Markets Gave Big Shout-Out to the Budget 2021-22
<span style="font-weight: 400;">Union Finance Minister Nirmala Sitharaman presented her third budget that aims to shore up an economy badly-hit by the novel coronavirus pandemic. The economy is projected to contract 7.7% in the current fiscal year, although the government forecasts growth of 11% for
Published -
Feb 3, 2021 4:21 AM
Union Finance Minister Nirmala Sitharaman presented her third budget that aims to shore up an economy badly-hit by the novel coronavirus pandemic. The economy is projected to contract 7.7% in the current fiscal year, although the government forecasts growth of 11% for the coming fiscal year, after a massive COVID-19 vaccination drive and a rebound in consumer demand and investments. Budget 2021 rests on six pillars – health and well-being, physical, financial capital and infrastructure, inclusive development for aspirational India, reinvigorating human capital, innovation and R&D and minimum government and maximum governance. The finance minister has announced a total spend of around Rs 2 trillion on healthcare and mega national highway projects in election-bound states of Tamil Nadu, West Bengal, Assam and Kerala. Defence Budget consists of three component - revenue, pension & capital component. The Budget allocation (for the capital component) in 2020-21 was ?1,13,734 crores. It has gone to ?1,35,060 crores which is an increase of 20%: TV Somanathan, Secretary, Expenditure. The government would infuse Rs 20,000 crore into public sector banks in 2021-22, to meet regulatory norms. She also said that the government will sell stake in at least two public sector banks as part of its privatisation plan in the next financial year. Corporate bond market: Permanent institutional framework to be put in place to purchase investment grade papers FM Nirmala Sitharaman has also announced measures under Aatmanirbhar Package. She said the early PM garib Kalyan Yojana amounted to almost presenting 5 “mini budgets” in 2020. She proposed strengthening of ‘Sankalp of Aatmanirbhar Bharat’. Focus on 6 pillars, which include – Health & Well-being, Inclusive Development, Human Capital, Innovation and R&D. FM added that the govt is fully prepared to support and facilitate economic growth and they are introducing Aatmanirbhar Swastha Bharat Yojana with an outlay of Rs 64,180 crore. FM said that, today India has two vaccines available and has begun safeguarding not only her own citizens against COVID-19 but also those of 100 or more countries. It has added comfort to know that two more vaccines are also expected soon. Railways will monetise dedicated freight corridor after commissioning. The next lot of airports will also be monetised for operations and management. AAI airports in tier-2,3 cities and other railway assets are to be monetised. Highway infra work proposed include building 8,500-km of highways by March 2022. National Infrastructure Pipeline has been expanded to 7,400 projects. Futher, projects worth ?1.1 lakh crore have been completed under the National Infra Pipeline. Government will also set up DFI providing ?20,000 crore to launch the National Asset Monetisation Pipeline to fund new infra projects. The ambition is to have a lending portfolio of at least Rs 5 lakh crore for this DFI in three years’ time which will act as a provider, enabler and catalyst for infrastructure financing. She also announced the launch of a "National Monetization Pipeline" of potential brownfield infrastructure assets, stating that monetizing operating public infrastructure assets is a very important financing option for new infrastructure construction.