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UNION BUDGET 2021-22 Union Budget 2021-22 – Is it 1991 again?

Feb 12, 2021

With the Union Budget 2021-22 out now, various measures have been implemented, improved and amplified from the 2020-21 budget. The Viewpoint gathers insight from various prominent spokespersons from healthcare, manufacturing, start-ups, MSME industry associations, etc and seeks to understand if the Budget is really the best budget presented in the last 100 years, as proclaimed, or if there are any shortfalls and the overall impact for the future of businesses in India.

Budget provides an opportunity for state & centre to rebuild the future together - Harsha Kadam, Managing Director & CEO, Schaeffler India

This Budget has the ingredients to deliver long-term growth, and we are encouraged by it. The infrastructure boost will give a much-needed benefit to heavy- and medium-commercial vehicle segments. Keeping in mind the environment and auto industry at large, the voluntary scrappage policy is a step in the right direction. The PLI scheme investments will encourage global manufacturing firms, provide incentives for local manufacturing to expand and will create massive jobs & opportunities for the youth. This Budget has been very progressive for the railways too. The push for additional investment towards MetroLite and MetroNeo for smaller cities bode well in the long run. Also, the commissioning of dedicated freight corridors will improve the overall movement of goods and spur economic activities. The only caution here is to look at the inflating fiscal deficit. Overall, the Budget provides an opportunity for the state & central governments to come together and rebuild for the future, and we must seize these growth opportunities.

Extending the already announced PLI schemes will increase domestic manufacturing - Vikas Khanvelkar, Managing Director, DesignTech Systems

As mentioned by the FM, Nirmala Sitharaman, this year’s Budget has been presented during unprecedented times. It aims to give a boost to the economy by increasing expenditure in many sectors. Hence, 6.8% fiscal deficit looks difficult but is achievable through ambitious divestment programmes announced. Focus on health by providing ₹64,000 crore for ‘Swastha Bharat’ and ₹35,000 crore for vaccination is an excellent move. On the industrial front, extending the already announced PLI scheme for the electronics sector to 13 more sectors by providing ₹1.97 lakh crore over five years is a great move to support the ‘Aatmanirbhar Bharat’ initiative too. It will give a strong push to grow the manufacturing sector and will create job opportunities. Mitra scheme for creating world-class companies in the textile field will help boost textile exports. The long-awaited voluntary vehicles scrapping scheme is also perfect for the automotive sector. Overall, the Budget is in the right direction to get our economy back on track to reach the $5 trillion economy.

The government is working hard to reach the growth target - Amit Gupta, Managing Director, SAG Infotech

There are much more positives than negatives in the Budget 2021. Most importantly, there are no new taxes that helped either the stock market or investors. It is deliberately set towards fiscal stimulus growth, giving hope for a 15.5% growth. Also, the expenditure on public sectors with an agreeable deficit rate are alright for the near future. An 11% growth may or may not be achievable as there are dozens of factors. The Budget shows that the government is working hard to reach the target, but people’s sentiments are still negative and might not improve till we become mask-free.

For the growth of manufacturing activities, India has to tackle its basic necessity – dozens of regulatory permissions – which my clients and I have been a witness to for two decades now. The emphasis on ‘Make in India’, ‘Aatmanirbhar Bharat’ and ‘Vocal for Local’ schemes will bring some softness in regulatory compliance for starting manufacturing units. Following the mobile industry, around 10 more industries will be a target to these initiatives and will see a boost.

A strong & disciplined implementation agenda will achieve 11% GDP growth - Ashok Patel, CEO & Founder, Max Ventilator

The healthcare sector has been at the centre of all the policies since the pandemic hit. The announcement of Aatmanirbhar Health Yojana, with an outlay of ₹64,180 crore, and the National Health Mission is an excellent step towards strengthening primary, secondary and tertiary healthcare systems. But all these schemes will surely need time to reflect results on a larger scale. The expansion of the PLI scheme, with an allocation of ₹1.97 lakh crore over the next five years, will boost medical device manufacturing in the country. However, what seemed to be missing was the encouragement of private investment in healthcare infrastructure and the manufacturing of medical devices. The private sector rose to the challenge during the pandemic, whether it was innovation or manufacturing of devices, drugs or vaccines, and they expected a boost. As far as the achievability of 11% GDP growth is concerned, I am confident that by adopting a strong & disciplined implementation agenda, the government will be able to accomplish it.

