The overview of the budgetary allocations under the scheme, i.e. ANB 1.0, 2.0 and 3.0 respectively, depict a 27.1 lakh crores worth of financial incentive.
As the very eagerly awaited Union Budget for the years 2021-2022 was finally announced, a plethora of changes was put in motion to revive the Indian economy from a ‘once in a century crisis’. To start off with the revival of the economy, the statistics depicting the fall in mining, manufacturing and electricity production have been put forward for comparison.
The data for January 2020 depicts an approximately 2-4% growth rate in comparison to the data for April 2020, a week after the nationwide lockdown was put in motion, as being -55-58%, depicting a roughly -60% drop in economic services. The current situation, however, stands at level with what the projections were for the month of January 2020.
the Atma Nirbhar Abhiyaan Measures
The Atma Nirbhar Bharat Abhiyaan is further brought into focus as the stimulus provided towards its furtherance tallies up to 15% of the GDP by the measures advanced by the government and RBI. The overview of the budgetary allocations under the scheme, i.e. ANB 1.0, 2.0 and 3.0 respectively, depict a 27.1 lakh crores worth of financial incentive, i.e. the aforementioned 15% of the GDP.
This was followed by the announcement of the two vaccines under development in the country which are not only to be administered to the citizens of the country but are also to be exported to a 100 different countries, thereby leading to a more comprehensive pharmaceutical research avenue for the Ministry of Health and for the pharma giants involved. This summarizes the investment in the health and development sector by putting in motion a new centrally sponsored scheme, PM AtmaNirbhar Swasth Bharat Yojana, to be launched with an outlay of about ` 64,180 crores over 6 years.
ANB Abhiyaan, under its umbrella also included an allocation of 1.97 lakh crore rupees to be allocated over a period 5 years in separate tranches for 13 different manufacturing sectors.
Financial Capital Measures
The honourable Finance Minister further proposed to consolidate the provisions of SEBI Act, 1992, Depositories Act, 1996, Securities Contracts (Regulation) Act, 1956 and Government Securities Act, 2007 into a rationalized single Securities Markets Code. Consolidation of laws pertaining to the securities market aims to put a comprehensive Code for the enforcement of regulatory and procedural provisions regarding the same, into circulation, thereby reducing the number of out-dated, obsolete and circumventory provisions in force.
The move for consolidation of a commercial regulatory statute has previously been seen in the case of The Insolvency and Bankruptcy code, 2016, encompassing corporate, partnership and personal insolvency and bankruptcy provisions with some in enforcement and the other yet to be notified.
The Budget even encompasses measures to resolve the stressed asset management perils that the seriously under-performing Public Sector Banks have been ailing with. An Asset 16 Reconstruction Company Limited and Asset Management Company, has been proposed, to be set up to consolidate and take over the existing stressed debt and then manage and dispose of the assets to Alternate Investment Funds and other potential investors for eventual value realization. The Budget also envisages recapitalisation of the Public Sector Banks to the tune of rupees 20,000 crores.
Measures for Corporate and related persons
The Finance minister proposed to decriminalise the Limited Liability Partnership (LLP) Act, 2008 after successfully decriminalising several provisions pertaining to procedural and technical compoundable offences under the Companies Act, 2013. Further, a, smattering of under-development measures were also proposed, i.e. redefining the thresholds of paid up capital for small companies, alternate recovery and debt resolution frameworks for MSMEs and strengthening of NCLT mechanisms.
Taxation
The Budget’s more lucrative and highly critical provision was to exempt senior citizens above the age of 75, relying merely on pension and interest income, from paying taxes. An unprecedented tax exemption such as this is to be measured very closely as the projections for potential loss in revenue generated from the concerned demographic could only be accurately measured when the National Census registers the number of people falling under the respective category.
Construction and Infrastructure
With the highly awaited REITs and InVITs for the advancement of the Real Estate sector already being put in motion, the budget enlists the central governments vision to make suitable and dynamic amendments to the relevant legislation in order to attract a hefty foreign investment, ergo, leading to the resurrection of the long-dormant real-estate sector. In furtherance of the same, a Development Financial Institution would also be set up by allocating rupees 20, 000 crores for its institution to establish a rupees 5 lakh crore lending portfolio.
Analysis and conclusion
With the pandemic wreaking havoc to nearly the whole of the economy, there were many highly speculated and awaited inclusions in the budget that the indian masses were expecting there to be.
For the revival of the ailing PSBs, the divestment and privatisation of PSUs, the highly unprecedented and highly criticism-worthy tax-slabs and exemptions, the lending packages for the real estate sector, the fall and revival of the manufacturing sector and dozens of other sectors, the Budget was a sigh of relief.
Moreover, as the allocation of the funds for the respective sector starts rolling in, the proposed USD 5 trillion economical targets that the Indian government envisages, would be once again on track.
Having said this, the fact that India is the second worst-hit nation in terms of Coronavirus cases, globally and still only manages to spend about 1% of its GDP on Healthcare raises eyebrows and would take at least two to three fiscal quarters to recalibrate.
Furthermore, the concerns over liquidity stress and asset restructuring/mobilisation threaten to loom large over the heads of the concerned ministries as the RBI could not possibly disburse and inject insurmountable tranches of funds all at once, to prevent the inflationary projections to go haywire.
Thus it would seem that the Budget is tackling the economic contractions in one of the most significant, if not the primarily all-inclusive, ways for the recovery of the nation facing its worst economic slump.
By Sonam Chandwani, Managing Partner, KS Legal and Associates
DISCLAIMER: The views expressed are solely of the author and RealtyNXT.com does not necessarily subscribe to it. RealtyNXT.com shall not be responsible for any damage caused to any person/organisation directly or indirectly.
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