Crisis provides the opportunity to do things that you could not do before II BUDGET 2021 - GO GO GROWTH says Axis Mutual Fund

In a bold move the honourable finance minister, Nirmala Sitharaman, delivered a pro-growth budget. Spearheaded by government spending on long term projects including infrastructure, the government aims to get the economy out of the Covid shadow. The budget also aims to build on the work done during the lockdown in supporting growth and making structural reforms. As expected given higher deficits and pro-growth tilt the debt markets sold off while equity markets were sharply positive.

Given the weak macro, markets widely expected additional taxes and/or reduced spending to manage the Fiscal deficit within the FRBM targets. Amending the FRBM act is a clear indication of the government focusing on growth over consolidation. Equity markets cheered the budget with a sharp 5%+ rally. Debt markets sold off 15 bps in response to a weaker than expected fiscal outlook.

See Zee Business Live TV Streaming Below:

KEY HIGHLIGHTS:

Fiscal deficit for FY 2020-21 pegged at 9.5% (RE), FY 2021-22 at 6.8%.
No changes to personal income tax limits or tax brackets.
LIC proposed to be listed; 2 public sector banks and 1 general insurance company likely to be privatised.
Gross government borrowing for FY 22 pegged at ` 12 lakh cr.
Innovative asset monetization program
FDI cap in the insurance sector raised to 74%.

Budget Takeaways:

The government held steadfast to its objective of stimulating growth by way of enhancing its expenditure programs. This is despite weaker than expected revenue collections. The result is significantly higher borrowings from the market to fund the widening fiscal deficit. The government has extended its fiscal consolidation timeline in the process to reach a fiscal deficit level below 4.5% of GDP by 2025-2026.
CAPEX all the way:

The government has gone all guns blazing on its proposed infrastructure spending. The budget outlines a new National Infrastructure pipeline comprising 7400 projects. The comprehensive plan also includes an asset monetization game plan comprising assets including airports, toll roads, rail infra assets, warehousing assets of CPSE’s and even sports stadiums.

As part of her six pillar approach the FM has emphasised on the need for health and wellness. To that effect A new centrally sponsored scheme, PM Atma Nirbhar Swasth Bharat Yojana, will be launched with an outlay of about Rs 64180 cr over 6 years.

The textile sector will be given impetus above and beyond the PLI scheme by way of launching 7 large textile parks over the next 3 years. The Mega Investment Textiles Parks (MITRA) aims to build and provide plug & play facilities to enable and create global champions in exports.

The budget envisages a slew of changes to further promote channelizing domestic savings and attracting foreign flows. With an eye on Atma Nirbhar Bharat and generating jobs for the youth, the government has taken the enhanced Production Linked Incentive scheme. The budget also envisages tweaks on imported products via customs duty to promote import substitution.