First Take | Budget 2021

Playing on the front foot

Amidst all the speculation around tax regime changes and disproportionate focus on rural India, the Finance Minister (FM) has managed to pull something out of the hat. The Budget has a strong focus not only on rural India but also on the development of various target groups — youth, women, elderly and the economically backward. At the same time, the Budget manages to incorporate a visible theme with infrastructure and digital being given adequate consideration.

India has several areas for improvement. Our agriculture sector productivity is low, the youth of the country need jobs, infrastructure and connectivity have miles to go before we can call them ‘world-class’ and a life of dignity for the poor and the elderly. Budget 2018 has continued to address all of these. The commitment to infrastructure and push for Make-in-India remains intact and hopefully will create more jobs in the immediate term. A slew of announcements for the rural and agriculture sector are meant to double farm income by 2022. I see this as a genuine attempt to improve the quality of lives for every rural inhabitant, than a mere populist measure. It is heartening to see the special attention being paid to healthcare, by launching what the FM stated as the world’s largest healthcare programme that will cover 50 crore people.

There is a sense of practicality about the budget. Ambitious infrastructure developmental projects such as the Bharat Mala and the fibre optic network have been backed by innovative financing models.

This is critical as such initiatives can only take flight once financial closure is in place. The farm and rural segment provides the livelihood derived by a large part of our population.

The steps taken on increasing support prices, distribution efficiencies and renewed focus on certain crops are a major overhaul to resolve the systemic deficiencies that plague the sector. Setting up of mega food parks, increasing institutional credit to ₹11 lakh crore and focus on food processing businesses will help strengthen the entire chain.

Increasing custom duties will provide some relief to the indigenous manufacturing sector.

There was lot of ambiguity and apprehension in the market on how, if at all, the long term capital gains tax will be brought in without puncturing the strong market sentiment that we have been witnessing over the last couple of years. The grandfathering provision construct has ensured that the tax is fair and there would be least volatility due to its introduction. Considering the returns that the Indian market has generated for domestic and foreign investors, I feel confident that in the long-run, investors will accept the additional tax cost.

India is at an inflection point in terms of its rise in the global pecking order. The future is bright and we have a track record of prudent policy making.

This Budget continues that legacy and addresses all the key elements that will aid India’s ascension. We are fresh from a win in South Africa. Kohli used India’s bowling muscle to stage that victory. Mr. Jaitley has flexed India’s financial muscle to deliver a winning Budget!

Playing on the front foot

(Harsh Goenka, Chairman, RPG Enterprises)

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Printable version | Aug 1, 2021 1:56:28 PM |

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