The budget has also announced a huge surge in capital outlay by 33%, which will be a great push to infrastructure and job creation.
New Delhi, India: Dr. Arun Singh, Global Chief Economist at Dun & Bradstreet, has praised the Union Budget 2021 for its focus on Green Growth and Infrastructure Development. In a detailed analysis of the budget, he highlighted several key areas that would have a positive impact on the Indian economy.
Green Push
“The budget has a major focus on green growth, which is a positive for public policy,” said Dr. Singh. He added that the green finance initiative would accelerate the pace of credit disbursement for green initiatives. The notification of Green Finance under the Environment Protection Act would provide additional resources for entities to raise funds at a lower cost towards sustainable/green investments. The central government’s old vehicle scrappage policy is also seen as a positive for the automobile industry and will help in reducing green gas emissions and improving energy efficiency.
Infrastructure
The budget has also announced a huge surge in capital outlay by 33%, which will be a great push to infrastructure and job creation. Dr. Singh emphasized the importance of nudging states to increase their capital spending in order to fully benefit from the infrastructure development. The continuation of the 50-year interest-free loan scheme for capital expenditure will enhance infrastructure development and last-mile connectivity.
MSME
The use of PAN as a common business identifier would help improve ease of doing business, according to Dr. Singh. The Digi locker for entities to securely share documents would provide a digital infrastructure, which will be helpful in the digital lending framework for MSMEs. The cost of credit is also set to be reduced by 1% under the revamped credit guarantee for MSMEs, which is seen as a big positive for the sector.
Agriculture
Dr. Singh noted that the data infrastructure is the core of digital transformation of agriculture, and the digital public infrastructure for agriculture is a novel initiative that will encourage digitization of the primary sector.
Capital Expenditure
The capital expenditure at 3.3% of GDP, which is the highest in almost two decades, will benefit the economy from the time-tested Keynesian principle of spurring infrastructure to create jobs and channelize multiplier cycles, according to Dr. Singh. He added that the 2022-23 fiscal deficit of 6.4% and 5.9% for 2023-24 would allow for private capital expenditure to grow without crowding out private investment.
Tourism
Dr. Singh highlighted that several enhancements announced towards ease of tourism would provide growth opportunities and employment for the vast working-age population.
Exporters Benefit
The announcement of the EXIM bank subsidiary for trade refinancing under IFSC Authority (Gift City) would enhance credit availability for exporters, according to Dr. Singh.
Dr. Singh praised the Union Budget 2021 for its focus on Green Growth and Infrastructure Development and noted that the budget would have a positive impact on the Indian economy in the coming years.
