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Budget Day is an eagerly anticipated event in India, with both businesses and the general public waiting to understand the schemes and initiatives that could benefit them. This year, due to the elections, Budget 2024 has been announced later than usual i.e. February 1. The FM announced the Final Budget on 23rd July 2024. Here is a summary for the Latest GD Topics 2024 - UNION BUDGET 2024-2025.
The focus of the budget remains on four major groups: 'Garib' (Poor), 'Mahilayen' (Women), 'Yuva' (Youth), and 'Annadata' (Farmers) .
Priority 1: Productivity and Resilience in Agriculture:
Measures include releasing new 109 high-yielding crop varieties, promoting natural farming among 1 crore farmers, establishing 10,000 need-based bio-input bio-input centres, and enhancing production, storage, and marketing of pulses and oilseeds (achieve‘atmanirbharta’ for oil seeds).
Priority 2: Employment & Skilling:
The budget introduces schemes like Employment Linked Incentive and initiatives to boost skilling with a focus on skilling 20 lakh youth over a 5-year period and upgrading 1,000 Industrial Training Institutes.
Priority 3: Inclusive Human Resource Development and Social Justice:
Enhanced support for economic activities among marginalised groups, including tribal communities and women entrepreneurs, is emphasized.
The government's Purvodaya initiative aims to comprehensively develop the eastern region of India- including Bihar, Jharkhand, West Bengal, Odisha, and Andhra Pradesh, focusing on human resource development, infrastructure enhancement, and economic growth to advance towards a developed nation.
Priority 4: Manufacturing & Services:
The budget emphasises support for MSMEs, focusing on labour-intensive manufacturing, with a new self-financing guarantee fund offering up to Rs 100 crore per applicant.
Public sector banks will enhance their internal assessment capabilities for MSME credit. Additionally, Mudra loan limits will increase to Rs 20 lakh for previous 'Tarun' category borrowers.
Priority 5: Urban Development:
PM Awas Yojana Urban 2.0, has been allocated Rs 10 lakh crore to address housing needs of 1 crore urban poor and middle-class families, with Rs 2.2 lakh crore in central assistance over 5 years.
The government will also collaborate with State Governments and Multilateral Development Banks to promote water supply, sewage treatment, and solid waste management in 100 large cities through bankable projects.
Priority 7: Infrastructure:
Government will try to maintain strong fiscal support for infrastructure over the next 5 years on this line Rs 11,11,111 crore for capital expenditure has been allocated this year, which is 3.4% of our GDP.
Priority 8: Innovation, Research & Development:
The government will establish the Anusandhan National Research Fund to support basic research and prototype development, allocating Rs 1 lakh crore to spur private sector-driven research and innovation at a commercial scale.
Minister of Finance and Corporate Affairs Smt Nirmala Sitharaman, while presenting the Union Budget 2024-25 in Parliament said that India’s inflation continues to be low, stable and moving towards the 4 per cent target. Core inflation (non-food, non-fuel) currently is 3.1 per cent and steps are being taken to ensure supplies of perishable goods reach market adequately
Union Interim Budget 2024 – Prudence & Propriety or Lost Opportunity? – MBAUniverse.com Analysis
Indian Finance Minister Nirmala Sitharaman introduced the Interim Budget 2024 in Parliament on February 1, placing significant emphasis on India's macroeconomic growth and fiscal consolidation. As 2024 marks an election year, with Lok Sabha Elections anticipated in April-May, the finance minister chose to present an Interim Budget or a “Vote on Account” in February, rather than a complete Annual Budget. The anticipation is for the unveiling of the new full Budget in July 2024, post the establishment of the new government. However, some experts believe that since there are several months to go before the new government is formed, Interim Budget 2024 could have done a lot more to push the economy and business.
Given the paramount importance of the Government Budget for the Economy and Business, the analysis of Budget 2024 emerges as a crucial GD Topic for MBA Admission and other entrance exams. For a thorough exploration of Budget 2024 GD Topic, refer to this analysis on MBAUniverse.com.
GD Topic for MBA Admission – Union Interim Budget 2024
Conclusion
As India strides into a crucial election year, the Interim Budget 2024 sets the stage for economic resilience and progress. The fiscal projections, taxation strategies, and targeted initiatives for housing, healthcare, and renewable energy signify the government's commitment to a stable and flourishing economy. The upcoming months hold the promise of further financial insights and policies as the nation navigates through the democratic process and charts its course towards sustained growth.
