Budget 2021 excellent opportunity for private sector to participate in India growth story

Union Budget 2021 India has introduced the novel idea of National asset Monetisation Pipeline that will allow companies and sectors like Railways in the core economy to raise funds by leveraging their operating assets.

Budget 2021-22, Union Budget 2021
Mr. Puneet Dalmia

By Puneet Dalmia

Indian Union Budget 2021-22: The FY22 budget is big on vision and has taken a series of measures to bring back sustained and high growth for the Indian economy. It presents an inclusive package that can help boost business confidence and promote the sentiment of Atmanirbhar Bharat across the sectors. The budget is clearly banking on infrastructure led growth revival in the economy. A key highlight is that the budget has significantly hiked allocation including for capital expenditure without raising any taxes. Instead, it has introduced the novel idea of National asset Monetisation Pipeline that will allow companies and sectors like Railways in the core economy to raise funds by leveraging their operating assets. This will surely create a virtuous cycle and generate sufficient funds for future investments and upgradation.

The National Infrastructure Pipeline launched in 2019 with 6,835 projects has now been expanded to 7,400 projects. This will not only augment India’s infrastructure sector, but will also help boost industrial production with a multiplier effect on number of other sectors. By extending its Rs 111-lakh-crore ($1.5 trillion) NIP package to cover more projects by 2025, the government plans to give impetus to sustained economic growth in the country as the nation recovers from the pandemic induced slowdown.

Further, the introduction of Production Linked Incentive scheme (PLI) will help bring scale and size in key sectors and provide job opportunity to the youth of our country. It will also ensure that the manufacturing sector grows in double digits on a sustained basis so that India becomes an integral part of the global supply chain and we can attain our $5 trillion economy goal. This will also provide a bold and unconventional stimulus to help revitalise the economy.

Given the impetus to infrastructure that typically has long gestation period, there is also a need for long term debt financing that can provide adequate funds at reasonable interest rates. Keeping this in mind, the government has decided to set up a Development Financial Institution (DFI) and has provided a sum of Rs 20,000 crores to capitalise this institution. A dedicated and professionally managed financial institution will surely act an enabler and catalyst for financing infrastructure projects in the country.

Additionally, the government’s plan to set up a National Asset Monetisation Pipeline that will free up idle resources including surplus land with PSUs, and monetise various assets like dedicated freight corridors, power transmission lines, roads, and oil and gas pipelines for fund mobilisation. The Asset Monetization dashboard will also provide easy of doing business and provide transparency as it will enable companies to track progress by simultaneously providing visibility to their investors. This will unlock value for public sector companies and boost availability of capital for new projects.

Apart from this, the decision to set up three more dedicated freight corridors will ensure faster and smoother delivery of raw materials as well as industrial and farm products, which will help save costs and allow companies to target new markets.

The budget has also emphasized on creating infrastructure for R&D and Skill enhancement in Artificial intelligence, which will play a pivotal role in preparing the workforce for the future. If rolled out well, all these initiatives will act as a game-changer for the Indian economy and allow India to emerge as global hub for both manufacturing and trained workforce in this decade

This is a visionary and growth oriented budget with no half measures as the government has gone all out to reinvigorate economic growth despite fiscal pressures. With the government showing the way and allocating sizeable funds for sectors with strong multiplier effect, it is time for India Inc to seize the initiative and be a part of the post COVID growth story.

(The author is Managing Director, Dalmia Bharat Group. Views expressed are personal and do no reflect position or police of the Financial Express Online.)

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