Industry reacts to Budget 2021-22
Mohammad Athar(Saif), Partner, Economic Development and Infrastructure, PwC India
Madan Sabnavis, Chief Economist, CARE Ratings
Prabhajit Kumar Sarkar, MD & CEO, Power Exchange India Limited (PXIL)
Niranjan Hiranandani, National President, NAREDCO; and MD, Hiranandani Group
Vimal Kejriwal, Managing Director & CEO, KEC International Ltd.
Anshul Singhal, Managing Director, Welspun One Logistics Parks
Himanshu Chaturvedi, Chief Strategy Officer, Tata Projects Ltd
Warren Harris, CEO & MD, Tata Technologies
4th Indian Cement Review Conference 2021
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Paul Wallett, Regional Director for Trimble Middle-East and India region
Ramesh Palagiri, MD, Wirtgen Group India
Rama Kirloskar, Director, Kirloskar Brothers Ltd.
Kshitish Nadgauda, SVP and MD-Asia, Louis Berger
George Rajkumar, Country President, Grundfos India
Prem Kishan Dass Gupta, CMD, Gateway Distriparks
Sanjay Dutt, MD & CEO, Tata Realty & Infrastructure Limited
Sankey Prasad, FRICS, Chairman & MD (India), Colliers International
Rajeshwar Burla, Vice President, Corporate Ratings, ICRA
Ravichandran Purushothaman, President, Danfoss India
Kaushal Agarwal, Chairman, The Guardians Real Estate Advisory
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Deepto Roy, Partner, Shardul Amarchand Mangaldas & Co
Ashok Mohanani, President, NAREDCO Maharashtra
Rajesh Neelakanta, ED & CEO of BVC Logistics
Dhruvil Sanghvi, CEO, LogiNext
Aditya Vazirani, CEO, Robinsons Global Logistics Solutions
Bhushan Parekh, Director, SME Solutions, CRISIL
Prasad Sreeram, Co-founder & CEO, COGOS Tech
Samantak Das, Chief Economist and Head of Research, JLL India
Ankush Kaul, President-Sales & Marketing, Ambience Group
Kamal Khetan, CMD, Sunteck Realty Ltd
Abhishek Jain, COO, Satellite Developers Pvt Ltd
Ratul Puri, Chairman, Hindustan Power
Pushkar Singh, Co-founder & CEO, LetsTransport
Anil Gupta, Chairman-cum-Managing Director, KEI Industries Ltd
Vivek Bhatia, MD & CEO, thyssenkrupp Industries India
Sanjay Dutt, MD and CEO, Tata Realty and Infrastructure
The lockdown in 2020 and its subsequent continuation in 2021 has caused a lot of disruption and set back to the economy as well as the real estate sector. The government therefore had to focus on providing relief to people and the industry. We welcome the government’s intent to deliver a growth oriented budget. However, we had expected the government to do more for the sector because of the multiplier effect it has on the economic growth. The government’s measures in 2020 have only provided some relief. The budget provided an opportunity to consider lowering GST on building materials, no GST on JDA and TDR, and extending the tax benefit from affordable to mid housing would have made a significant impact. Additionally, allocating additional capital for distressed funds could have eased the liquidity needed for last mile funding, allowing FDI in ready to move in inventory to unlock capital and provide for liquidity to NBFC, banks and developers.
Acknowledging the role of NRI homebuyers and increased interest amid the pandemic, the government’s decision to reduce NRI residency limit will help. Raising customs duty on solar inverters to 20% from 5% is likely to add to the cost of the commercial and residential developments while monetisation of land is likely to provide more land for development and arrest its rising cost.
For the investor community, we are pleased with the proposal to make dividend payments to REITs (Real estate investment trusts) and InVITs (Infrastructure investment trusts) exempt from TDS. The Indian real estate sector is at an interesting juncture and I strongly believe REITs will define the future as they allow investors to expand their range of properties. The Finance Minister’s plan to introduce a bill to set up a DFI (development finance institution) for long-term funding infra projects with a capital of Rs 20,000 crore and lending Rs 5 lakh crore in the next three years is a great move for India’s sustainable infrastructure. We look forward to working with the government for these crucial infra projects by leveraging the Tata brand to contribute to India’s exciting growth story.
Anil Saboo, President, IEEMA
A figure of Rs 3.05 lakh crore will be invested in Discoms for improvement of feeder separation, prepaid smart metering and upgradation of systems. This investment will improve the functioning of Discoms and help in improving their health and viability.