However, some experts believe that since there are several months to go before the new government is formed, Interim Budget 2024 could have done a lot more to push the economy and business.
Union Budget 2023: Key Highlights & Priorities
Given the importance of Union Budget in context of Indian economy, this is a hot topic for GD and Essay for 2023. There are a host of measures for a number of sectors given priority in Union Budget 2023 and are aimed at boosting growth amid rising inflation. Giving relief to middle class, the Finance Minister Nirmala Sitharaman has brought cheer to the middle class by introducing widespread changes to the income tax structure, by changing the slabs, raising the rebate level and providing incentives to those falling under higher brackets. However, there is a catch! The Budget incentives can only be enjoyed by those who opt for the new tax regime, which was introduced in Union Budget 2020. MBAUniverse.com has reviewed and publishes below the highlights of Union Budget 2023.
The Finance Minister of India, Nirmala Sitharaman presented Union Budget 2023 in lower house of Parliament, ‘Lok Sabha’ on February 1, 2023. This was the Finance Minister's fifth Budget presentation since 2019. The Budget 2023 has more significance as this is the last full Budget before the 2024 general elections. The Union Cabinet headed by Prime Minister Narendra Modi on Wednesday January 31, 2023, approved the Budget for the fiscal year 2023-24 (April 2023 to March 2024). The Finance Minister has set following priorities in her Budget speech 2023
Union Budget 2023: Focus on 7 Key ‘Saptarishi’ Areas
Beginning her Budget speech in Parliament, FM Sitharaman outlined 7 ‘Saptarishi’ priority sectors and said that this Budget will focus on the following areas:
Let us know brief details about each of the 7 priorities ‘Saptarishi’ as outlined in Budget 2023. It will help you in your GD preparation also:
1. Inclusive development
The government's Sabka Saath Sabka Vikas policy has benefitted many sections, including women, SCs, STs, OBCs, and other underprivileged groups.
2. Reaching the last mile
Building on the huge success of Aspirational District program, the Aspirational Blocks program have recently been launched, covering 500 blocks for saturation of government services.
3. Infrastructure and investment
The Capex outlay is increased steeply by 33% to Rs 10 lakh crore, which would be 3.3% of the GDP.
4. Unleashing the potential
A National Data Governance Policy will be brought up enabling access to anonimised data to unleash innovation and research by startups and academia.
5. Financial sector
The revamp schemes will take effect from 2023 through an infusion of Rs 9,000 crore in the corpus.
6. Green growth
This budget provides for Rs 35,000 crore capital investment towards energy transition and net zero objective and energy security by the Ministry of petroleum and natural gas.
7. Youth power
There will be a launch of the PM Kaushal Vikas Yojana 4.0 to skill lakhs of youth. The scheme will cover new age courses.
But before getting into the key provisions and changes announced in the Budget 2023 to achieve the various economic targets, let us know - What is the Union Budget; Who presents it; When and Why it is presented...
What is Union Budget of India?
Popularly known as the “Budget”, the Union Budget of India, also referred to as the Annual Financial Statement in the Article 112 of the Constitution of India, is the annual budget of India. Budget is presented on the first day of February by Finance Minister of Government of India in Parliament. Budget provisions are implemented from the beginning of new financial year, starting in April. Until 2016 it was presented on the last working day of February.
Budget: An Account of Govt’s Income & Expenditure
Union Budget keeps the account of the government's finances for the fiscal year that runs from 1st April to 31st March.
Union Budget: Classification
Union Budget is classified into two major parts: a) Revenue Budget and b) Capital Budget. Let’s understand the difference.
Revenue Budget
Revenue budget includes the government's revenue receipts and expenditure. There are two kinds of revenue receipts - Tax and Non-Tax revenue. Revenue expenditure is the expenditure incurred on day to day functioning of the government and on various services offered to citizens. If revenue expenditure exceeds revenue receipts, the government incurs a revenue deficit.
Capital Budget
Capital Budget includes capital receipts and payments of the government. Loans from public, foreign governments and RBI form a major part of the government's capital receipts. Capital expenditure is the expenditure on development of machinery, equipment, building, health facilities, education etc. Fiscal deficit is incurred when the government's total expenditure exceeds its total revenue.
Union Budget of India 2023: Presentation
Union Budget 2023 was presented by Union Minister of Finance Smt. Nirmala Sitharaman on February 1, 2023 in Parliament after holding the Pre-Budget Consultation Meeting with the leading Economists and Representatives of Industry and Various sectors to help prepare the General Budget 2023-24.
