infrastructure domain. The announcement of the development of investor charter should also be welcome as it will protect the hard-earned money of a number of investors.”

Anuj Mundra, Chairman & MD, Nandani Creation, said the establishment of 7 textile parks by Modi government in Budget 2021 is big boost for Indian textile industry to become world leader in textile sector.

Welcoming the government’s “long-awaited scrappage policy” and focus on better road infrastructure, Dr. Yogesh Bhatia, Founder, Detel, said “The thrust on automobile sustainability by introducing voluntary scrappage policy will progress the auto sector significantly and curb pollution issues and soaring crude oil bills, while also replacing the 15-20 years old, pollution-causing vehicles and generating massive demand for e-vehicles in the market.”

“The budget has successfully carved a constructive recovery roadmap by laying emphasis on Capital spending,” Ravi Mehta, Managing Director & Head – Transaction Tax, RBSA Advisors, said adding “Unlike the traditionally-followed path of tinkering taxes for revenue mobilization, the Budget seeks to pursue a novel path of borrowings, privatization, monetization and disinvestment to shore-up the funding needs for this agenda. Initiatives like faceless dispute resolution, hike in tax audit exemption limit, rationalization of reassessment period and clarifications on dividend-related taxation and TDS aspects of INVIT will support in reducing litigation, promote investment and facilitate the even-green Government agenda of ‘ease of doing business’.”

Nilesh Shah, Group President & MD, Kotak Mahindra Asset Management Company, said this “This growth-oriented budget will support the equity market. Asset Monetization, Strategic Divestment, Auto Scrappage policy are positive for market. Fixed income market will look forward to RBIs monetary policy as the gross borrowing program was little on the higher side. The budget has laid foundation for growth beyond FY 22 through selective protection to domestic industry and encouragement via PLI scheme.”

Vinkesh Gulati , President, Federation of Automobile Dealers Associations (FADA), said “FADA is happy to note that the Hon’ble Finance Minister has finally announced the much awaited Scrappage Policy — though voluntary — to phase out old vehicles. If we take 1990 as base year, there are approximately 37 lakh CVs and 52 lakh PVs eligible for voluntarily scrappage. As an estimate, 10% of CV and 5% of PV may still be plying on road. The 6,575 km Highway works proposed in Tamil Nadu, Kerala, West Bengal and Assam and another 19,500 km work for Bharat Mala project will definitely add fillip to much-needed revival of Commercial Vehicles especially M&HCV segment. The Government’s reduction of customs duty on steel products to 7.5% will benefit Auto OEMs with benefit to trickle down to end customers — thus boosting demand.”
“The Union Budget is the best possible balancing act addressing need for sustained fiscal support to foster faster recovery, growth and fiscal consolidation,”said Sidharth Rath, MD & CEO, SBM Bank India.”The 35% increase in CAPEX coupled with realistic divestment target of Rs.1.75 Lac Cr and a big push to asset monetization, Privatization of 2 PSU Banks and 1 PSU insurance firm in FY 21 22 indicates a balancing act. Though Fiscal Deficit target is higher than market expectation (9.5% in FY 21 and 6.8% in FY 22) and significant portion of this deficit will be funded by the market borrowing, with the deficit being mainly utilized to the growth impulses, it will be positive for economy in a longer run. Measures announced on Healthcare, boost for infrastructure, banking stress assets resolution will go long way in putting economy on right track against COVID driven disruptions.”

B Gopkumar, MD & CEO, Axis Securities, said “This is a landmark budget meeting sky-high expectations of equity markets and general public through spending on economic revival without major changes in the taxation structure, while focusing on infrastructure, health care, and key social programs. The fiscal deficit pegged at 6.8% is clearly expansionary and will aid the economy significantly. The proposals for the financial sector which include privatization of public banks and asset reconstruction company are also significant positives for the financial sector.”

“The government has expanded the scope of the National Infrastructure Pipeline to include more projects and the increased budgetary allocation of Rs 5.5 lakh crores in FY22 –a whopping 35% growth over the allocation in FY21– clearly indicates the focus and thrust of the government. Moreover, the monetization plans by encouraging INVIT structures and financing initiatives through the setting of development financial institutions is another positive move.”

Vishal Kapoor, CEO, IDFC AMC, said “Budget 2021 is remarkable with a strong push for growth through a sharp increase in capital expenditure, especially in infrastructure. Additional resources required are targeted to be raised through divestment and monetization, and domestic corporate and MSMEs would be happy to see additional custom duties in certain sectors, with no increase in taxes for them. Individual tax payers would be relieved at no change in Income tax rates. Additional tax filing simplification for investors through pre-filled capital gains and interest income, relief for senior citizens in filing taxes and a reduction in the limit for tax assessment reopening from 6 years to 3 years will improve tax-payer confidence. Retail investors will also look forward to the benefit from regulatory consolidation and the Investor Charter announced.”

Rohit Gera, MD, Gera Developments said, “Finance Minister has done a good job in pushing the growth drivers of the economy. Record GST collections in the last few months as a result of simplification and increased technology led vigilance will continue to help boost revenues for the government. For real estate sector, the government is doing away with sector specific sops and in light of this, the extension of the interest rate deduction for home buyers as well as extension of tax holiday for affordable projects by one more year is welcome. Simplification of processes and rules for the SME segment will help ease the cost and efforts of compliance which is very good for the SME sector.”

