Finance Minister Nirmala Sitharaman had promised a budget like no other and, given the current situation immediately post Covid pandemic, she has lived up to that promise. The Budget 2021 has certainly showcased the government’s strong strategic push for growth-oriented roadmap that can propel India’s economy forward. The sharp and targeted focus on infrastructure, capex, health, education, financial sector reforms and fiscal credibility have been the key takeaways from this Budget. The multiplier effect of infrastructure spending is being banked upon to facilitate sustainable economic recovery and growth.
There has been a clear restructuring of expenditure in favour of capital expenditure (an increase of 34.5% to 5.5 lakh crore). Its focus is on the creation of key infrastructure - road, power, ports, railways, all of which have been given sizable allocations in the budget. Further, the creation of a Rs 20,000 crore Development Finance Institution (DFI) would provide the much-needed financing to the capital starved infra sector.
The Health and Wellness sector received a huge fillip with a whopping 137% increase in Budget outlay coupled with a new scheme – PM Atmanirbhar Swasthya Yojana – to strengthen existing national institutions and create new institutions for catering to detection and cure of new and emerging diseases. This marks an important step in addressing gaps in healthcare infrastructure in the country.
Financial sector reforms also got due emphasis in this year’s budget. The proposed increase in FDI limit in insurance sector to 74% would help insurers attract more capital and knowhow to expand business.
The setting up of a bad bank under the ARC (asset reconstruction company), AMC (asset management company) and AIF (alternative investment funds) model is a welcome step as this will provide a major breather for bad asset resolution in the banking system. The Budget also needs to be lauded for coming clean about off-budget spending and revealing the true nature of Centre’s finances.
In short, a mix of short-term relief and long-term structural emphasis has been the hallmark of this Budget.
The author is President, FICCI, and has joined the Board of Business Standard as Non-executive Director