Sandeep Mathur, Brand Leader, CASE India
The Budget 2021-22 has put a lot of focus on reviving the infrastructure sector. The government’s effort towards further enhancing the roads and highways projects to 7,400 new projects is a welcomed step which will ensure a better year for the infrastructure sector as well as for the construction equipment industry. The announcement of introduction of the development finance institution providing Rs 20,000 crore to launch the national asset monetisation pipeline to fund new infra projects, will strengthen the stability of the sector. Additionally, the multitude of announcements on the highway projects in Tamil Nadu, Kerala, West Bengal and Assam will further give a much needed boost to the sector. The government's vision of committing Rs 1.97 trillion to the manufacturing sector over five years will help the industry immensely. We are confident that all these efforts will play an important role in reviving the sector and bringing back the economy to normalcy.
Tomohiko Okada, Managing Director, Toshiba India
The Union Budget 2021 is geared towards recovery, revival and growth for a more sustainable and inclusive economy. Our key takeaway is the government’s focus on initiatives like Jal Jeevan Mission and Urban Swachh Bharat Mission 2.0, CapEx fund for railways, and voluntary vehicle scrappage policy, that we may relate our business too.
The Jal Jeevan Mission initiative calls for countrywide wastewater treatment infrastructure. Through our subsidiary Toshiba Water Solutions, we will be happy to utilise our strengths in providing water and wastewater treatment solutions and support the government’s aims.
Voluntary vehicle scrappage policy will boost demand for fuel-efficient, environment friendly vehicles. Toshiba’s rechargeable battery SCiB is ideal for hybrid vehicles for features like excellent safety, long life, and rapid charging. We expect the SCiB can promote green transportation in India.
Toshiba looks forward to offering more of our infrastructure solutions to India, turning on the promise of a new day for a sustainable economy.
R Mukundan, MD and CEO, Tata Chemicals
The first budget of the new decade has ensured the right balance of sustainable growth, social equity and long-term competitiveness of the Indian economy.
The proposed step to create more stability in the tax regime is a welcome move. This, combined with simplification and a further improvement in the dispute resolution process, will augur well for tax compliance and increase in resource mobilisation.
The impetus in funding towards railways, roadways and ports will go a long way in improving the competitiveness of Indian industry by reducing the cost of logistics.
The continued support of manufacturing with the Productivity Linked Incentive (PLI) scheme will further strengthen the Atmanirbhar Bharat mission to help the country integrate more strongly with the global supply chain. The PLI scheme coupled with duty rationalisation of inputs especially naphtha will bode well for value added products and speciality chemicals.
Also, the start of the hydrogen economy is a welcome step. All in all, a balanced approach to resource mobilisation, stability in taxation and focused sectoral steps to spur manufacturing growth will ensure that we come out of this pandemic stronger and more competitive.
Sanjay Bhatia, Co-Founder & CEO, Freightwalla
For most of the last year, the shipping and logistics sector has been under strain due to global headwinds. The industry was expecting short term measures to lower the current pressure faced by the industry. Having said the budget did include steps to boost the sector in the long term. Invitation to private players to manage the ports is a beneficial move for the industry. Private port management players having knowledge and competencies can transform the overall functioning, thereby increasing its potential in shipment handling. It can also lead to digitising the entire port facility and providing an experience to the consumers and users. The industry provides direct and indirect employment opportunities to millions of people in the country. The launch of the scheme to promote merchant ships' flagging will further give a rise in employment. It also sends a signal that the Indian government is welcoming to the international logistics industry.
Additionally, the goal to double the ship's recycling capabilities is another move to generate career opportunities among the nation's youth. Aggressive road infrastructure push will help in smooth cargo movement to and fro from port to shipper. Overall it has been a reasonable budget for the sector, more investments or steps to digitise the industry could have made it even better.
Sumant Sinha, CMD, ReNew Power
It is a growth oriented and forward looking budget. The Finance Minister’s focus on healthcare, infrastructure, power and the financial sector will have a positive, broad based impact on the economy. By increasing capex spending significantly without hiking taxes, and instead focusing on expanding economic activity, the FM has set the groundwork for a sharp and sustained economic recovery over the next several years.
