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Budget 2021: The Growth Vaccine

Budget 2021: The Growth Vaccine

Infrastructure and healthcare shines as the core focus areas in the Union Budget 2021. EPC World takes a closer look on the Budget deliverables assured and industry reactions…

The year 2021 began on a positive note with the arrival of vaccine for one of the most challenging pandemic Covid-19. With the medical progress attained the economic sectors eyed for a positive sign of revival. Bringing a cheer to this sentiments was the Union Budget 2021 that was keenly focused on increasing the infrastructure and health welfare spending. Though the opposition political parties rammed the Budget announced for a lag in its actual deliverables, the Budget has evidently brought in a cheer of hope among the economic segments, especially for the infrastructure sector.

The Budget was highlighted as a vision to boost wealth and well-being by the Indian Prime Minister Shri Narendra Modi. During his post budget comment he expressed, "Covid-19 has impacted the entire humankind, This Budget reflects India's self-belief. The Budget lays a strong foundation for the new decade and is an important step towards achieving the vision of Aatmanirbhar Bharat. The Budget is framed on the principles of expansion of opportunities for growth, new opportunities for the youth, new meaning to human resource, opens new sectors for infrastructure development, progress towards modernization and new reforms. It's a pro-active Budget that provides a boost to wealth as well as wellness."

'Aatmanirbhar Bharat' remained the key highlight of the Budget announcement made by the Union Finance Minister Smt Nirmala Sitharaman. In her Budget announcement the Finance Minister proposed towards strengthening the 'Sankalp of Aatmanirbhar Bharat'. And put forth the six core pillars – health and well-being, inclusive development, human capital, innovation and research and development. "The Government is fully prepared to support and facilitate economic growth and are introducing Aatmanirbhar Swastha Bharat Yojana with an outlay of ₹ 64,180 crore," said Nirmala Sitharaman, Union Finance Minister during her Budget announcement.

The Infra Focus

As Infrastructure remains the key growth mantra adopted by the Modi led Government, it became one among the core areas focused along with healthcare in the Budget 2021. A slew of promising initiatives were put forth by the Finance Minister to scale up the infrastructure sector. And a key among them is the National Infrastructure Pipeline (NIP) that has been expanded to 7,400 projects. Through the Budget the Government also announced the three key thrust areas focused to increase funding for the NIP:

  1. Creation of institutional structure – Setting up and capitalising a Development Financial Institution (DFI)
  2. Greater emphasis on monetizing assets
  3. Enhancing the share of capital expenditure

The key takeaways for the roads and highway infrastructure includes the highest ever outlay of ₹ 1,18,101 lakh crore for the Ministry of Road Transport and Highways, plans to develop new economic corridors and expressways and implementing advanced traffic management system in all new four and six lane highways. New highway and road projects were announced for the states of Kerala, Tamil Nadu, West Bengal and Assam. In regards to the rail infrastructure a National Rail Plan for India (2030) is being framed to create a 'future ready' Railway system by 2030. The other key rail infra related announcements includes – 100 per cent electrification of Broad-Gauge routes (to be complete by 2023), commissioning of Western and Eastern Dedicated Freight Corridors (by June 2022), aesthetically designed Vista Dome Linke Hofmann Busch coach on tourist routes, an indigenously developed automatic train protection system for high density networks by eliminating train collision due to human error, expansion of metro rail networks and 'MetroLite and MetroNeo technologies to be used for providing metro rail systems at much lesser cost.

To scale up the country's power infrastructure the Government plans to launch a comprehensive National Hydrogen Energy Mission 2021-22. ₹ 3,05,984 crore is being allotted over a period of five years for revamping, reforms-based and result-linked new power distribution sector scheme. A key takeaway for the energy segment is the extension of Ujjwala Scheme which is expected to cover more one crore beneficiaries. The other key initiatives planned on this front are – a new gas pipeline project in Jammu & Kashmir, and an independent Gas Transport System Operator to be set up for facilitating an coordinating bookings of common carrier capacity in all-natural gas pipelines on a non-discriminatory open access basis.

Aimed toward redefining the country's ports, shipping and waterways the Budget has allotted ₹ 2,000 crore worth seven project on a Public Private Parternship (PPP) mode for the Financial Year 2021-22. These projects catering towards the operation of major ports are expected to scale up their performance and overall turnarounds. In addition plans were also put forth to double the recycling capacity of ports by 2024.

Apart from the infrastructure sector, healthcare remained the other major area that drove away the benefits from the Budget allotment for the fiscal year. The noteworthy healthcare infra announcements made during the Budget involved – Mission POSHAN 2.0 to improve nutritional outcomes across 112 aspirational districts, operationalization of 17 new public health units, modernization of existing health units at 32 airports, 15 seaports and land ports, Jal Jeevan Mission Urban for better water supply across the nation and strengthening of Urban Swachh Bharat Mission.

