Union Finance Minister Nirmala Sitharaman will unveil Union Budget 2021 on 1 February 2021. The finance minister will present her third Union Budget amid the raging concerns over the COVID19 pandemic.
Ahead of the budget, numerous corporates, business owner and experts have given their opinions and expressed their expectations from the upcoming budget. A Deloitte Survey recently summed up the expectations of India Inc in the run up to the Union budget.
It said that the majority of India Inc expects the Union budget to focus on boosting infrastructure while offering simpler tax regimes to promote ease of doing business.
A total of 68 per cent from the 180 surveyed members said that they believe India’s economic revival after the COVID slump looks positive. The mass vaccination drive, the government’s stimulus packages and other policy changes focused attention to infrastructure, and continuing efforts on digitisation will be key areas helping India revive and thrive, the survey found.
Sanjay Kumar, Partner and Leader Public Policy, Deloitte India, said, “Schemes such as Aatmanirbhar Bharat and PLI have done especially well in supporting self-reliance and stabilising the country’s economic growth. While these schemes have helped the manufacturing, life sciences, and consumer products sectors the most, the rest of the industry is also positive about stimulating their respective businesses through injection of R&D spend and income-linked incentives."
About 49% of respondents also highlighted the role of technology and digitisation in this aspect, in addition to implementing an online single-window system. About 45% of respondents believe that creating a new fund to finance projects and attracting sovereign funds through various incentives are effective means to inject capital in the infrastructure sector to ultimately boost the economy.
Industry experts and survey respondents also suggested that privatising public-sector banks and granting licences to financial institutions could help infuse capital and increase competition.
Here is what India Inc has to say:
"Expect the government to provide an income tax holiday for EV unit operations" - Yogesh Bhatia, Founder, Detel
“With the promotion of clean energy priority on the government agenda, we have strong expectations from the union budget when it comes to the EV industry. We expect the central government to provide an income tax holiday for EV unit operations. This will lead to having a competitive price on electric vehicles. The government should also consider lowering ROI on the electric vehicle fraternity.
To encourage people for the faster adoption of EVs, we expect the government to allot budgets for providing subsidies on low-speed electric vehicles. Another key step that the government can take is to waive off the parking fee and toll rates for electric vehicles that will further push green mobility in India." said Yogesh Bhatia, Founder at Detel.
The government must look at creating a thriving ecosystem for logistics - Narasimhan Raghavan, Director, Raag Technologies and Services
"As the saying goes, every cloud has a silver lining. 2020 has been a game-changing year for the logistics sector. As we await the Budget 2021, we are expecting that the government will take further steps to strengthen the sector with reforms related to GST, and most importantly accelerate the implementation of initiatives under the Sagarmala and Bharatmala projects. It must be noted that logistics is also one of the highest employment-generating sectors currently. Therefore, the government must look at creating a thriving ecosystem for logistics leading to the overall economic growth." said Narasimhan Raghavan, Director at Raag Technologies and Services.
"Global and national supply chain is of paramount criticality in 2021" - Dhruvil Sanghvi, CEO, LogiNext
"For India, this budget will probably be the most important one in decades. The world has changed and from our perspective, the pandemic has put all focus on the importance of Logistics and Technology. Global and national supply chain are of paramount criticality in 2021 and beyond. This sector is the backbone of modern civilization and the Indian government should look at ways to simplify global trade. We build from India for the world and increasingly, more technology startups would be doing this. Currently, there is a very high degree of compliance and paperwork which makes it difficult for technology companies to serve the global audience and this forces companies to shift base outside the country. Urgent steps in this direction will help high growth companies keep base in India, generate employment across the spectrum and help revive the national economy after the shock of the pandemic," said Dhruvil Sanghvi, Chief Executive Officer at LogiNext.
"Growth will be the central theme around which budget initiatives will revolve" - Shanti Ekambaram, Group President-Consumer Banking, Kotak Mahindra Bank
"As India slowly emerges out of the shadows of the pandemic – falling COVID-19 numbers, the beginning of the vaccination drive, an economy on the mend and historic market levels – 2021 has begun on an optimistic note. All eyes are now on Union Budget 2021 with high expectations and hopes from virtually all sections of society.