Union Budget of India 2023: Important Announcements
The focus of Union Budget 2023 is on initiatives needed to achieve $5 trillion economy, job-oriented growth with focus on Inclusive development, reaching the last mile, infrastructure & investment, green growth, youth power, and the financial sector. This entails growth in manufacturing and services, transparency of fiscal arithmetic, monetary transmission, Government’s fiscal prudence and fiscal stimulus and targeting the inflation check among others. Before making Budget announcements, the FM highlighted India’s achievements in her Budget speech 2023, and said:
The 10 Important Announcements by the Finance Minister Nirmala Sitharaman in her long budget speech which lasted 1 hour 25 minutes, in nine years of the Narendra Modi government included key reforms that sought to address both economic and social aspects of the country. She started her address in the Parliament and made following important announcements
Budget 2023: Estimated Receipts, Expenditure & Fiscal Deficit
Total receipts or receipts other than borrowing is Rs 24.3 lakh crore of which net tax receipts are Rs 20.9 lakh crore
Estimated Total Expenditure is Rs 41.9 lakh crore, of which the capital expenditure is about Rs 7.3 lakh
Estimated Fiscal Deficit for FY 2023-24 is 5.9% of GDP
Union Budget 2023: Changes in Tax Regime
The Finance Minister has announced raising of the Income Tax exemption limit from 5 to 7 lakh rupees in the new tax regime and also proposed that the new tax regime would be made the default tax regime.
Source: Indian Express
Budget 2023: Focus on Agriculture – Key Takes
The Union Government’s focus on reforming the agriculture sector continues, after its legal reforms were repealed. Key Take away on Agriculture in Union Budget 2023 are:
Budget 2023: 33% Enhancement in Capital Outlay
Budget 2023: National Digital Library
National digital library for children and adolescents will be set up for facilitating quality books
The National Book Trust, Children's Book Trust will replenish non-curricular titles in regional languages and English to digital libraries
Budget 2023: Food Security Scheme
Government is implementing scheme to supply free grains to poor under PMGKAY with expenditure of ₹ 2 lakh crore from Jan 1. The Finance Minister said, "Continuing our commitment to food security, we are implementing from January 1. a scheme to supply free food grain to all Antyodaya and priority households for one year under PM Garib Kalyan Ann Yojana."
Atmanirbhar Clean Plant Programme
The government will launch the Atmanirbhar Clean Plant Programme to improve availability of disease-free quality planting material for high-value horticultural crops at an outlay of Rs. 2,200 crore.
Empowering Women
The government aims to empower women by way of self-help groups focused on raw material supply, branding and marketing of products.
Highest Ever Railway Outlay
The budget 2023 provides for the highest ever Railway outlay at Rs 2.4 lakh crore, boosting affordable regional connectivity and logistics of cargo freights.
Budget announcements on Digital Initiatives
These initiatives focus on artificial intelligence in the education sector
Three centres of excellence for artificial intelligence will be established in top educational institutions
100 laboratories in engineering institutions will be developing applications using 5G services
A national digital library will be set up for children and adolescents for facilitating the availability of quality books across geographies, languages and genres
Centre to recruit 38,800 teachers and support staff for 749 Eklavya Model Residential Schools that will service 3.5 lakh tribal students
Union Budget 2023: What becomes Cheaper and what becomes Expensive?
A large number of commonly used items will become more expensive and certain goods will become cheaper as the government has slashed the customs duty according to the Union Budget 2023-24. Here’s is a list of items that will become cheaper and costlier.
List of Items that Become Cheaper in Budget 2023
List of Items that Become More Expensive in Budget 2023
Budget 2023 at a Glance
Major announcements made by the Finance Minister in Budget 2023 include:
Since taking charge in 2014, Prime Minister Narendra Modi has ramped up capital spending including on roads and energy, while attracting investors through lower tax rates and labour reforms, and offering subsidies to poor households to clinch their political support.
Nirmala Sitharaman on Tuesday tabled the Economic Survey for this financial year. It said that India's economic recovery from the Covid pandemic is complete and the economy is expected to grow in the range of 6 per cent to 6.8 per cent in the coming financial year 2023-24. This is in comparison to 7 per cent this fiscal and 8.7 per cent in 2021-22.
