Budget 2021: The right formula for revival, says Centrum Group's J Bindra

The much-awaited, post-pandemic Bud­get struck the perfect balance between maintaining investor sentiment, reducing fiscal deficit, boost­ing job creation and increasing government spending. Inc­reased allocations towards improving healthcare and giving infrastructure a push headlined the reforms. Status quo was maintained for corporations and the common man wi­th no surprise increases in tax rates.

On the expenditure side, the Budget met expectations. With a slew of key divestments in place, increase in FDI limits, an asset monetisation pipeline and the proposed LIC IPO, the government is building up the arsenal it needs to keep infl­ows in place as well.

Healthcare and well­being saw a major increase in alloc­ation, largely to roll out the Covid vaccine and create infrastructure to combat future pandemics. Introducing the voluntary vehicle scrappage policy will improve environmental well-being, lead to job creation and benefit a large number of MSMEs. And an agri infra cess on petrol and diesel could see cleaner options such as CNG and e-vehicles gain momentum.

Jaspal Bindra, Executive chairman, Centrum Group

The announcement of the ARC through an AIF route to consolidate and absorb the bad loans nagging PSU banks, and the privatisation of two more PSBs along with a general insurance firm, would also bring some cheer, as the IBC has seen limited success. The proposed DFI, armed with Rs 20,000 crore, will provide the much-needed capital to the sector.

The DFI should play a more dev­elopmental role in building greenfield infra projects, which could help achieve the target of Rs 5 trillion. Though direct taxes remained unch­a­nged, a commitment to simplification and dispute resolution was welcoming. Tax holidays for affordable housing projects, an extens­ion of the interest subsidy combined wi­th lower stamp duty rates should prov­ide a brea­ther to the real estate sector.

To sum up, the Budget delivered well on boosting capex and introducing reforms in the financial sector. However, liquidity pressures will need to be kept un­der check owing to higher deficit and proposed increase in borrowings.