Industry Reactions

With infrastructure remaining the core growth area focussed in the Budget 2021, a wave of positive sentiment is being reflected among the industry stakeholders. The Budget 2021 hence is being warmly welcomed by the economic segments as a much needed growth booster for the country.

Sharing his views on the Budget announced, Deepak Shetty, CEO and MD, JCB India said, "Leading up to the budget we had made key Industry recommendations, especially since we are just beginning to come out of a very difficult time due to the pandemic. It is thus heartening to note that the two key areas which needed strong focus in the budget have been given the impetus. These being Infrastructure development and Health care. The outlay for the Ministry of Road Transport and Highways is the highest ever this year. The capital expenditure allocation for FY 2021–2022 is also much greater than the previous years. Encouragingly Railways is set to emerge as a growth driver in addition to Roads and Highways, which was long overdue. A record allocation for Railway Corridors and other Structural Developments has been made. This will certainly help in generating on ground activity in the sector."

He further added, "With the formation of a Development Finance Institute (DFI), the stress in Capital Requirements for long-term infrastructure projects should significantly ease out. This was critical to infrastructure development. The Government has shown a strong intent towards generating funds by proposing a Privatisation drive and Monetisation of assets. Another positive in the budget announcement is focus on Hydrogen Energy and the aim to create an ecosystem for Alternative Fuels. These are welcome steps towards the vision of creating an Aatmanirbhar Bharat. Infrastructure development has a multiplier effect in the creation of jobs and livelihoods. We feel that the budget will support the National Infrastructure Pipeline (NIP) and other Large Scale Infrastructure projects, thus creating more opportunities for Construction Equipment Manufacturers."

"It was interesting to see that the Union Budget for 2021-22 heavily focused on giving a push to infrastructure - especially roads, highways, metro lines and more which can significantly contribute to the growth of the economy. The COVID-19 pandemic halted operations in this industry for a significant amount of time because of which various government and private stakeholders had to incur losses that they haven't been able to bounce back from. This budget allocation will open doors for various opportunities that will not only aid in the revival of businesses but also generate employment on a large scale for all the people that were left without a regular stream of income in 2020. The overall budget seems promising and we hope that the execution and on-ground allocation is as seamless as it has been projected in today's speech," shared Vikramjiet Roy, Managing Director of India and Head of India South East Asia Pacific, Maccaferri.

Sharing his reactions Paul Wallett, Regional Director, Trimble Middle-East and India region disclosed, "Budget 2021 announcement is focused on the nation's growth and brings a positive sentiment to the overall economy. The announcement of increased capital expenditure, allocation of ₹ 2,000 Cr for DFI's and push into asset recycling will put the Indian infrastructure industry in a route to recovery. We believe that prioritization of government spending on infrastructure promises to be the much needed push for economic revival."

Reflecting his views on the Budget announced, Guenter Butschek, CEO & MD, Tata Motors said, "Budget 2021 is a progressive statement of intent and action that aims to both stimulate and sustain growth following an unprecedented year. For the automobile sector, which is a significant contributor to India's GDP, there are multiple welcome announcements including a voluntary vehicle scrapping policy to phase out old and unfit vehicles, augmenting public transport system in urban areas, continuing focus on adoption of cleaner fuels, and enhancing outlays for developing road infrastructure and expanding the Swachh Bharat Mission."

"There is potential for employment generation considering that the budget focused on key sectors/pillars, like healthcare, infrastructure and manufacturing. The focus on scrappage policy and PLI for automotive sector needs to be studied for details. The promised review and consolidation of GST and Customs Duty structure (rates) by Sep 2021 is a welcome development. The purchase of 20,000 buses will augment and render the much-needed support to the industry. Overall, it is a growth-oriented budget which bodes very well for our trucks and CE business in the coming years," shared Kamal Bali, President & MD, Volvo Group India.

Commenting on similar lines by viewing Budget as a positive growth oriented move is Sumant Sinha, CMD, ReNew Power. He echoed, "The Finance Minister's focus on healthcare, infrastructure, power and the financial sector will have a positive, broad based impact on the economy. By increasing capex spending significantly without hiking taxes, and instead focusing on expanding economic activity, the FM has set the groundwork for a sharp and sustained economic recovery over the next several years."