Digital connectivity will ultimately become a cornerstone of everything we do - Ramesh Mamgain, Country Manager, India and SAARC, Commvault

The Union Budget 2021 is sui generis considering it is India’s first-ever ‘Digital Budget’. The gesture of doing away with the paper versions of the Budget underlines the government’s commitment towards the PM’s ‘Digital India’ vision. The renewed focus on infrastructure means accelerated technology adoption, which cannot be accomplished without data privacy measures propelled by data protection. This approach would help in strengthening India’s data protection framework to protect individual information, with investments in key technologies, like AI and ML, to secure cloud-based infrastructures. While the capital expenditure on the physical connectivity – road, railway and port – have been highlighted throughout, I am sure that digital connectivity will ultimately become a cornerstone of everything we do in the current times. Overall, it is an inclusive, pro-growth Budget presenting a balanced stance on the pathway to recovery.

Incentivising EV consumption could have aggravated domestic demand - Jeetender Sharma, Founder & Managing Director, Okinawa Autotech

The Budget 2021-22 effectively sets a roadmap for the next five years with a slew of measures for the overall economic growth while also focusing on ‘Aatmanirbhar Bharat’ and ‘Make in India’. The increase in customs duty on automobile parts will rightly encourage domestic manufacturing. The increased focus on strengthening the country’s infrastructure and the allocation of ₹1.08 trillion for the Ministry of Roads is a welcomed move. Furthermore, the commitment of ₹1.97 lakh crore for PLI schemes covering 13 sectors also comes as a cheer for the industry. All in all, the Budget is definitely rewarding.

The pandemic had an inevitable impact on the auto industry. For the much-needed impetus to the sector from EVs, reduction in GST and reconsideration of the current taxation framework applicable on raw material & final product was expected. The government could have also aggravated the domestic demand by further incentivising individual and commercial consumption of EVs pan India. Nevertheless, we are optimistic that this fiscal year will unfold immense growth opportunities, and we are geared for it.

Encourage manufacturing with more liberal policies - Chandrakant Salunkhe, President, SME Chambers of India

I am not quite happy with the Budget allotted particularly for the SME sector. The PLIs offered, too, aren’t very satisfactory. I believe, if they can announce an additional budget for the SME sector, India can aim at growing well and compete with China, Germany, Italy, France, etc. Giving importance to the ‘Aatmanirbhar Bharat Abhiyaan’, focus should be given not just to health (sector) but also on creating wealth by focusing on SMEs, manufacturing and creating new entrepreneurship. The Budget openly invites investments in insurance, aviation, etc; similarly, the government needs to create a similar environment encouraging investments in the manufacturing sector with more liberal policies. The 11% growth in the GDP is a huge expectation from India’s perspective, but nevertheless we can aim for it. For this, the government needs to support all the sectors by focusing more on an all-India level, where they need to create employment, produce quality products for local & global market and, most importantly, create a level playing field. The SME sector expects the government to take serious steps to empower the industry, because in India, almost all industries are dependent on the SME sector’s supply chain management.

The voluntary vehicle scrappage policy will drive demand in the automotive sector - Nikunj Sanghi, President, Automotive Skills Development Council (ASDC)

This Union Budget 2020-21 is expected to give a thrust to the Indian manufacturing industry. It will boost the MSMEs and strengthen the ‘Aatmanirbhar Bharat’ initiative. The positives include doubling of the allocation for MSMEs and the PLI scheme for the auto industry to improve production efficiency to become self-reliant. On the downside, the Indian automobile market is unlikely to reach 2018 levels any time soon; the much-required GST and cess rationalisation were also missing from the Budget. Additionally, increasing the customs duty on certain auto parts to 15% will increase the input costs. This will lead to a hike in car prices which depend on specialised components that cannot be manufactured locally due to unviable volumes.

