Indians across the country are waiting for this year's Union Budget and as announced, Finance Minister (FM) Nirmala Sitharaman will be presenting the same Monday, February 1, 2021.
Experts state that the budget will be challenging as the country is in the midst of the coronavirus pandemic, and ever since March 2020, the nation has been under a turmoil due to the COVID-19 infection. The strict decisions of lockdown have impacted several businesses and the economy at large, not only in India but across the world.
However, FM Nirmala Sitharaman, in a recently released statement, informed that the budget will be like 'never before' and this has raised anticipation among the citizens, who are dealing with multiple issues and concerns, in these tough times. She had earlier requested the officials and people to send the inputs and addressing the concerns raised, she said that the country, in its last 100 years, would not have experienced such a budget which the ministry has planned post the coronavirus pandemic.
Sharing their thoughts about the expectations and predictions, several business leaders, from various sectors, offered their thoughts regarding the same. Here are a few
We expect the government to create a fund for product companies along with extended SEZ
CP Gurnani, MD & CEO, Tech Mahindra, said, “2020 has been an unprecedented year and we hope that the upcoming budget will address the challenges faced by businesses and propel the economy towards faster recovery and growth. Digital technology and connectivity continue to be the cornerstone of India’s growth and leadership. The pandemic accelerated the shift to digital and we need to maintain this growth momentum, as it will have a cascading effect on creating efficient businesses, new jobs and all-round development. R&D (Research and Development) spending must be increased in order to accelerate digital transformation and jumpstart education with a focus on next-gen technologies, skilling, reskilling and upskilling programs, to nurture our young talent pool and thus accelerate our journey towards an ‘Atmanirbhar Bharat’ (Self-reliant India). We also hope to see focused initiatives to boost consumer sentiment, accelerate infrastructure development, move towards a lower interest rate regime and increase investments in key areas including healthcare and education. From an IT (Information Technology) perspective, we expect the government to create a fund for product companies along with extended SEZ (Special Economic Zone) benefits in the new normal of remote working, besides nurturing an ecosystem for deep tech startups in areas including blockchain, artificial intelligence, augmented reality and virtual reality. India is on the path of a higher growth trajectory and the vision of a $5 trillion economy can be achieved with a focus on economic growth and development.”
Need to undertake definite policy measures and provide fiscal stimulus to ensure financial recovery
“We expect the budget to act as a much-needed catalyst for boosting demand, curbing inflation and thereby reviving the economy. There is a need to undertake definite policy measures and provide fiscal stimulus to ensure financial recovery and spur economic growth, specifically across, sectors, like healthcare, EdTech, Infrastructure and Manufacturing. We are also hopeful that the budget will address measures essential for an accelerated digital transformation. This includes investment in R&D, automation technologies, skilling and development of a talent pool trained in digital age skills which will help accelerate the pace of development,” said Rajiv Bhalla, Managing Director, Barco India
Logistics cost should be reduced from the present 14 per cent of GDP to less than 10 per cent
Aneel Gambhir, CFO, Blue Dart, said, “While the onset of the pandemic affected the logistics sector, the sector has stood the test of time by supporting the movement of essentials and non-essentials when the nation was under lockdown. We expect the government’s full support to revive the sector and in order to do so, the logistics cost should be reduced from the present 14 per cent of GDP to less than 10 per cent since high logistics cost is impacting the competitiveness of domestic goods in the international market. Investing in better road infrastructure will fasten the movement of goods, help in reducing the costs and improve turnaround time for vehicles. Improvement of air infrastructure and connectivity will help the logistics industry to boost this sector. Electric vehicles have the potential to aid in last-mile delivery while also adding to environmental protection. The Government should incentivize the use of electrical vehicles and focus on strengthening the infrastructure for enabling easy manufacturing and usage of EVs and EV-related elements. Similarly, the Government could consider rolling back additional taxes levied on Petrol and diesel prices. The additional taxes levied during the pandemic are hurting the cost of transportation. It is also leading to high inflation.”
Forego fiscal restraints and increase capital expenditure in particular sectors
As the country recovers from the Covid-19 pandemic, it is hoped that the budget 2021-22 kick-starts the economy while boosting expenditure on education and healthcare infrastructure. In this regard, the government could plan to forego fiscal restraints and increase capital expenditure in these particular sectors. There should be transparency and accountability in every rupee spent on education and ensure equitable distribution of funds. It is expected that the budget should look at boosting private investments and give a fillip to avenues of employment generation. The focus should be on upgrading the basic infrastructure and digitalization of educational institutions, measures to encourage student retention, and comprehensive teacher training programmes to remain updated with global learning standards.
Positive learning from the pandemic indicates that there should be a significant allocation of funds to online education, affordable digital devices, and should be complemented with high-speed internet access to the remotest parts of India. The budget should also look into resource building and improve the teacher-student ratio as nearly 250 million students are expected to enroll in schools by 2030 which would need 7.5 million highly trained teachers to address the massive student population," said Rustom Kerawalla, Chairman, Ampersand Group
GST for sea transport should be reduced to 12 per cent for more sustainable benefits
Rajiv Agarwal. CEO and Managing Director of Essar Ports Ltd, said, "Ports will play a pivotal role in achieving this objective and the budget should also focus on increasing the contribution of Ports sector to the country’s GDP. Ports is a significant driver of EXIM trade hence it becomes necessary to keep logistics cost low to encourage exports. Indirect taxes on port services has increased to 18% GST as industries like Thermal Power Plants, Fertilizer and Refineries are needed to pay higher logistics and manufacturing cost (on account of no GST Credit) for their raw material movement like Coal, LNG and Crude Oil, POL etc. This is impacting the competitiveness of sea transport as an option as compared to rail and roads that are less environment-friendly modes of transport. Hence, GST for sea transport should be reduced to 12% for more sustainable benefits. Presently PPP Projects and Major Port Trusts compete for cargo at Ports, which leads to a conflict of interest. It is important that Major Ports should act as enablers with PPP projects driving the growth. To further strengthen the current position of the industry players, it is critical for ports to be given enough autonomy and decision making power to stay ahead in terms of modernization and technological enhancements. Mechanized berths, sufficient stockyard and multimodal evacuation systems for fast turnaround of vessels are key enablers for productivity and efficiency of Ports & Terminals. To achieve this, investments will be required in dredging, developing adequate civil infrastructure and securing land along with the latest technology equipment to create a mechanized and environment-friendly cargo handling. The budget should also focus on the development of Port bases industries and manufacturing hub. Taking a cue from the success of Singapore, Dubai, Antwerp, Rotterdam and Houston for a blue economy with all-round development, we believe Hazira (Gujarat) and Paradip/ Mahanadi (Orissa) are two such locations which can be identified as the frontrunner for Port-based Industrial City prototypes in India. Innovative proposals for large scale development by private players must be awarded on high priority to boost the growth of the sector.
Have enough measures to infuse liquidity, benefiting small and medium enterprises
"For the Payments industry, FM should reconsider the complete elimination of merchant discount rate (MDR) on Rupay and UPI transactions which will support sustainable growth in digital payments. To further the Financial Inclusion in the country, I feel all transactions happening under PMJDY should be exempted from the GST levy. Bank accounts opened under PMJDY are basically of low ticket size. However, the operating cost to service this under-served community is very high till it reaches a substantial base hence the exemption. This Budget should have enough measures to infuse liquidity, benefiting small and medium enterprises, especially those in the hinterlands. PSU banks must lead this mandates in partnership with FinTech’s - either through co-lending or lead-generation model," said Ketan Doshi, MD, PayPoint India.
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