Dilip Oommen, CEO, ArcelorMittal Nippon Steel India; and President of Indian Steel Association
The budget is truly expansionary and progressive, striking a right balance between welfare and growth without being constrained by the fiscal deficit. The government is fully geared up to support and facilitate the economy’s reset and strengthen the country as the business epicentre of the world. Introduction of PM Atmanirbhar Swasth Bharat Yojana in addition to the national health mission is commendable. Heavy spending on infrastructure and increased spending for capital expenditure creation, a 25 % rise, are welcome moves. Asset creation in roads, rails, pipelines, textile Parks, power sector, and more, is a forward-looking initiative. Development finance institution (DFI) has been conceptualised and a lending portfolio of Rs 5 lakh crore in years, is a step in the right direction. A targeted program of disinvestment to raise Rs 1.75 lakh crore can unlock value in the public sector units, as I mentioned in the pre-budget discussions. Voluntary vehicle scrappage policy will improve business sentiments. The budget truly intends to propel the goal of a 5 trillion dollar economy. If there was no reduction in customs duty on finished and semi finished steel, it would have helped the domestic steel sector instead of some non FTA neighbouring countries.
Subhrakant Panda, VP, FICCI and MD, IMFA
The budget is very comprehensive and proposals are well thought through which will provide fiscal support for investment and consumption while also providing a five year roadmap to come back to prudent norms. Higher outlays for various sectors augurs well, as does the fact that the quality of expenditure is improving with more thrust on capital expenditure. Setting up of a DFI to fund long gestation projects, and an asset reconstruction cum asset management company to deal with stressed assets are welcome steps. Limiting reopening of assessments and providing for a faceless ITAT will encourage the honest taxpayer. Similarly, several regulations and laws subsiding into a single securities code is a very positive step. Finally, no major changes in the tax structure is a major commitment to provide stability.
Amish Mehta, COO, CRISIL
This is a growth-centric, expansionary budget that pushes many right buttons, while focussing on improving the mid term growth trajectory.
Spending will continue despite limited new tax revenue, and the focus is clearly on stimulating growth after a once-in-a-century shock.
While this implies higher-than-anticipated fiscal deficit and borrowings, and therefore adds an upside risk to interest rates, the quality of spending will improve.
The CAGR for capital expenditure over fiscal 2020 is a praiseworthy 28%, while revenue expenditure growth is contained at 12%.
Reduced dependence on IEBR–essentially off balance sheet financing done through the public sector and government entities such as NHAI, for funding capex is also a positive.
There are also other noteworthy and progressive steps for the financial sector, including on privatisation of public sector banks, transfer of bad loans to a ‘bad bank’, adequate allocation for recapitalisation, and increase in foreign direct investment limit in insurance.
Asset monetisation in infrastructure, and the plan for a development finance institution will reduce the pressure on banks to fund long-term projects.
The thrust on domestic manufacturing is evident in higher custom duty for PLI-linked segments.
The better-than-expected recovery seen in the past few months led by larger companies is yet to fully benefit MSMEs.
A few steps in this regard will go a long way in supporting this segment that is so critical for jobs and exports.
Tulsi Tanti, Chairman, Suzlon Group and Indian Wind Turbine Manufacturers
I am particularly inspired by the union budget presented by our FM today. It has the right set of priorities and initiatives required to stimulate our nation’s economy post the Covid 19 crisis. The budget is bold and focuses on the basic drivers of our economy. Focus on infrastructure, power sector and renewable energy is particularly encouraging, however, there is ample impetus for healthcare and Atmanirbhar Bharat. I am also delighted to see that the government is focusing on inclusive development, innovation and human capital which is going to build the new India of our dreams.
This is a very comprehensive budget and there is enough in this budget for all sections of the industry and society. The stimulus for the MSMEs will help build the foundation of a strong domestic economy. It is rare to see such a wide range of coverage in the union budget and I congratulate the Finance Minister and the Government of India for the same. I am sure this budget will go a long way in building a sustainable and strong India.
K Satyanarayana, Co-Founder and Director, Ecom Express
We are encouraged to see the government’s commitment towards ensuring smooth logistics services by creating an outlay budget for national highway projects to the tune of Rs 1.18 lakh crore of 8,500 km by March 2022 and an additional 11,000 km of national highway corridor. This impetus given to infrastructure and logistics industries, being the backbone of the economy, will help give a solid and much needed boost to the economy, especially post the global health pandemic related situation.
In particular, we welcome the continued focus of a digital India with the introduction of a Rs 1,500 crore scheme on digital payment which will help smoothen the customer interface for logistics companies like us. We also feel heartened to see the government’s efforts to allow women to work in all categories with adequate protection and the introduction of minimum wages. This will definitely help encourage more women to come on board in logistics sectors across categories as the government has also introduced social security benefits for gig and platform workers. This will augment our current initiatives in this direction for more diversity and inclusion.
Kshitish Nadgauda, SVP and MD - Asia, Louis Berger
As the backbone of any economy, impetus to infrastructure is one of the key tools to give the economy a solid boost. It is one of the surest ways for an economic rebound, especially after the global health crisis which has slowed down and crippled many economies. Infrastructure has been a key focus area of the government. It was therefore encouraging to see it amongst the top two pillars of the budget for FY 21-22 as announced earlier today by the Honourable Finance Minister, Ms Nirmala Sitharaman.