Growth will be the central theme around which budget initiatives will revolve. COVID-19 has severely disrupted India's growth trajectory and getting growth back on track in FY21-22 will be the finance minister's foremost priority. Infrastructure investment is key for growth and we are likely to see higher allocations as well as the formation of a Development Finance Institution for infrastructure financing. Given India's experience during the pandemic, expect a greater thrust towards investments in healthcare infrastructure and insurance incentives are expected as well. Housing and real estate are likely to receive a boost as it aids core economic growth. With the Government needing to raise resources, an aggressive divestment programme is also expected to be announced.
The other major focus area of Budget 2021 will be on jobs creation that will provide immeasurable economic relief to India's middle and lower-middle-class who have been deeply impacted by the pandemic. Specific reforms to help sectors under stress will also be on the agenda.
Finance Minister Nirmala Sitharaman will share her roadmap to a revised fiscal consolidation path. Fiscal deficit target for FY21-22 is likely to be around 5 to 5.5% of GDP. Expect allocation for recapitalisation and privatisation of PSU banks.
The budget will try to balance the twin objectives of stimulating growth and managing fiscal deficit. Demand stimulus measures are also important but given the fiscal situation, there could be limited headroom available. All in all, Budget 2021 is likely to set an aggressive "Atmanirbhar" growth agenda," said Shanti Ekambaram, Group President – Consumer Banking at Kotak Mahindra Bank.
Technology sector expects operative and promising policies - Sumit Sood, Senior Vice President & Head of APAC, GlobalLogic
"As the upcoming Union Budget 2021 is taking the centre stage, numerous sectors across India have huge expectations on how it will pave the right path for economic recovery from the COVID-19 pandemic impact. The technology sector, that played a vital role in digital adoption and business continuity expects operative and promising policies that not only support innovation and business continuity but create a robust digital ecosystem. To support India's growing digital economy, it is imperative to bring forth essential regulatory guidelines and incentivize R&D of new-age technologies like Artificial Intelligence (AI), Machine Learning (ML), Blockchain, etc," said Sumit Sood, Senior Vice President & Head of APAC at GlobalLogic.\
"Boost in domestic consumption, spending and savings within the nation needs to be a priority" - Sanjay Palve, Senior Managing Director, Essar Capital
"The Year 2020 has been one of the most difficult years in recent human history. While the world economy has been badly hit, countries like India are now looking at a path of recovery. Given this scenario, all eyes will now be on the Union Budget 2021. This will be a very complex budget as while the focus will be on growth and recovery, the government also needs to assign substantial funds for relief measures to curb the effects of the virus.
Our Honourable FM has already said, India's economy will return to growth in 2021/22 and higher spending in the budget will lay the foundations for even stronger growth. A boost in domestic consumption, spending and savings within the nation needs to be a priority. As on date Personal Income Tax coupled with indirect taxes leaves very little with the public for saving and investments. Rationalization of Personal Income Tax rates is essential to ensure there are surplus funds available in the household for both saving & spending.
With the pandemic having disrupted almost all industries, there is no doubt that industry at large and the economy in general needs handholding. Nevertheless, three sectors that must have specific attention to revive the economy are agriculture, healthcare and infrastructure. While the case for agriculture and healthcare needs no rationale, the importance of infrastructure calls for some elaboration. First, agriculture and healthcare both require modern infrastructure to ensure better outcomes, respectively.
There is no doubt the Budget should have adequate financial outlays for infrastructure development due to its association with greater growth while generating more employment and entrepreneurial opportunities. Since infrastructure development also boosts other industries and facilitates the ease of doing business, it fosters inclusive growth and helps in poverty alleviation too. In light of the above, to boost a quicker economic turnaround, the Union Budget 2021 should ensure greater outlays for infrastructure development.
Though, the government has unveiled its plan for INR 100 – 150 lakh crore investment in the Infrastructure Sector going forward under the National Infrastructure Pipeline. Funding of same should be addressed in the Budget through the creation of Development Finance Institutions/ Infrastructure debt funds / Sovereign Wealth fund. This will enable low cost and long term borrowing requirement for the Infrastructure Projects as has been the case worldwide. More Banks like IIFCL and other DFCs should be created with the mandate to take lead and fund capital intensive long gestation infrastructure projects. This will bring much-desired liquidity in the system and enable private sector participation.
The Union Budget 2021 will be very crucial as it will pave the way to enable India to become a USD 5 Trillion economy," said Sanjay Palve, Senior Managing Director at Essar Capital.