By Rajiv Bajaj

Indian Union Budget 2021-22: YOU ONLY LIVE TWICE, THE title of a 1969 Bond film, would be a fitting tribute to this post-Covid Union Budget. We are all virtually living our second life after a year of a disastrous pandemic. This Budget is a reminder that even an economy needs to be re-born in this post-Covid world.

The Budget is a continuation of the fiscal measures delivered post the pandemic. There is a laser-sharp focus on manufacturing and infrastructure growth, development of financial markets, employment generation, healthcare and to free-up capital and ensure availability of requisite capital to propel growth.

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Sustainable long-term financing has been a key impediment to infrastructure projects in India. The government envisages a three-pronged policy to address this—1. Creation of institutional structures (DFI), allowing infrastructure debt funds to issue tax efficient zero coupon bonds and enabling debt financing of InVITs and REITs by FPIs, 2. Monetisation of operating public infrastructure assets through National Monetization Pipeline and a disinvestment target of Rs 1.75 lakh crore, and, 3. Enhancing the share of capital expenditure in Central and State Budgets from Rs 4.12 lakh crore in FY21 (BE) to Rs 5.54 lakh crore, a rise of 34.5%.

The Budget also lays emphasis on boosting manufacturing. Voluntary scrapping policy for automobiles and launch of scheme of Mega Investment Textile Parks (MITRA) in addition to the PLI scheme should boost the automobile and textile sectors that are employment intensive.

The Budget also proposes significant reforms in financial markets. In a capital-starved economy like India, financial market reforms promote transparent and efficient capital markets. The consolidation of four securities market laws into a single Securities Markets Code, development of a world-class fintech hub at GIFT-IFSC, setting up a body to purchase investment grade corporate bonds in normal as well as stressed times, setting up regulated gold exchanges and proposal to introduce an investor charter for protection of rights of all financial investors, are key steps in this direction. The government proposes to increase the FDI limit in insurance from 49% to 74% while allowing foreign ownership and control with safeguards. There is a concerted effort to clean up the stressed assets plaguing Indian lenders.

There isn’t much on the personal taxation front. Tax rates have been left unchanged and no new cess or surcharge has been added, a commendable achievement in these times of severe resource crunch. There have been a couple of cases of rationalisation in tax exemptions for big-ticket ULIP and EPF investors that should encourage flow of long-term investor money towards equity mutual funds which are more transparent, have lower costs and offer better return potential for long-term investors.

To sum it up, it has truly been a once-in-100 years Budget that is poised to put the economy back on a multi-year trajectory of double-digit expansion.

The author is Chairman & MD, Bajaj Capital