In particular, we welcome the focus on continued investment in the development of urban mass transit (Metro Rail) projects in India. Such mass transit projects are vital to realise multiple benefits such as reduction in air pollution, time saving for commuters, reduction in accidents, reduction in traffic congestion, fuel savings, etc. The announcement of the central fiscal funding for metro rail projects showcases the government’s continued focus on metro connectivity. We welcome this move and believe that this will lead to building safe, world-class transportation facilities which would be availed of by the common man.
We also welcome the proposals of the continued development of Economic Corridors. These road and highway projects will boost the economy by creating thousands of jobs that are much needed during these times and attracting greater investment along the corridors because of the improved infrastructure. Additionally, the soon to be tabled bill on DFI (development finance institution) is a much awaited step which will provide funding to construction in the Infrastructure sector. Additionally, we welcome the announcement of the new 11,000 km of proposed roads and highways in the states of Tamil Nadu, Kerala, Assam and West Bengal. We would urge similar investment in other states.
Ashwath Ram, MD, Cummins India
At first glance, it appears to be a progressive budget. There is a focus on the socio-economic development of the country with an emphasis on railways, the power sector, infrastructure, healthcare, and enhanced digital connectivity. The voluntary policy on the scrapping of vehicles will have a positive impact and will drive the commercial vehicle and auto sector forward, the industry wanted an incentive-based scheme so we are still seeing the details. In addition, MSMEs and other user industries have been severely affected by the recent sharp rise in iron and steel prices. The industry will definitely receive a push by the decision to double the allocation of MSME and reduce the customs duty on some of the steel products. The focus on highways and the infrastructure investment plan will definitely give the necessary impetus to the CV and construction equipment businesses.
Farrokh Cooper, CMD, Cooper Corporation
Budget 2021 is optimistic, driving the country towards Atmanirbhar Bharat by putting significant stress on railways, power sector, infrastructure healthcare, banking, insurance, and agriculture, which will not only enable the country to revive its economy but will also stimulate growth. Voluntary policy on the scrapping of vehicles would have a positive effect and will move the commercial and automobile industries ahead. The industry would definitely be encouraged by the decision to double the allocation of MSME and to reduce the customs duty on steel. Focusing on highways and the investment plan would certainly give the CV and construction equipment the requisite impetus. The government’s increased focus on the infrastructure sector will certainly bring in positive impact.
Vikas Bajaj, President, AIFI(Association of Indian Forging Industry)
This year's union budget is positive, as well as a progressive one with a strong drive towards the country's socio-economic growth. It focuses on the railways, power, health infrastructure, banking, insurance and agriculture sectors. Voluntary policy on the scrapping of vehicles will definitely have a positive effect and will drive the commercial and automotive industries forward. Furthermore, a recent sharp rise in iron and steel prices has affected MSMEs and other user industries severely. The positive step of reduction in customs duty uniformly to 7.5% on semis, flat, and long products of non-alloy, alloy, and stainless steels would certainly contribute to better raw material prices and reduced input costs. Also, no new corporate tax has been added which is positive news as it is a tough time for the industry. The increased government attention on the highways and infrastructure sector would definitely contribute to a significant impact on the manufacturing and Auto industry and help in employment generation which is the most critical need to revive the economy.
Kamal Bali, President and Managing Director, Volvo Group India
Budget 2021-22 announced yesterday by the Honourable Finance Minister under the visionary leadership of PM Narendra Modi is very positive and will surely spur growth. There is potential for employment generation considering that the budget focused on key sectors or pillars, like healthcare, infrastructure, and manufacturing. The focus on scrappage policy and PLI for the automotive sector needs to be studied for details. The promised review and consolidation of GST and customs duty structure (rates) by September 2021 is a welcome development. The purchase of 20,000 buses will augment and render the much needed support to the industry. Overall, it is a growth oriented budget which bodes very well for our trucks and CE business in the coming years.
Mangesh Wadaje, CEO and Director, Highbar Technocrat Limited
The current budget is a definitive step towards spearheading India's march of becoming a dominant world economy. It lays the foundation for a strong economic revival in the post Covid era with an aim to achieve progressive growth, with well defined focus on key areas such as infrastructure, health and medication, banking and finance.
The budget provides impetus towards developing world-class infrastructure in India.
Move towards fast-tracking infrastructure projects, expansion of the metro rail network and the creation of development finance institution (DFI) are transformational initiatives for India announced in this year’s budget.
