Viewpoint | Budget 2021

Budget 2020 | A Budget that will spur long-term growth

Pawan Goenka, Managing Director, Mahindra and Mahindra.  

The expectations of the Corporate India from this Budget were very high. The Budget meets the expectations in certain areas and falls short in certain other areas. The primary need of the hour is how to revive demand. By and large the supply side was taken care of by many steps which were taken post July 5 till before the Budget. I think the Budget could have taken a few more measures for immediate revival of demand. For example, the Fiscal deficit of 3.5%, though more than 3.3 of last year, may have gone a little higher to 3.8%. This could have put a little bit more money in the hands of the government to increase expenditure and therefore revived demand.

While the overall immediate impact on demand may not be stimulated by this Budget, but what it scores heavily on is mid to long term. The kind of things that have been talked about — the three themes, Aspirational India, Economic Development for all and Caring Society — these are themes that will augur well for our country.

I personally see these themes as longer-term stimuli and a blueprint for the future to make India a global manufacturing base. The structural changes in the way things are being done may not be enough to have an impact tomorrow, but will definitely give strong impetus to the economy and so you could look at the glass as half full or half empty depending on what you want to see.

For the first time during the Union Budget presentation, I heard things like — Artificial Intelligence, Machine Learning, Internet Of Things (IoT) and the engineer in me hopes that these are all well-intentioned and hopefully will be significantly supported as we move along.

I particularly liked the 16-point agenda the FM targeted under rural development. The FM spoke about doubling farmers’ income by 2022, which augurs well for the farmers. Some of the measures outlined — ranging from solar pumps for farmers to improving the agriculture– warehousing and cold storage to the water sufficiency measures for over 100 water-stressed districts — all augur well for the future.

A lot, of course, would be dependent on proficient execution by the government. This focus on the rural and farm sector, I feel, will help facilitate the smooth functioning in the sector with a rise in farm income. Addressing these issues like water conservation, improving yields etc., coupled with the ₹2.83 lakh crore budgetary allocation for agriculture, irrigation and allied activities and rural development all augur well for the future.

I do hope that the Budget does hold true on its promise for economic development for all ushering in a period of true growth and inclusion for all.

For tractors, demand will be good in February and March and April to July will be dull months. Slowly demand will pick up by September. In Auto, we will see challenging times till the festive season and we will be happy with high single digit growth.

As far as electric vehicles (EVs) are concerned, the government has done enough and now it is up to us to make EVs happen. Somehow we need to enable charging infrastructure. One thing that the government could have done is remove import duty on lithium ion cells.

Where the Budget perhaps should have done more is how to revive demand. As we have been saying all along, the biggest concern right now for the economy is how to get the demand cycle going. This is definitely is a Budget that will spur mid-long term growth.

Dr. Pawan Goenka, Managing Director, Mahindra & Mahindra Ltd., as told to Lalatendu Mishra

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Printable version | Feb 27, 2021 12:53:23 AM |

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