Experts give a thumbs-up to Budget 2021; say proposal will benefit cement, heavy industries, insurance & banks

Finance Minister Nirmala Sitharaman seems to have delivered on her promises of a historic Budget given the one side run in the stock market, something which has evaded the FM since her time at the office. The Budget which comes in the backdrop of a pandemic-ridden year focused on six pillars- Health and Wellbeing, Physical and Financial Capital, and Infrastructure, Inclusive Development for Aspirational India, Reinvigorating Human Capital, Innovation and R&D and minimum government and maximum governance.

FM's push reinvigorating the economy with higher capital expenditure rather than taking the taxation route cheered both markets and experts as they gave a meaty thumbs-up to the Budget proposals.

The Nifty50 ended 646.6 points or 4.74 percent higher at 14,281.20 and the BSE Sensex climbed 2,315 points or 5 percent higher at 48,600.61. The rally was led by banking stock as Nifty Bank surged 8.26 percent, after touching record high levels, to end at 33.089.05.

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Here's what the experts had to say about the Budget

Kaushlendra Singh Sengar, Founder & CEO at INVEST19

FM announcing the Budget from the Made in India tablet clearly showed how much Indian administration is advancing towards ‘Atma Nirbhar Bharat’ and being tech-savvy.

The major push to invite investment by eradicating dividend tax on Invites will push institutions to deploy more investments. No introduction of any tax and cess on personal income, start-ups and other areas has cleared that the administration’s focus is more on growth despite the heavy expenditure incurred on COVID-19 in this financial year.

Increase in FDI limit in insurance companies, the rise in NRI tax audit limit from Rs 1 crore to Rs 5 crore shows the government is welcoming foreign investment. In order to spur privatisation, earlier disinvestment plans of PSUs will be cleared and two more PSUs along with a general insurance company will be disinvested this year. However, the increase in oil prices, fiscal deficit target of FY22 to 6.8 percent and gross borrowings of 12 lakh crores for FY22 will spur inflation that may offset some incentives provided in the Budget.

Gopal Kavalireddi, Head of Research at FYERS

Sitharaman has definitely addressed the need for economic growth with considerable allocation to infrastructure – roads, railways, ports. The admission of the need to improve healthcare was reflected through Rs 64,000 crore which will be allocated over six years. A 35 percent rise in FY22 capex at Rs 5.54 lakh crore is bound to provide a strong footing for economy-related sectors. While the fiscal position seems alarming with Rs 12 lakh crore of gross borrowing for the year, a 9.5 percent fiscal deficit was on expected lines.

Recapitalisation of public sector banks, divestment target of Rs 1.75 lakh crore, raising of FDI in insurance to 74 percent, new securities market code would be welcomed by investors. No changes were made to personal tax slabs or LTCG or other stock market-related taxes is a neutral move to taxpayers and market participants. Affordable housing tax holiday extension, additional interest deduction extension, tax holiday for startups are other significant announcements.

Overall, the Budget is pro-growth and pro-economy oriented, with fine fiscal balancing. While there would be some disappointed citizens due to the unchanged tax slabs or further tax exemptions, it is important to treat this as a ‘Rebuilding India – Post-COVID Budget’ and not as any other generic Budget.

VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services

This is indeed a bold growth-oriented Budget. Absence of the much-feared Covid tax and the surcharges on Income Tax is a great relief. Privatisation of two nationalised banks and proposal of monetisation of assets like land are clear positives. Raising FDI in insurance from 49 percent to 74 percent is also welcomed. Market response to the budget reflects growth optimism. In brief, the FM has presented a pragmatic, bold and visionary Budget in these difficult times.

S Ranganathan, Head of Research at LKP Securities

A pragmatic Budget which delivered on many parameters without resorting to higher taxes. The Budget seeks to kickstart growth through higher spends on Infrastructure, Healthcare & Rural India with special focus on MSME and Start-Ups as India’s demographic profile is now making Tier-2 & Tier-3 cities the new engine of growth. Relaxation in Tax compliance burden for senior citizens, reducing timelines for re-opening of Tax returns including faceless electronic communication with tax authorities is heartening news. As the Budget is growth-focussed, several sectors of the economy stand to benefit. Investors should focus on companies that are growing rather than m-cap.

Harshad Chetanwala, Co-Founder of MyWealthGrowth.com

The announcements in the Budget have been in the right direction and it does have its heart in the right place as far as focus on growth and development is concerned. The emphasis on Health and Infrastructure is key for our economy from a growth perspective. Increase in infrastructure spend will drive growth, increase employment and boost consumption. This should benefit sectors like banks, consumer discretionary, etc. Also, the firm stand and plans on divestment and monetisation of certain PSUs look promising for our economy.

Deepthi Mathew, Economist at Geojit Financial Services

The Budget called for increased government spending to revive the economy. There was an infrastructure push, focussing on developing financial institution and asset monetisation to fund the infra projects. Privatisation of PSBs was another bold announcement. Positively, there wasn’t any increase in taxes, even when the fiscal deficit figures are projected at a higher range.

Nilesh Shah, Group President & MD, Kotak Mahindra Asset Management Company

Growth-oriented Budget will support the equity market. Asset monetisation, strategic divestment, auto scrappage policy are positive for the market. Fixed income market will look forward to RBIs monetary policy as the gross borrowing program was little on the higher side. The Budget has laid the foundation for growth beyond FY 22 through selective protection of domestic industry and encouragement via PLI scheme.

Jimeet Modi, Founder & CEO Samco Group rated 4.5 out of 5

Markets heaved a sigh of relief in absence of any major change in personal or corporate taxes and therefore reacted positively. Though the exuberance might be temporary, this Budget is truly a right fit in times of a pandemic.

The difficult times orchestrated by pandemic have been appropriately tackled by the divestment of two PSU banks and one insurance company along with a decent hike in market borrowings by the government to offset the slowdown in the economy. These initiatives would enable the government to jump-start the economy and place it back on the growth track.

Additionally, the government stuck to its path of elevated capex to accelerate growth and put money back in the hands of people through real asset creation in the economy rather than simply writing cheques to the citizens as done by the developed nations to support their slouching economy. The FM also tried to tame the runway in commodity prices by tweaking customs duties and exemptions.

All in all, the principal theme of Budget 2021 was definitely a capex and infrastructure which is positive for cement, heavy industries, insurance, PSUs and private sector banks, while autos and domestic electronics manufacturers prima facie appear to be at the back foot.

Raghvendra Nath, Managing Director at Ladderup Wealth Management

The Union Budget presented by the FM was a novel one highlighting the essential problems faced by the economy and addressing them on the right lines. The country required a much-needed boost in the infra space which was duly provided for in this budget.

The significant increase in allocation is a reflection of the same and the benefits of the same should trickle down the economy effectively. The easing of compliance norms should help both businesses and individuals function smoothly and reduce the compliance burden. The privatisation of two public sector banks and the stake sale of LIC should help the government meet the disinvestment target and reduce the fiscal constraints. The status quo on direct taxes should alleviate the tax burden on the HNIs. Overall, it should pave the way for India's growth going forward.