Budget 2023: Reactions
Top Industrialists, Bankers, Chief Ministers, Economists have largely welcomed the budget while a few also criticized it
Odisha CM Naveen Patnaik: "The budget has some good aspects which need to be appreciated including increased capital investment, support for drinking water initiatives and increasing rural housing. These will accelerate growth as well as have a social impact in rural areas ... I welcome PM's trust in millets. Odisha millet mission is a pioneering initiative. I'm happy that millet was given importance in budget. Focus on new-world technologies like artificial intelligence is appreciable. The focus on primitive tribal groups is a welcome step"
Y Viswanatha Gowd, MD & CEO of LIC Housing Finance: “The Budget has a clear progressive intent via the 7 Priorities of Budget 2023 as India enters into ‘Amrit Kaal’. The priorities reinforce the support to government’s 'Aatmanirbharta' mission, by focusing on Inclusive development, Youth Power, Infrastructure and investment, Financial Sector, and women empowerment. The raise in CAPEX by 33% is promising news as it accelerates the infrastructural development which will spur further growth in the Real Estate sector. Allocation of Rs 79,000 cr towards Pradhan Mantri Awas Yojana (PMAY) serves well for the ‘Housing for All’ mission. The modification under the new tax regime puts more money in the hands of the common man which will certainly boost consumption. Overall, Budget exudes great optimism to set the stage for very good economic growth.”
GP Hinduja, co-chairman of Hinduja Group: When India is the lone shining star in the world facing threats of recession, FM Nirmala Sitaraman has delivered a perfectly focused growth-oriented budget with massive capital investment outlays at 4.5% of GDP while staying on track with the fiscal deficit reduction plan. What is remarkable is the holistic, sustainable and inclusive approach taken covering every element of infrastructure and capability building and making the best use of the world-class digital public infrastructure. The budget clearly reflects PM Modi’s long-term vision for India and it aims to engage with and carry every section of society towards the goal of a self-reliant and strong India”
Devesh Srivastava, CMD, General Insurance Corporation of India: “The FM has taken commendable steps to strengthen our agriculture sector. The new ‘Agriculture Accelerator Fund’ will not only motivate our young entrepreneurs in rural areas towards Agri start-ups but also, benefit the farmer by providing innovative and affordable solutions for the challenges faced by them. Raise in CAPEX by 33% to Rs 10 lakh crore will shore up demand and consumption in the economy. This massive capital expenditure planned will give a boost to the reinsurance sector."
Krishna Bodanapu, MD & CEO, Cyient: “It is a good budget that balances the three pillars of the Indian economy – agriculture, manufacturing, and services. It is very promising to see long-term investments with a significant increase in capital expenditure and the focus on accelerating technology with initiatives in 5G labs, agricultural tech, and AI.
Nandita Tripathi, Partner, M&A and PE Tax and ENR Tax Lead, KPMG in India: “India has been leading the race in energy transition and the announcements in the budget are clearly reflective of country’s roadmap to achieve net zero target. The commitment of INR 35,000 crore for priority capital investments towards energy transition and energy security will help in improving viability of the projects. Electric mobility has got a renewed push in the budget as customs duty exemption has been proposed for import of capital goods required for manufacture of lithium-ion cells for EV batteries.
Lt. Gen. Dr. S.P. Kochhar, Director General, COAI: “The Union Budget 2023-24 has introduced some provisions which are expected to indirectly have a positive impact on the telecom sector. The budget lays emphasis on innovation, job creation and skilling, with continued push towards Digital India. The capital investment outlay has been increased by 33% to INR 10 lakh crore and we hope the same would include development of infrastructure for proliferation of telecom and digital services.
Daniel Mazon, Vice Chairman and Managing Director, Philips Indian Subcontinent: “We welcome the announcements made by the Finance Minister in 2023-24 Budget as there is a higher emphasis on expanding health infrastructure and development of technology-based solutions in India. The decision to set up three Centres of Excellences of Artificial Intelligence (AI) will foster innovation to develop cutting edge applications and scalable solutions in healthcare. We are also encouraged by the Government’s focus on increasing the number of skilled healthcare professionals in the country through new educational institutions as it will increase accessibility to quality healthcare. Philips, as a health-tech company, is committed to work with the Government to further strengthen our country’s digital healthcare infrastructure and improve the lives of fellow Indians."
Suresh Agarwal, MD & CEO, Kotak Mahindra General Insurance Company: "Taking it a notch above the expectations of the middle class, the budget has special thrust on women and youth which makes it truly citizen-centric. To remain the fastest growing major economy in the world, it demonstrates the government’s intent to improve a taxpayer’s purchasing power through income tax rebates, enhanced grievance redressal mechanism for direct tax payers and capital deductions from capital gains on investments, while being overall fiscally prudent to address inflation. Further, rolling out a host of initiatives to support domestic industries, the budget sets positive sentiments in placing India in a resilient position amidst a global slowdown."
