Budget 2021 Expectations: With Finance Minister Nirmala Sitharaman all set to table the Union Budget for 2021-22 fiscal on February 1, several industries have tugged their hopes high and it will indeed be a tough financial year for the country with the economical dent caused by the Coronavirus-induced lockdown last year. All eyes will be on FM Sitharaman who is expected to introduce some major reforms, remedies and grants for industries reeling under the after-effects of lockdown. ALSO READ | Budget 2021 Expectations: Banking Sector Holds High Hopes From FM Sitharam To Get Economy Back On The Run
The Union Budget also faces severe challenge of maintaining a balance of reviving growth in the economy amidst shrinking revenue streams and need to balance expenditure and come back on path of fiscal consolidation.
Here’s what industry veterans from Essar Ports Lts expect from Union Budget 2021:
Rajiv Agarwal, CEO & Managing Director of Essar Ports Ltd:
Our Honourable PM’s vision of making India – A Global Manufacturing Hub and becoming $5 Trillion economy, will be one of the key objectives of the upcoming budget.
Ports will play a pivotal role in achieving this objective and the budget should also focus on increasing the contribution of Ports sector to the country’s GDP. Ports is a significant driver of EXIM trade hence it becomes necessary to keep logistics cost low to encourage exports.
Indirect taxes on port services has increased to 18% GST as industries like Thermal Power Plants, Fertilizer and Refineries are needed to pay higher logistics and manufacturing cost (on account of no GST Credit) for their raw material movement like Coal, LNG and Crude Oil, POL etc. This is impacting the competitiveness of sea transport as an option as compared to rail and roads that are less environment friendly modes of transport. Hence, GST for sea transport should be reduced to 12% for more sustainable benefits.
Presently PPP Projects and Major Port Trusts compete for cargo at Ports, which leads to conflict of interest. It is important that Major Ports should act as enablers with PPP projects driving the growth
To further strengthen the current position of the industry players, it is critical for ports to be given enough autonomy and decision making power to stay ahead in terms of modernization and technological enhancements. Mechanized berths, sufficient stockyard and multimodal evacuation systems for fast turnaround of vessels are key enablers for productivity and efficiency of Ports & Terminals. To achieve this, investments will be required in dredging, developing adequate civil infrastructure and securing land along with latest technology equipment to create a mechanized and environment friendly cargo handling.
The budget should also focus on development of Port bases industries and manufacturing hub. Taking que from the success of Singapore, Dubai, Antwerp, Rotterdam and Houston for blue economy with all round development, we believe Hazira (Gujarat) and Paradip/ Mahanadi (Orissa) are two such locations which can be identified as frontrunner for Port based Industrial City prototypes in India. Innovative proposals for large scale development by private players must be awarded on high priority to boost the growth of sector.
In times of such uncertainties like the pandemic, “Aatmanirbhar Bharat” or a self-reliant India, is indeed a well thought out roadmap to encourage people to be ‘vocal for local’ for a future-ready India.
Sanjay Palve, Senior Managing Director, Essar Capital Ltd.
The Year 2020 has been one of the most difficult years in recent human history. While the world economy has been badly hit, countries like India are now looking at a path of recovery. Given this scenario all eyes will now be on the Union Budget 2021. This will be a very complex budget as while the focus will be on growth and recovery, the government also needs to assign substantial funds for relief measures to curb the effects of the virus.
Our Honourable FM has already said, India’s economy will return to growth in 2021/22 and higher spending in the budget will lay the foundations for even stronger growth. A boost in domestic consumption, spending and savings within the nation needs to be a priority. As on date Personal Income Tax coupled with indirect taxes leaves very little with public for saving and investments. Rationalization of Personal Income Tax rates is essential to ensure there is surplus funds available in the household for both saving & spending.
With the pandemic having disrupted almost all industries, there is no doubt that industry at large and the economy in general needs handholding. Nevertheless, three sectors that must have specific attention to revive the economy are agriculture, healthcare and infrastructure. While the case for agriculture and healthcare needs no rationale, the importance of infrastructure calls for some elaboration. First, agriculture and healthcare both require modern infrastructure to ensure better outcomes, respectively.
There is no doubt the Budget should have adequate financial outlays for infrastructure development due to its association with greater growth while generating more employment and entrepreneurial opportunities. Since infrastructure development also boosts other industries and facilitates the ease of doing business, it fosters inclusive growth and helps in poverty alleviation too. In the light of the above, to boost a quicker economic turnaround, the Union Budget 2021 should ensure greater outlays for infrastructure development.
Though, the government has unveiled its plan for INR 100 – 150 lakh crore investment in the Infrastructure Sector going forward under the National Infrastructure Pipeline. Funding of same should be addressed in the Budget through creation of Development Finance Institutions/ Infrastructure debt funds / Sovereign Wealth fund. This will enable low cost and long term borrowing requirement for the Infrastructure Projects as has been the case worldwide. More Banks like IIFCL and other DFCs should be created with the mandate to take lead and fund capital intensive long gestation infrastructure projects. This will bring much desired liquidity in the system and enable private sector participation.
The Union Budget 2021 will be very crucial as it will pave the way to enable India become a USD 5 Trillion economy.
