The previous year was great for some industries while saggy for some as it hit the economy, It is well known that the covid-19 pandemic resulted in the contraction of around 7% in the Indian economy for the current financial year. A sharp contraction of the economy came after three successive years in GDP growth. While the country and the world are still in the process of recovery, all the eyes of hope will be on” BUDGET 2021″. As our government is working around a clock to plan the best strategy. For our country to overcome they have some disclosures in budget 2021.
At the first glance, the key strategy employed by the government seems to be to switch the nature of expenditure. In the next financial year, it will switch towards increasing capital expenditure than revenue expenditure.
Capital expenditure implies creating productive assets such as roads while revenue expenditure implies government day-to-day expenditure such as salaries.
Emphasis on capital expenditure :
As such while the total expenditure in 2021-22 is pegged at Rs 34,83,236crore against RS 34,50.305 crore in 2020-21. This is the most significant takeaway from this year’s budget 2021 because more often than not governments even this is one in the past tend to sacrifice capital expenditure in favour of revenue expenditure.
The BUDGET 2021 also emphasize on health, education and inclusive development were central to the expenditure agenda
Budget 2021: The most significant highlights :-
○ Two public-sector bank and one state-owned general insurance company to be up for disinvestment. FDI in insurance be boosted up to 74% from 49% now. Life insurance company to be listed too.
○ No Populism, But Focus on Growth: Despite being a tough year for the ordinary man, there is no income tax relief. No considerable changes made in income tax return .
○ Health to be a centerpiece : In a year when the world was devastated by the Covid-19 pandemic. Finance minister gives health the attention it merited. Health allocation exaggerate to 137% to Rs 2,23,846 crore in 2021-22 compared with Rs 94,452 crore in 2020-21. And for vaccine there is Rs 35,000 crore and more if required.
○After lot of turmoils for almost six years, the government has finally decided to set up an asset reconstruction company . Which will take over the bad loans of banks, giving them flexibility to finance the economic recovery.
○ Development Finance Institutions (DFI) Reborn: The idea was dead with most earlier DFIs including IDBI and ICICI turning into banks. To provide debt to projects for a long period of time, a new DFI with a capital of Rs 20,000 crore. It will have legal backing but will be a professionally organized Lending portfolio of Rs 5 lakh crore within three years.
○Asset Monetization – Will it speeds up: This is an ongoing exercise. Where the government hasn’t done much to gain confidence. National Monetization Pipeline of potential assets of NHAI, PGCIL, Railways, airports, warehouses, sports, and stadiums.
○ Eye on Elections – Not unpredicted : Four poll-bound states get crucial highway projects. Tamil Nadu (3,500 km – Rs 1.03 lakh crore), Kerala (1,100 km – Rs 65,000 crore), West Bengal (675 km – Rs 25,000 crore) and Assam (1,300 km – Rs 34,000 crore).
○Strategic Disinvestment – Again, Needs Political and Bureaucratic Push: NITI Aayog asked to short list non-core PSUs for strategic sale. After a penurious show in 2020-21, the government has estimated disinvestment receipts at Rs 1,75,000 crore.
○Growth Vs Prudence – Tilting Towards Growth: Fiscal deficit estimated at 6.8 per cent of GDP in 2021-22; it is estimated to touch around 9.5% in 2020-21. It will be fall down to 4.5 per cent of GDP by 2025-26.
May BUDGET2021 be the ray of hope for every bright morning.