"The budget 2021 is extremely positive, driving the country towards Aatmanirbhar Bharat by laying huge stress on health care, infrastructure, banking and insurance, textile and agriculture that will aid the country not only towards economic revival but also spur growth. The announcement of the launch of the National Asset Monetisation Pipeline which will include Transmission lines of Power Grid, oil and gas pipelines, airports, toll roads, etc, will be a game changer. Government's increased focus on the infrastructure sector will certainly bring in positive measures for the holistic growth of the logistics and maritime sector. No new tax is a very big positive in these times," briefed Rajiv Agarwal, CEO and MD, Essar Ports.

"Budget 2021 is a budget for an Aatmanirbhar Bharat; a forward-looking budget focusing on construction and capex-led economic recovery. Significant allocation towards creating a future-ready Railway system, 100% Railway Electrification by 2023, focus on DFCs and Urban Infra, including new Metro projects and emerging technologies, infra creation for Power Distribution companies, expansion of Gas Distribution network to 100 new cities, thrust on Renewables, developing one lakh Digital Villages through BharatNet, and the creation of a Development Financial Institution for infrastructure financing augurs well for KEC International," pictured Vimal Kejriwal, MD& CEO, KEC International.

Looking into the key takeaways from Budget 2021, Tomohiko Okada, Managing Director, Toshiba India said, "Our key takeaway is the government's focus on initiatives like Jal Jeevan Mission and Urban Swachh Bharat Mission 2.0, CapEx fund for Railways, and Voluntary Vehicle Scrappage policy, that we may relate our business to. The Jal Jeevan Mission initiative calls for countrywide wastewater treatment infrastructure. Through our subsidiary – Toshiba Water Solutions, we will be happy to utilise our strengths in providing water and wastewater treatment solutions and support the government's aims. Voluntary Vehicle Scrappage policy will boost demand for fuel-efficient, environment friendly vehicles. Toshiba's rechargeable battery – SCiB is ideal for hybrid vehicles for features like excellent safety, long life and rapid charging. We expect the SCiB can promote green transportation in India. Toshiba looks forward to offering more of our infrastructure solutions to India, turning on the promise of a new day for a sustainable economy."

"Over the past one year, we have witnessed the Central Government rising to the occasion by taking several bold steps to revive the economy and more specifically the manufacturing sector. The revision of the definition of MSME, introduction of several support provisions for MSMEs under the Aatma Nirbhar Bharat Package and introduction of Production Linked Incentive (PLI) Scheme, to name a few, have started to bring back the positive sentiment in this labor intensive sector. The proposal to cover Air Conditioning products under the Phased Manufacturing Program (PMP) and the imposition of import ban on refrigerant filled Air Conditioning units are expected to improve local manufacturing in our industry," expressed Gurmeet Singh, Chairman and Managing Director, Johnson Controls-Hitachi Air Conditioning India Ltd on his expectations from Budget 2021.

"At a time when the Indian economy has been scaling a fast recovery trajectory, FM Sitharaman has effectively navigated the challenge of balancing fiscal concerns and addressing economic growth. This is further strengthened by the 13 points that outline the vision for a Self-reliant' or 'Aatmanirbhar' nation. Proposals to boost operational contingencies of road infrastructure and build more economic corridors have the potential to increase efficiencies across the logistics ecosystem and simulate regional economies to encourage local entrepreneurial initiatives. The government's intent to increase the share of green energy in the national energy grid and transition to a zero-carbon fuel regime is in line with its steadfast commitment to sustainability. The proposed one-year extension of tax holiday for affordable housing projects is likely to ensure inclusive housing for the underprivileged and foster community empowerment and resilience," viewed Shashi Kiran Shetty, Chairman, Allcargo Logistics.

On a similar line by looking on to the benefits that could be drawn out for the operational business activities Aneel Gambhir, CFO, Blue Dart shared, "We are pleased to know that the Budget is in line with our expectations. The industry is eagerly waiting to see the results of these measures in our field of work. The proposed solutions include a succinct focus on improving road and railway infrastructure; investments in National highway corridors and economic corridors will aid in the speedy movement of goods and improve turnaround time which, in the long run, will bring down logistics costs significantly. The National Highway work planned in Tamil Nadu, Kerala, West Bengal, Assam will further assist in the final goal of last-mile delivery and we are eager to see its results on our business. In the long term, all the expenditures could be assisted with the proposed introduction of the DFI which will speed up the infrastructure development in India. Apart from this, the focus on the manufacturing sector in the budget would also help the logistics sector grow further."

The industry reactions from the stakeholders across distinct sectors thus reflects a positive and welcome approach towards the Budget 2021, each sector keenly looks on to the deliverables that could be achieved and put into practice on the actual implementation. The Budget 2021 thus puts forth a promising and optimistic path for the fiscal 2021-22.

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