If Executed Well, 8% Growth Is Possible

In one of the toughest years to present a Union Budget — when the Indian economy witnessed the sharpest GDP contraction in years due to the Coronavirus outbreak — Finance Minister Nirmala Sitharaman went all out to increase capital expenditure in infrastructure and healthcare, and unveiled plans to monetise state assets, privatise state-owned banks and insurance companies. Sitharaman had already raised expectations calling it the ‘Never Before Budget’ weeks before it was presented. On Budget day, the BSE Sensex responded with a gain of 2,315 points (5 per cent), its biggest rise after a Union Budget since 1999. Business Today spoke to economists, CEOs, consultants and sector specialists to gauge the mood of the country regarding Budget 2021.

“THE INCREASED CAPITAL EXPENDITURE PLAN AND ₹2 LAKH CRORE TRANSFER TO STATES WILL ACCELERATE ECONOMIC ACTIVITY AND JOB CREATION”
Seshagiri Rao, Joint MD & Group CFO, JSW Steel

Here’s what Arun Kumar, Chairman & CEO, KPMG in India; Ashu Suyash, MD & CEO, CRISIL; Mohit Malhotra, CEO, Dabur India; Ranjan Pai, Chairman, Manipal Education and Medical Group; Sachchidanand Shukla, Chief Economist, Mahindra Group; Saugata Bhattacharya, Executive Vice President, Business and Economic Research and Chief Economist, Axis Bank; Seshagiri Rao, Joint MD and Group CFO, JSW Steel; Uday Shankar, President, Federation of Indian Chambers of Commerce and Industry (Ficci), and Zarin Daruwala, Cluster CEO, India and South Asia markets (Bangladesh, Sri Lanka and Nepal), Standard Chartered Bank, had to say:

Was this the ‘Never-before’ Budget as promised? Will it bring India back to a sustained 8 per centplus growth rate?

SACHCHIDANAND SHUKLA: This Budget has its head and heart in the right place with focus on infrastructure, health and financial sector rejuvenation. It resisted the temptation of tinkering with direct tax rates. Moreover, it has been transparent by including some one-off balance sheet items in headline deficit numbers.

The allocations for FY21 should be seen in the context of the pandemic where the government had to resort to additional one-off kind of expenditure to save “lives.” Around 800 million people were provided free food and job scheme allocation had to be raised, given the acute rise in demand in the short-term. However, with India seemingly turning the corner on Covid and eyeing faster recovery in FY22, the economy needs to pivot to a more “Rurban” and infra-led growth, while maintaining the agriculture and rural thrust.

₹5.54 LAKH CRORE Capital allocation for infra in the Budget

Budget 2021 is outstanding because there was clarity and focus to kick-start economic activities after an unprecedented pandemic. It also laid a