Lakshmi Venkataraman Venkatesan, Founding and managing trustee of BYST: “94% MSME are microunits with 2-3 employees. Budgets don’t often address the issues faced by micro and small enterprises. Only 20% are regd even under Udyami. Rest 80% can’t benefit from many of the schemes and programs. Budget should integrate unregistered units into to formal sector.
Naveen Munjal, Managing Director, Hero Electric: We welcome the Union Budget 2023 presented by the Hon’ble Finance Minister, with sustainability and green growth across sectors at its core. It encourages the implementation of programmes across sectors to reduce carbon intensity and create green jobs through unique initiatives like ‘Green Credit’, PM Pranam Yojna, Green Hydrogen Mission, etc. Fronting the ‘Net Zero Emission’ mission, it focuses on the promotion of battery energy storage systems to aid in fueling the electric mobility revolution. The Budget 2023 reflects the government's inclination to support the EV transition, enabling the creation of a carbon-free nation that thrives on sustainable, futuristic, and alternative fuel technology. We are confident that initiatives under green growth and sustainability will build awareness and help everyone contribute towards a clean and green future.
Budget 2023 – Criticisms
Bhupesh Baghel, CM Chhattisgarh: "This can be called Nirmala Sitharaman’s ‘nirmam’ budget. There is nothing in this budget for youth, farmers, women, tribals or scheduled castes. It was made purely focusing on the upcoming elections. There is nothing for Chhattisgarh in the budget"
Mamata Banerjee, Bengal CM: Terming the Union Budget "anti-people", West Bengal chief minister Mamata Banerjee on Wednesday said it will deprive the poor. She claimed that the changes in the income tax slabs will not help anyone. "This budget is not futuristic, it is totally opportunistic, anti-people and anti-poor. It will benefit only one class of people. This Budget will not help address the country's unemployment issue. It has been prepared with an eye on the 2024 Lok Sabha elections," she said. "This Budget is full of lies, falsehoods and fake claims. Give me half an hour and I will show you how to prepare a Budget for the poor"
Union Budget 2022
Finance Minister Nirmala Sitharaman presented the Union Budget 2022-23 in Parliament on February 1. There were a host of measures for a number of sectors, aimed at boosting growth amid high & rising inflation. There, however, were few changes to the personal income tax structure and Union Budget 2022 India saw no major populist giveaways. Given the importance of Union Budget and its impact on Indian Economy and Industry, Union Budget 2022 is an important GD Topic.
Union Budget 2022: Top Highlights
Here are the key Budget 2022 highlights as announced by the Finance Minister Nirmala Sitharaman
Before we progress, let’s understand the key terms and a bit about the history of Union Budget India.
What is Union Budget?
The Union Budget is the blueprint of the Government’s revenue and expenditure for a fiscal year, starting from 1st April of one year to 31st March of the following year. It is presented during the month of February so that it can be materialized before the start of a new financial year. According to Article 112 of the Indian Constitution, it is an extensive financial statement that presents the Government’s estimation of revenue sources and estimated expenses for the year. It is classified into two parts – revenue budget and capital budget. Revenue budget contains the government's revenue receipts and expenditure, while the Capital Budget comprises of the government's capital receipts and payments.
The first Union Budget of India, a concept introduced when the country was still under the British colonial rule, was presented on 7th April, 1860, by the then Finance Minister of India, James Wilson. The first Union Budget India of Independent Nation was presented on November 26, 1947, by Sir R.K. Shanmugham Chetty, the first Finance Minister of Independent India.
Now, let’s check key highlights of Union Budget 2022 on various sectors of India
Overall Economy
Top focus of the budget this year are PM Gati Shakti, Inclusive Development, Productivity Enhancement, Sunrise Opportunities, Energy Transition, Climate Action, Financing of investments
Capital Expenditure target expanded by 35.4 per cent — from Rs 5.54 lakh crore to Rs 7.50 lakh crore. FY23 effective capex seen at Rs 10.7 lakh crore.
Budget noted that Productivity-linked incentive schemes in 14 sectors have received excellent response; has received investment intentions worth Rs 30 lakh crore
Overall, economic recovery is benefitting from public investment and capital spending. This Budget will provide further impetus to growth.