But the increased outlays in the road sector for building 8500 km of highways and economic corridors, infrastructure development, including a ₹18,000 crore scheme to enhance public transport in urban areas, and the introduction of the voluntary vehicle scrappage policy will drive demand in the automotive sector.

Budget 2021-22 - growth-oriented and expansionary endeavour, instead of a protectionist budget - Rajesh Nath, Managing Director, VDMA India

The Budget of 2021-22 is sui generis, given the circumstances. Amidst a global slowdown, a fillip to the Indian economy through a growth-oriented and expansionary endeavour, instead of a protectionist budget, was necessary. Physical, health and agriculture infrastructure have received the maximum attention, and DFI will further support implementing a burgeoning infrastructure outlay. The voluntary scrappage — a first — will make fitness test a criterion for scrapping. It will enable a shift towards newer vehicles, boost demand for CV production and support the entire ecosystem. While some more initiatives to promote EVs would have been ideal, the government has noted India’s critical role in the global automotive supply chain post-COVID. PLI schemes, infrastructure creation for R&D and skill development for new-gen technologies, like AI and ML, will help drive investment in engineering and research. The Aatmanirbhar Bharat–PLI scheme, with a commitment of ₹1.97 lakh crore, over five-years, will be a game changer. It will provide a significant fillip to the construction of industrial and manufacturing facilities — both greenfield and brownfield.

Augmenting FDIs in manufacturing is the need of the hour - Rama Kirloskar, Managing Director, Kirloskar Ebara Pumps & Director, Kirloskar Brothers

The Budget 2021 assumes greater significance as it comes amid the COVID-19 pandemic, which led to massive economic disruptions, locally & globally. Spending ₹1.97 lakh crore on various PLI schemes, over the next five years, will attract global players in the Indian manufacturing sector as the government is planning to offer plug-and-play infrastructure. The special focus on manufacturing will also assist in augmenting FDIs in this sector, undoubtedly the need of the hour. The announcement to extend social security benefits and minimum wages to gig and platform workers will ensure their economic development, impacting around 15 million gig workers. Further, allowing women to work in all categories, including night shifts with adequate protection, will ensure more women participation and economic development. Plus, this Budget addresses unorganised labour force’s needs with the proposal to launch a portal to collect relevant information. It will help formulate health, housing, skill, insurance credit and food schemes for migrant workers. This proposal was indeed required to make India’s workforce future-ready.

The policies are bold, balanced, inclusive and progressive - Vineet Seth, Managing Director – South Asia & Middle East, Mastercam APAC

Apropos to the current climate, the Budget has quite a few positives, including doubling MSME expenditure to ₹17,000 crore which enables for manufacturing. The economic revival is predicated upon infrastructure projects. I-T waiver for senior citizens, tax assessment reduction to three years, tax holiday extension for start-ups by a year are significant positives. Overall, the Budget hits the right notes. IMF has projected India to hit 11.5% growth and lauded for decisive action and systematic reopening. FY22 is most likely to see a return to pre-COVID levels; mobility indicators for three to four months have been pointing to a revitalised economy. We should hit 11% growth, as projected by the Economic Survey. Manufacturing-based initiatives – Aatmanirbhar Bharat, PLI, etc – have a direct positive impact; 35% capex increase will also benefit the sector. Moreover, the defence Budget will contribute significantly. The Swasth Bharat Yojana will provide impetus to medical manufacturing. The policies are bold, balanced, inclusive and progressive. The Distributed nature of domestic end-user verticals across agriculture, transportation and other industries are truly taking us towards Aatmanirbhar Bharat.

