The economic survey gave us key numbers for GDP growth: 6, 4, -7.7 and 11 for 21-22! Highest growth in the world for India seemed on the cards.
The V-shaped recovery is fed by an initial severe lockdown, in kind relief, financial and legal forbearance and some cash in the hands of the poorest. This was followed by a calibrated opening up. These actions extended the fiscal, caused a current account surplus, led to FDI and FPI flows and an unprecedented Foreign currency reserve of US$ 586billion. Clearly, astute reforms and simultaneous supply and demand side actions are in place. Investment in health, education, innovation, infrastructure, digitisation, and recapitalisation of state-owned banks are all signalled.
In what we consider as the best in more than 25 years, the Budget creates the space for India to be:
Fastest growing nation in the world.
Top most leader in implementing the 17 SDGS set out by the UN in 2015.
A leader in implementing the ESG framework.
A leader in reporting on the six capitals of integrated reporting and thinking (it is amazing that there were six pillars on which this Budget was constructed and they follow the framework which is receiving global acceptance).
The most attractive destination for FDI
The Rs 5.15 lakh crore government of India contribution to capex for infrastructure will be echoed 5X times as completed infrastructure assets get into listed INVITS. An infinite source for future disinvestment has been created as all surplus assets will get monetised at all central and state levels, in departmental undertakings, in PSUs and everywhere else they are held. These will be listed on bourses all over the world and give retail and Institutional investors an opportunity to invest. Ownership of Infra assets will be democratised and a virtuous cycle of public followed by PPP followed by private ownership will be established. We predict at least a $ 100 billion FDI year.
The most advanced nation in disinvestment
Disinvestment is the centrepiece of this wonderful Budget. The LIC IPO, the ready to go PSUs (BPCL, Air India, Shipping Corporation, CCI, IDBI, BEL, Pawan Hans, NISL) the 75% permission for Insurance investment and the general liberalisation under incentive frameworks at State level are all breaking new ground, never before attempted at this scale. Strategic sales will enjoy an unprecedented interest. The target of Rs 1.75 lakh crore will be easily achieved as the massive preparatory work has already been done.
The attractor of massive flows into and out of Debt markets. As we access global low cost funds and use our current account surplus as a natural hedge and we develop openly a robust market for debt from anywhere in the world.
A liberal and attractive nation to trade with and to have global chains passing through
Direct taxes have been left untouched. Only simplification, tax determination and reduction in litigation have been planned for. Time limits on all regulatory processes, faceless ITAT proceedings and a threat to go after defaulters and evaders which is real are the crux of the changes. This will result in tax compliance as many will have return filing which is unnecessary or done by the tax department from the rich data from the financial footprint. Digital payments, a far superior securities regulation, a liberalised decriminalisation of laws, a scrapping of unnecessary exemptions and a general approach of simplification a genuine taxpayer friendliness will enhance the tax effort considerably.
In indirect taxes, the GST will be streamlined to avoid inversion. Indications are clear that more inclusions of items, a rationalisation of rates and other measures to simplify will be taken as the GST council meets. Customs duties have been strategically raised to protect Indian manufacturing and where required reduced to benefit the Indian consumer. This is the first signal of astute global approach to interacting with the world on fair terms!
The six pillars of resource allocation are indeed praiseworthy
In health care, the focus on prevention, detection and correction in a decentralised manner will work in a country as large as ours. The focus on Nutrition, clean water, construction waste limitation and clean air are so appropriately selected. India will certainly become one among the early large nations with herd immunity. As we take up digitisation of detection and prescription of immunity enhancing supplements, we will become truly a nation that believes in health care and not sick care. The 137% increase in allocation is fully justified.
Allocations for 13 sectors chosen for PLI, monetisation of ready infrastructure assets, implementation of the national infrastructure Plan, complete opening up to REITS and INVITS [will attract flows of FDI and FPI that we have never seen before], thrust on airport, electricity transmission and roads are all necessary. There is no country that can take in over trillions in infrastructure investments. Kudos to the Finance Minister for opening up all the taps to invest in infrastructure. This will create a large number of permanent, Gig and contracted workers. SDG 8 will be fulfilled. The Rs 20000 cr capital DFI is a crowning glory. PPPs will come alive like never before.
Banks will be privatised, better governed, recapitalised and put to work, the era of prompt corrective action (PCA) will end soon! As ship breaking gets elevated to a new level, ports are more efficiently managed and hydrogen energy gets created, India will truly become a clean energy capital of the world. We will be fastest to a 50% renewables major economy. NBFCs with a rural and infrastructure thrust empowered to recover more aggressively using SAREFASI and free to cater to last mile financing, will pivot back to attractive investable entities.
City gas distribution, a gas pipeline in J and Kashmir, better security regulation, vibrant debt market and liberal investment in Insurance will usher in a new vibrancy of growth with a clean environment.
The start-ups, global innovators, MSMEs, NRIs and almost anybody interested in entrepreneurship and innovation will get a fillip through this budget. No FM has mentioned ML, AI, and BDA and other data led ideas as often as Nirmala ji (Finance Minister Nirmala Sitharaman) has before this. A great era of data-led lending, recovery and regulation is breaking out. As legal and regulatory processes get time bound and conciliation driven, ease of business will improve.
Education has been given the due respect for the first time as a human capital builder. 15,000 schools, a central University in Leh and many other physical interventions will put every child into school.
Agriculture and labour will emerge as much reformed, market driven, well supported with integrity and institutional thrusts, with a certainty that the growth and productivity will double from here.
A digital budget, digital courts, a digital census, a faceless tribunal, professional health workers and nurses being recognised and cared for, all signal more governance!
While the FRBM is getting reset, digitalisation is being embraced and innovation is being installed deep into our DNA, it is important to realise that the onus is also on us to rise and become true , honest citizens of India. To this promised land, my countrymen, this Budget will lead us.
(The writer is a noted chartered accountant. The views expressed are personal.)