Expenditure and deficit & other key numbers
Taxes
Duties on Industry
Jobs
Infrastructure & manufacturing sector
Digital Currency
Housing, Urban Planning, Real Estate Sector
Start-ups & MSMEs Sector
Agriculture Sector
Electric Vehicles (EV) Sector
Education & skilling
Banking & Finance Sector
Healthcare Sector
Ease of Business &Living
Defence Sector
Climate & Net Zero
Union Budget 2021: Key Highlights, Analysis, Pros & Cons – GD Topic
Union Budget of a year, also referred to as the annual financial statement, is a statement of the estimated receipts and expenditure of the government for that particular year. Union Budget is the account of the government's finances for the fiscal year that runs from 1st April to 31st March. Union Minister of Finance and Corporate Affairs Smt. Nirmala Sitharaman presented 2021 Budget on 1.2.2021. Given the impact of Budget on Society, Business and Economy, this becomes a very important GD, WAT, Extempore, Interview topic for MBA Admissions and other competitive exams. MBAUniverse.com presents a detailed analysis of Budget 2021.
What is 'Union Budget'
According to Article 112 of the Indian Constitution, the Union Budget of a year, also referred to as the annual financial statement, is a statement of the estimated receipts and expenditure of the government for that particular year. Union Budget is the account of the government's finances for the fiscal year that runs from 1st April to 31st March. Union Budget is classified into Revenue Budget and Capital Budget.
What is Revenue Budget and Capital Budget?
Let’s understand this basic and important difference. Revenue budget includes the government's revenue receipts and expenditure. There are two kinds of revenue receipts - tax and non-tax revenue. Revenue expenditure is the expenditure incurred on day to day functioning of the government and on various services offered to citizens. If revenue expenditure exceeds revenue receipts, the government incurs a revenue deficit. Capital Budget includes capital receipts and payments of the government. Loans from public, foreign governments and RBI form a major part of the government's capital receipts. Capital expenditure is the expenditure on development of machinery, equipment, building, health facilities, education etc. Fiscal deficit is incurred when the government's total expenditure exceeds its total revenue.
Sectoral Impact
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Sectors
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Budget proposals |
Impact on sectors |
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Auto |
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Neutral: Some positive for Electric Vehicle segments and broadly neutral for all other segment players
Investment allocation increase in infrastructure will have positive indirect impact on Commercial Vehicle segment.
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Banks / NBFCs / HFCs |
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Positive: Positive for banks & NBFC’s - as MSME sector (including Hospitality sector) was more impacted due to pandemic. The extension as well as higher allocation would ensure that the sector comes out of pandemic strongly Positive: Would not only support higher credit growth for the sector, but would also ensure stable asset quality for Banks & NBFC Positive: For Banks & HFC’s Positive: For Banks & HFC’s, as this would facilitates easy access to finance Positive: For the sector, as digital adoption will increase Positive: Digital adoption would not only provide boost to digital economy, but would also lead to more efficient and cheaper currency management Positive: Resolution of NPA would expedite |
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Capital goods |
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Positive: Removal of concessional custom duty and restoration of higher duty (7.5%) is positive for domestic manufacturers of these capital goods as imports become costlier. |
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Cement and building materials |
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Positive: This can aid demand from housing and infrastructure sector |
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Coal |
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Positive: Biomass blending will impact demand of coal by the power sector. However, impact is likely to be limited to 5-7% of overall coal demand. Success in coal gasification and coal-tochemical will aid domestic coal demand. |
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Consumer |
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Positive: it will benefit Cigarette companies as this will help in cigarette volume recovery. Positive: It will benefit Jewellery companies as this will lead to lower retail prices and boost volume. Negative: Negative for Spirits companies as this will be inflationary for ENA (extra neutral alcohol) prices in medium to long term. Negative: Negative for FMCG companies as FY23 outlay is lower for MGNREGA and flat for PM Kisan compared to the revised FY22 budget outlay. Government schemes like MGNREGA, PM Kisan help boost rural demand. Negative: Negative for companies selling Pan masala (containing tobacco) as effective duty/ taxes increase. |
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Defense |
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Positive: Higher capital outlay, lower imports should lead to higher order book for Defence companies. |
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Fertilizers |
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Neutral: Budget allocation has decreased despite the prevailing high global fertilizer prices, likely on expectation of some moderation in global prices from peaks of FY22. If fertilizer prices remain elevated it is likely that the government will increase budget allocation as it did in FY22. |
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Healthcare |