The DFI's provisioning of Rs 20,000 crore to launch the national asset monetisation pipeline, shall fund the expansion of new infrastructure projects.
All these measures will have a multiplier impact on boosting the nation’s economy. We believe that this budget is transformative and will act as a catalyst for stimulating economic growth.
Amit Kapur, Joint Managing Partner, J Sagar Associates
The budget speech expectedly has given a strong signal for infrastructure development focusing on actualising the ambitious national infrastructure pipeline targeting an investment of Rs111 lakh crore over five years. The signal comes from the announced budgetary allocations and decisions (a) central allocation of Rs 5.54 lakh crore, (b) state allocations of Rs 2 lakh crore, (c) announcement to tap into budgetary resources of PSUs and wide ranging InVITs monetising assets in highways, power transmission, gas pipelines, dedicated freight corridors, airport. The above announcements are strengthened by announcement of establishing Bad Bank in nature of AMC; a development finance institution with a seed investment of Rs 20,000 crore and a target to be build a lending portfolio of Rs 5 lakh crore in three years; an extensive disinvestment program with target of Rs 1.75 lakh crore; zero coupon bonds that will help arrange the infra financing. The devil lies in the details and the success in reviving the economy would depend on effective structural reforms in infrastructure sectors removing barriers to growth + how the government goes about monetising the land bank and assets held by PSUs.
Anuj Puri, Chairman, ANAROCK Property Consultants
Considered ‘the Margaret Thatcher moment’ for the FM, Union Budget 2021-22 was literally a make-or-break event. The circumstances are unprecedented-it is the first budget presented after a pandemic which shattered the economy globally, and in India. The impact of the pandemic has been catastrophic with the early government estimates indicating a 7.7% contraction in FY 2020-21–the biggest GDP growth plunge in over four decades. Expectations across sectors were at an all-time high, though the fiscal pressures on the finance ministry are nothing short of crippling.
As expected, healthcare got the highest priority in resource allocation and policy support including Rs 64,180 crore outlay under PM Atmanirbhar Swastha Bharat scheme. It bodes well for healthcare facilities and wellness-oriented real estate.
Further, FY 2021-22 capital expenditure outlay at Rs 5.54 lakh crore to ensure that the target of becoming a 5 trillion dollar economy by 2025 is well on track. This will positively impact infrastructure, connectivity of Tier 2 cities, and job creation for SMEs and MSMEs – thereby benefiting the target customers of affordable housing.
For the ‘Aam Aadmi,’ personal tax relief by way of tax rate cuts or favourably readjusted tax slabs topped demand and the FM failed to deliver on it. An upward revision in the deduction limit under Section 80C (at Rs 1.5 lakh a year) was long overdue and increasing this limit would have increased disposable incomes, inevitably pushing up consumption. It would have also helped improve consumer sentiments across sectors-the real need of the hour.
As anticipated, affordable housing and rental housing got a big boost with the government extending the period for extra deduction of Rs 1.5 lakh available for loans up to 31 March 2022. This will keep demand buoyant for affordable housing in 2021 as well. Further, the extension of the tax holiday for affordable housing projects for one more year will help bring in more new supply within this segment. As per Anarock research, affordable housing already accounts for more than 35% of the supply across the top seven cities in the country.
Infrastructure got a major push. Infra works proposed include building 8,500 km of highways by March 2022. There were big infra sops announced for poll-bound states including West Bengal, Tamil Nadu, Kerala and Assam. The government also announced the bill to set up development finance institution (DFI) providing Rs 20,000 crore to boost infrastructure projects. The Modi government has not lost sight of its USP of infra creation, which will help connect more areas and thus open them up for real estate development.
Customs duty on steel reduced to 7.5% will create some space for real estate developers who may not be in a position to increase prices immediately.
The announcement to set up seven mega textile parks with plug-and-play facility in three years will unlock the potential of new markets for development and provide an impetus to real estate assets, including logistics and warehousing.
Post the pandemic, the chances of NPAs growing are significantly high. The Budget announced the setting up of ARCs to help banks to cushion the impact of the pandemic. Besides setting up the long-awaited bad bank, the government will also infuse Rs 20,000 crore into public sector banks as part of its recapitalisation plan.
All in all, the budget was broad-based with special emphasis on building robust healthcare infrastructure, physical infrastructure and affordable housing. It will result in job creation in the informal sector, which was severely impacted by the pandemic. Creating buoyancy in the job market will benefit the Indian economy in the long run. The focus on rural job creation will also give a boost to affordable housing, which will help increase housing demand in tier 2 and 3 cities.