Union Budget 2021-2022

The Goodies

* The Budget maintains a good balance between Infrastructure boost, Healthcare & Inclusive Development

* The Budget has been very practical in assuming growth in Tax Revenues

* Privatisation of 2 PSU banks is a welcome step in the right direction

* Union Budget - 2021 would go down as a Growth Oriented Budget which seized the opportunity to position India well ahead of peers.

* 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.

* Increase in FDI limit for Insurance Companies

FY21 Fiscal Deficit at 9.5% of GDP:

* FY21 gross expenditure seen at ₹34.5tn with capital expenditure seen at ₹4.39bn. FY21 fiscal deficit pegged at 9.5% of GDP with FY22E fiscal deficit target at 6.8% of GDP.

* FY22 gross expenditure seen at ₹34.83tn with capital expenditure seen at ₹5.54tn.

* To meet the deficit, the market borrowing in FY22 seen at ₹12tn.

* On the way to fiscal consolidation path by FY26, the GOI estimates the Fiscal Deficit will reach below 4.5% by FY26.

* The government will borrow ₹800bn in the remaining two months to meet FY21 expenditure.

Divestment target for FY22 at ₹1.75tn.

* In FY21, the GOI had budgeted to raise ₹2.1tn through divestments but fell short. Some of the big ticket divestments planned last year, including the stake sale in LIC, may conclude this year.

* The GOI has approved a new public sector enterprises policy, which is intended to drive privatisation. Fiscal support in FY22 depends on revenue generation from the success of these programmes.

* The GOI proposes to sell the balance stake in IDBI Bank. The GOI holds 47.11% in IDBI while LIC holds 51% .

* The Finance Minister proposed the privatization of Two public sector banks and One General Insurance Company.

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