India’s Union Budget 2021 - Manufacturing, Infrastructure, and Economic Recovery

Do you see Budget 2021 as a solution to the ailing Indian economy considering the goals of achieving higher manufacturing growth?

Several initiatives were announced in the budget to revive the manufacturing sector. There has been an increase in the proposed capital expenditure of INR 15,700 crore (USD 2.15 Bn) for the MSME sector, which is double the capital expenditure proposed in last year’s budget. The Finance Minister also announced the creation of a framework for MSMEs for faster debt resolution.

Key manufacturing schemes including Production-Linked Incentive (PLI) are likely to attract global players in the manufacturing sector and make India globally competitive by attracting investment. The schemes aim to incentivize local companies to set up or expand existing manufacturing units across the country. The step is significant for India’s manufacturing sector after the contraction caused by the pandemic.

The government’s initiatives are geared towards attracting foreign investment in India’s manufacturing sector and encouraging domestic manufacturers to expand their units and presence in the country.

Infrastructure was the focus area in this year’s budget. What is your take on this?

The Budget has given much-needed impetus to infrastructure development. This signals the government’s intention of creating a conducive business environment to attract much needed foreign investment into India.

The overall spending on infrastructure in this budget is up sharply by 35% from last year. This increase will provide a boost to the economy through the multiplier effect which will help other ancillary sectors and create jobs. Also, the focus on roads and railways will create a unified market in India for seamless movement of goods and human resources.

Will the budget aid India’s post-COVID-19 economic recovery and can be called as the budget for Aspirational “New India”?

As India revives from the impact of COVID-19 pandemic and returns to normalcy, the Union budget 2021 was expected to be high on spending across various thrust areas such as boosting healthcare, reviving the economy and creating employment.

The budget focuses on all the major issues and seems to have ticked almost all boxes and met expectations. A significant increase in capital expenditure for the states and the focus on infrastructure would boost employment and attract foreign investment. This step among others, reiterates the arrival of a ‘New India’ where the government has made a decisive move towards an investment-led growth model.

In many ways, the Budget 2021 can be integral and one of the most important chapters to India’s future growth story.