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Neutral. Ayushman Bharat is making treatment available to the “bottom of the Pyramid”. However, no major increase should not have any material impact. Neutral. No increase in budget will have a neutral impact for the healthcare sector, including pharmaceuticals. Positive. NDHRM would boost tele-medicine and expand quality healthcare services into tier-II/III towns without commensurate need to build physical infrastructure. |
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Infrastructure |
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Positive: Higher capital spends will aid order inflows, revenue growth for Industrial and EPC companies. Positive: Good traction in road sector awarding to continue. Positive: Higher capex will aid demand for Industrial, EPC companies. Steel companies will benefit from higher demand for rails led by new lines, track renewals, new coaches. Positive: These River-linking projects can entail large capital outlay over next few years and aid revenues of EPC, Industrial companies. It will also aid demand for steel and cement companies. Positive: Higher capital lay will aid order inflows for EPC, Pipe, Steel companies, etc. Positive: Green Bonds will aid capex in clean energy infrastructure. This will aid order flows for EPC, Industrial companies. Positive: Higher capital lay will aid order inflows for EPC, Steel, Wire rope companies, etc. |
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IT Services |
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No immediate impact but Medium-term Positives: Higher borrowing target and fiscal deficit could mean a weaker INR over time. Rupee depreciation improves profitability in the near term and competitiveness in the medium term for the sector. Focus on digitisation (such as National Digital Health Ecosystem, digitisation of land records, 100% availability of post offices on core banking platform etc) would provide tailwinds to IT Services spending. But, won’t have a meaningful impact on sector growth, as exports contribute to ~80% of revenues |
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Logistics |
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Positive: To facilitate multi-modal logistics in the country and help bring down the logistics costs |
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Sectors |
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Impact on sectors |
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Metals |
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Neutral: Extension of exemption of Basic custom duty on steel scrap will continue to aid lower production costs for long steel companies for another year. Neutral: Steel prices at present and for past few years are much higher than rates set for antidumping duty. While anti-dumping duty could have aided domestic prices in case of sharp fall in steel prices on imports from these regions in future, near-to-medium term impact is neutral given much higher steel prices at present. |
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Oil & gas |
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Negative: Budgetary provision could prove to be inadequate if prices are not increased in the scenario of oil prices remaining at $80/b Neutral: This is to encourage blending of ethanol/bio diesel into Petrol and Diesel. Netural: Overall exposure to these is limited in the refining mix for most refiners Mixed: Negative for FO producing refiners but positive for FO/VGO importing refiners Negative: Refining capex for any new expansion will likely increase from 2023 onwards Negative: Cost of conversion kits will increase marginally Negative: Refining capex for any new expansion will likely increase from 2023 onwards HPCL is likely to have installed these units before 2023 so should remain insulated from the same for its current ongoing capex program Negative: Cost of conversion kits will increase by 7-8% but this is unlikely to impact conversion in any meaningful way |
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Pharmaceuticals |
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Negative. Govt.’s curtailed procurement program will create oversupply situation for vaccine manufacturers. Neutral. Already known, nothing incremental here. Neutral. Jan Aushadhi is a small part of the market and do not pose a significant threat to the private players |
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Power |
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Positive: The budget proposals are in positive direction. Support to Make-in-India through PLI schemes and import duties will encourage manufacturing. |
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Real Estate |
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Neutral: Affordable housing and Housing for all remains focused area for government. Data Centers getting infrastructure sector to drive increased investment in the space. |
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Telecom |
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Neutral: Auction timeline was widely expected. Also, there are expectation that reserve price for 5G spectrum will be lowered, govt budgeted receipt from the sector points to this possibility Positive: If PLI gets interest from network equipment supplier, overall costs for the industry is likely to come down Positive: Improved fibre connectivity to not only increase digital penetration but will also bring reduced backhaul costs for telecom operators |
Source: HDFC Mutual Fund
Union Budget 2021
Union Minister of Finance and Corporate Affairs Smt. Nirmala Sitharaman presented 2021 Budget on 1.2.2021. She said that India’s fight against COVID-19 continues into 2021 and that this moment in history, when the political, economic, and strategic relations in the post-COVID world are changing, is the dawn of a new era – one in which India is well-poised to truly be the land of promise and hope.
The key highlights of the Union Budget 2021-22 are as follows:
6 pillars of the Union Budget 2021-22:
Budget 2021 is based on six key pillars.
Let us understand key proposals and initiatives for each of these.
