What an interesting couple of weeks it has been for us Indians. From clinching a historic Test match win at Gabba to a huge, yet short budget that almost made history in so many ways, we have gone through it all.
Union Minister for Finance and Corporate Affairs Smt Nirmala Sitharaman in parliament today presented a budget amid the unprecedented Covid-19 crisis. The budget was evidently directed towards boosting infrastructure and healthcare sectors.
In this article I will be analysing the impact of some of the key points of today’s budget.
Voluntary scrapping policy for vehicles.
The government introduced the scrapping policy to remove unfit vehicles on a voluntary basis. All the private vehicles beyond 20 years and commercial vehicles beyond 15 years will have to go through a fitness test.
This will reportedly offer a boost to the auto sector. Auto sector shares surged after this announcement.
Pradhan Mantri Atma Nirbhar Swasthya Bharat Yojana.
The government announced a new central healthcare scheme in the union budget to strengthen the country’s healthcare infrastructure over the next couple of years. The Pradhan Mantri Atma Nirbhar Swasthya Bharath Yojana will operate in addition to the existing National Health Mission. Approximately Rs. 64,180 crores have been allocated to this scheme.
This is expected to boost the capacities of primary, secondary and tertiary healthcare systems as well as existing national institutions over the next few years. In addition to this, it would also be used towards creating new institutions to cater to the detection and cure of new and emerging diseases in India.
The Finance Minister during her speech said that the investment on health in the budget has increased substantially, with a focus on empowering preventive care, curative and well-being of the citizens.
Development Financial Institutions (DFI)
The FM announced setting up of a Development Financial Institutions since there is a lack of finance for infrastructure and long term projects. The DFI will have statutory backing and Rs.27,000 crore capital. The DFI which is to be set up now will be managed by professionals.
The primary objective of the DFI will be to finance both social and economic infrastructure projects identified under the National Infrastructure Pipeline (NIP)
Power
The government has proposed a framework to give consumers an alternative to choose from more than one power distribution corporation. This is aimed at offering competition at operator level and more choices to the consumers. This increases the efficiency at operator level.
Strategic Divestments
Strategic divestment of companies including BPCL, IDBI Bank, Air India and Container Corporation of India to be completed by 2022. The government has also asked Niti Aayog to start working on identifying the next list of companies for divestment. The government will also be coming up with the IPO of LIC.
This will increase the efficiency of these companies while gaining required momentum. This will also generate higher revenues to the government.
Textiles
Focusing on the AtmaNirbhar Bharath, FM announced in her speech the establishment of a scheme of Mega Investment Textiles Parks (MITRA), which will create seven textile parks across the country over the next three years.
This move is expected to boost local textile industries and compete to be a world class exporter.
National Asset Reconstruction Company
Of all the other schemes, this one has to be one of the most interesting and most required ones in the list. It is separating the good from the bad and not wasting good money on the bad assets. The NARC is expected to relieve bad assets held by the state-owned banks and also beautify their Balance Sheets. This will help the banks to lend to productive sectors as the economy starts recovering.
India’s Fiscal Deficit
India’s fiscal deficit to jump to 9.5 percent of the GDP in 2020-21 as per the estimates presented by the FM. The slump in the revenue amid the Covid-19 pandemic has led to the rise in deficit.
The government is planning to borrow an additional Rs. 80,000 crore to fund the deficit for the year.
These were the key highlights of the budget 2021. Seems like the government is pretty cautious when it comes to the spending structure. But Covid-19 has definitely proven to be a catalyst for increasing the government spending on healthcare and security.
Overall, the government managed to fulfil most tick boxes. The markets surged after a long time during a budget session which clearly illustrates a sense of satisfaction among the investors.
Team Mind Feed 
Nishchal Mallya 
