Union Budget 2021: FM’s balanced approach

February 3, 2021 2:00 AM

Union Budget 2021 India: Under these circumstances, the FM has pulled off a stunning balance between growth and fiscal prudence. The need of the hour is to lay primacy and ensure consolidation of early signs of economic recovery, while laying a pragmatic fiscal path.

Measures like tax scrutiny period reduction, clarification of treaty application, besides consolidating capital market regulations into a security code will improve ease of doing business and likely promote investments.Measures like tax scrutiny period reduction, clarification of treaty application, besides consolidating capital market regulations into a security code will improve ease of doing business and likely promote investments.

By Vikram Kirloskar

Indian Union Budget 2021-22: The FM faced the challenging task of ensuring continuation of the government’s vision of delivering rapid, inclusive economic growth coupled with enhanced focus on health and welfare, while facing a globally-led economic contraction and sharp increase in fiscal deficit due to Covid-19.

Under these circumstances, the FM has pulled off a stunning balance between growth and fiscal prudence. The need of the hour is to lay primacy and ensure consolidation of early signs of economic recovery, while laying a pragmatic fiscal path. The Budget has achieved this quite well by setting realistic revised targets and a glide path for fiscal consolidation. Relying on the Keynesian theory of capital creation to spur growth and jobs, the Budget lays strong emphasis on capital expenditure and infrastructure creation.

The capex funding is sought to be largely realised through borrowing and asset monetisation without resorting to significant increase in taxation. Privatisation of banks, higher foreign ceiling on insurance, zero coupon bonds to invite sovereign pension funds to participate in infra projects, tackling bank NPA through asset reconstruction company and asset management company, and the creation of a development finance institution all will stimulate growth. Measures like tax scrutiny period reduction, clarification of treaty application, besides consolidating capital market regulations into a security code will improve ease of doing business and likely promote investments.

The announcement of the national hydrogen energy mission is timely and will help India’s shift towards renewable future. The auto sector, which provides significant contribution to national and manufacturing GDP, will play a pivotal role in India achieving its target of becoming $5 trillion economy by 2025.

We have continuously worked towards creating a self-reliant and competitive local manufacturing ecosystem and are look forward to the details of the PLI scheme that can potentially make India a part of the global supply chain for both traditional and advanced auto technologies. The awaited voluntary scrappage policy will take older vehicles off the roads, helping lower fuel consumption and pollution, as also generating demand for cleaner, new vehicles.

The auto sector is hopeful that for realising full benefits there will be an early and full implementation of this policy.
Overall, the Budget makes a bold statement for a growth rate beyond pre-Covid-19 levels. It sets the broad direction for the next five years, reinforces the government’s commitment to “minimum government and maximum governance” while seeking to build a better inclusive future with continued emphasis on infrastructure development, and enhanced commitment to health, welfare and agriculture.

Vice-Chairman, Toyota Kirloskar Motor

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