Sanjay Palve, Senior Managing Director, Essar Capital Ltd., said “This is a ‘spend big’ budget with clear focus on banking and infrastructure sector — exactly what the economy and sectors needed and with this comprehensive approach, the FM has reset the economy for a V shaped recovery. The FM’s efforts — to clean up the balance sheet of banks by creating a bad bank for stressed assets — will give banks the required elbowroom to start lending aided by the proposed Development Finance Institution with Rs 20,000 crores capital. All these initiatives will spur corporate investments.”

Anirban Chakraborty, Managing Director & CEO, TFCI Ltd, “Budget 2022 indeed provides a well chartered framework to boost the travel sector. Higher allocation of Rs 2,83,846 lakh crore for health and wellness, which also includes Rs 35,000 crore for Covid-19 vaccines, promises to ensure fast rollout of mass vaccination and restoring normalcy sooner than expected – thus giving a boost to the travel & tourism demand in the coming year. Furthermore, greater emphasis on health infrastructure also positions India as the global wellness destination of tomorrow. A greater emphasis on debt financing, coupled with the budget’s reformist tone including measures such as higher disinvestment target, raising of farm income, sops for affordable housing and various other initiatives, give an overall boost to the economy and spurring consumption & investment. These reforms & growth-oriented initiatives are all set to position India as an “evolving global tourism hub” and drive higher demand for funding propelling the NBFC sector.”

Rajiv Agarwal, CEO and MD, Essar Ports Ltd., said “The budget 2021 is extremely positive, driving the country towards Aatmanirbhar Bharat by laying huge stress on health care, infrastructure, banking and insurance, textile and agriculture that will aid the country not only towards economic revival but also spur growth. The Infrastructure spending is going up by 34% through NIP and a welcome focus on boost in Road and Railway infrastructure with new economic corridors planned will certainly help the growth of the logistics sector and will lead to enhancing trade in the country.”

“The announcement of the launch of the National Asset Monetisation Pipeline — which will include Transmission lines of Power Grid, oil and gas pipelines, airports, toll roads etc– will be a game changer. Government’s increased focus on the infrastructure sector will certainly bring in positive measures for the holistic growth of the logistics and maritime sector. No new tax is a very big positive in these times.”

Startups too had a lot to say.

Lokendra Ranawat, Founder & CEO, WoodenStreet, said “Just as predicted, Startups were given importance in this budget and tax-exemption on revenue and investments being increased by one more year 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 Rs 2 crores 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.”

Rushi Shenghani, CEO & Founder, Earth Energy EV, said “Focus on the Atma Nirbhar package will lead to sustained recovery for indigenous brands. After keeping Scrappage policy unclear for so long, our Government is placing voluntary scrapping policy ahead this year where the industry is going to get a major boost and create demand for energy efficient vehicles. With the continued Government support, Indian OEMs and manufacturers will grow India self reliant towards Green mobility.”

Sai Srinivas, Co-founder and CEO, Mobile Premier League (MPL) said, “The Government’s budget is extremely encouraging for the start-up ecosystem in India. The extended exemption on capital gains for investments will definitely make more funds available for budding entrepreneurs and growing organizations alike. Digital payments infrastructure is very important for growth of the mobile gaming industry for which government is strengthening digital payments through incentivization. The Rs 1,500 crore boost will further support migration of more people towards digital payments and will have a positive impact on the mobile skill gaming industry. India is at the cusp of creating a wave of mobile gaming unicorns,for which these measures only support that momentum. With these announcements acting as winds in our sails the Indian Gaming Industry can aspire to be the Global Hub of game development.”

Gaurang Sinha, Director of Go-to-Market Strategy at Flock, welcomed Government’s budget plan of introduction of the scheme allowing 1-person company(s) for start-ups and innovators to be exempted from paid-up capitals and turnover norms. “This will enable India to develop new technologies and boost employment along with emerging technologies such as the internet of things (IoT), machine learning (ML), artificial intelligence (AI) and data analytics for growing our digital economy. Further, the adoption of video conferencing for various tasks by the Government will encourage the use and demand for professional communication and collaboration platforms.”

Kunal Lakhara, VP of Finance and Operations, Pocket Aces, said, “The Union Budget 2021-2022’s revised fiscal deficit estimate for FY21 which is pegged at 9.5% of GDP seems promising, and has taken on a realistic approach focused on spends needed to revive the economy. The tax holiday given to startups for an additional one year brings relief to enabling the sector to sustain and grow, as we recover from the pandemic.”

Dhruvil Sanghvi, Chief Executive Officer, LogiNext, said, “Strengthening global and national supply chains is of paramount importance for economic growth, and the proposals to set up freight corridors across the country, as well as the proposal for a future ready rail system, along with development of national highways will bridge the gaps that currently exist, bringing in better connectivity between production and consumption markets.”

Anand Rathi, Chairman, Anand Rathi Financial Services Ltd., said “Privatisation of banks is a great change of mind-set and the strategic disinvestment policy should prove to be game changer. The Finance Minister has tried to revive the economic sentiment by presenting a growth oriented budget which has laid emphasis on boosting investment both in public and private sectors. Towards the former, budget allocation on capital spending has been increased sharply especially on infrastructure, health, and education.”

“Additionally various measures have been take to rejuvenate the Indian financial sector including addressing issues such as non-performing and doubtful loans, improving source of longer term funding for infrastructure projects, and capitalization of public sector banks. The aim is to maintain orderly growth of the sector, ensuring availability adequate fund at reasonable cost for the economy and mobilization of funds from both domestic and foreign sources. Fiscal stimulus in India during the current year has been significantly lower than most G 20 peers and, with the initiatives of this current budget, India utilised this available fiscal space to boost growth. The budget looks pro-growth and positive for the Indian equity market. With appropriate funding arrangements, the impact on the bond market can also turn positive to neutral.”