1. Health and Wellbeing
In the context of COVID 19, Health was the focus of Budget 2021. Here are more details:
2. Physical and Financial Capital and Infrastructure
Infrastructure: National Infrastructure Pipeline (NIP) expanded to 7,400 projects. Around 217 projects worth Rs. 1.10 lakh crore completed. Measures in three thrust areas to increase funding for NIP:
Big thrust on monetizing assets: National Monetization Pipeline to be launched. Important asset monetization measures to be taken:
Disinvestment and Strategic Sale: This was another important aspect. Rs. 1,75,000 crore estimated receipts from disinvestment in BE 2020-21. Steps announced were:
3. Inclusive Development for Aspirational India
This was the third pillar of Budget 2021 and included Agriculture reforms. Lets note the key initiatives.
Agriculture:
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2013-14 (in Rs. crore)
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2019-20 (in Rs. crore)
|
2020-21 (in Rs. crore)
| |
|
Wheat
|
Rs. 33,874
|
Rs. 62,802
|
Rs. 75,060
|
|
Rice
|
Rs. 63,928
|
Rs. 1,41,930
|
Rs. 172,752
|
|
Pulses
|
Rs. 236
|
Rs. 8,285
|
Rs. 10,530
|
SWAMITVA Scheme to be extended to all States/UTs, 1.80 lakh property-owners in 1,241 villages have already been provided cards Migrant Workers and Labourers: One Nation One Ration Card scheme for beneficiaries to claim rations anywhere in the country was announced. Migrant workers to benefit the most.
4. Reinvigorating Human Capital
Education sector was the fourth pillar of Union Budget 2021. Here are the key initiatives:
5. Innovation and R&D
Innovation and RD was the fifth pillar. · National Research Foundation (announced in July 2019) will have Rs. 50,000 crore outlay over 5 years to strengthen overall research ecosystem with focus on national-priority thrust areas.
6. Minimum Government, Maximum Governance
Finally, Governance was the last pillar. Rs. 3,768 crore allocated for first digital census in the history of India.
Tax Proposals
One of the highlights of Budget 2021 was that no new taxes were announced. Budget noted following:
1. Direct Taxes
Achievements:
Relief to Senior Citizens:
Supporting ‘Housing for All’:
2. Indirect Taxes
GST:
Measures taken till date:
Electronic and Mobile Phone Industry:
Achievements and Milestones during the COVID-19 pandemic
Budget noted following achievements by government during the COVID-19 pandemic:
Political & Industry Reactions to Budget 2021
Overall, Industry has liked and praised the Budget 2021. Stock Market was up nearly 5% on the Budget day! Opposition parties have of course criticized the budget. Here are some reactions:
Historic budget with growth as the centre piece: CII president
CII president Uday Kotak said: “Delivering on her promise of unveiling a ‘Budget Like No Other’, the Finance Minister announced a raft of prudent measures aimed at rejuvenating government spending towards critical areas of increasing allocation on infrastructure expansion, education, housing and health as India rolls out a vaccine drive to inoculate 1.3 billion people.”
Proposed tax relief bypasses tax paying working class, middle class:
P. Chidambaram
According to Former Finance Minister P. Chidambaram, the proposed tax reliefs completely bypass the tax paying working class and tax paying middle class. "As expected, the FM has paid special attention to election bound states. She announced large capital outlays for Kerala, Tamil Nadu, West Bengal and Assam," he said.
A reassuring Budget: Biocon CEO KM Shaw
Kiran Mazumdar Shaw, executive chairperson, Biocon Ltd.: “Overall, a reassuring Budget with no negative surprises that has buoyed overall sentiment. Healthcare & well-being has received top priority in this Budget, with more than doubling of the outlay to ₹2,23,846 crore, including the allocation of ₹35,400 crore towards COVID-19 vaccination and ₹64,184 Cr for a new scheme to strengthen the country’s primary, secondary and tertiary health infrastructure.”
Budget justifiably focused on resetting the Indian economy: Cognizant India chairman
Rajesh Nambiar, chairman and managing director for India, Cognizant: “Coming as it does during an unprecedented global crisis, the Union Budget for 2021 is justifiably focused on resetting the Indian economy and enabling it to emerge from the shadows of a prolonged and unforeseen disruption.”
Given the impact of Budget on Society, Business and Economy, this becomes a very important GD, WAT, Extempore, Interview topic for MBA Admissions and other competitive exams. Hope you found this MBAUniverse.com detailed analysis of Budget 2021 useful.
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