Current rebound with budget measures will boost demand & consumption - Kumar Deepak, Principal Consultant, Manufacturing & Process Consulting Practice, Frost & Sullivan

Remarkable points in the Budget are an increase in capex and fiscal deficit target. Policies, like vehicle scrappage & PLI extension will increase domestic consumer demand. The vision of self-reliance is also evident. Sectors like FMCG and tourism did not find much mention, nor was there any change in the tax slab, as the primary focus was growth. FY20 witnessed contraction due to COVID-19, but the growth is now back. As per the Economic Survey, fundamentals have remained strong. Current rebound, coupled with budget measures, will boost demand and consumption. Hence, ceteris paribus, an 11% growth is achievable. The real contribution will reflect in the long-term growth starting FY22. The extension of PLI to 13 sectors will make Indian manufacturers globally competitive. Vehicle scrappage will boost CVs, PVs and ancillaries. BCD increases will help domestic firms. With a focus on cleaner future, the Hydrogen Energy Mission for FY22 was announced, which is not only essential to decarbonise heavy industries but is also the key to clean electric mobility that doesn’t depend on rare minerals.

‘Bad bank’ could kick start manufacturing ground up - Parthasarathi Patnaik, Chief Risk Officer, Vayana Network

The Union Budget 2021-22 focuses on providing strong economic stimuli to enable India to grow its way out of the negativity induced by the pandemic over the past year. Large increases in budgetary outlay towards surface & public transport are likely to give a leg up to manufacturing. The proposed voluntary vehicle scrappage policy phases out polluting vehicles and ushers in an era of modern EVs and enables infrastructure in line with global trends. MSMEs, particularly, may benefit from the unclogging of credit from the banking system following proposals to setup a ‘bad bank’; it could kick start manufacturing ground up, generate large scale employment and deliver growth to the country. However, the government’s ability to generate revenues to support this large expansion in expenditure would be key. Given no major new taxes, the government will have to make good its disinvestment targets in time and borrow efficiently to pump prime the economy and deliver 11% GDP growth rate; challenging but definitely doable.

Infrastructure investments are pivotal to enhance India’s manufacturing prowess - Ravichandran Purushothaman, President, Danfoss India

The Budgets’ provision doubling the MSME allocation and setting aside ₹15,700 crore in FY22 will strengthen India’s local manufacturing base. Further, the ₹1.97 lakh crore, over the next five years, for PLI schemes for an Aatmanirbhar Bharat will nurture size & scale and create jobs for the youth. The enhanced outlay of ₹1,18,101 crore announced for development of roads and highways would benefit corollary industries – cement, steel and transportation – showcase recovery potential. The move towards reducing air pollution and the impetus provided to the renewable energy sector, sustainability-oriented products can be effective drivers of maximising energy efficiency. The Budget has attempted to strike a balance between supporting growth and modest deficit reduction. It addresses supply-scarring and demand-constraint issues across industries; fiscal and tax relief measures would go a long way in boosting aggregate demand. Besides, infrastructure investments will be pivotal in enhancing India’s manufacturing prowess, acting as a catalyst in the journey towards becoming a local production powerhouse. Also, the NSDA’s special emphasis on infrastructure-focused skill development and the move to include young engineers in the Project Preparation Facility will address the skill gap and job creation concerns.

Image Gallery

  • Harsha Kadam

    Managing Director & CEO

    Schaeffler India

  • Vikas Khanvelkar

    Managing Director

    DesignTech Systems

  • Amit Gupta

    Managing Director

    SAG Infotech

  • Ashok Patel

    CEO & Founder

    Max Ventilator

  • Ramesh Mamgain

    Country Manager - India and SAARC


  • Jeetender Sharma

    Founder & Managing Director

    Okinawa Autotech

  • Chandrakant Salunkhe


    SME Chambers of India

  • Nikunj Sanghi


    Automotive Skills Development Council (ASDC)

  • Rajesh Nath

    Managing Director

    VDMA India

  • Rama Kirloskar

    Managing Director, Kirloskar Ebara Pumps

    Director, Kirloskar Brothers

  • Vineet Seth

    Managing Director – South Asia & Middle East

    Mastercam APAC

  • Kumar Deepak

    Principal Consultant - Manufacturing & Process Consulting Practice

    Frost & Sullivan

  • Parthasarathi Patnaik

    Chief Risk Officer

    Vayana Network

  • Ravichandran Purushothaman


    Danfoss India

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