Union Budget

K Paul Thomas, MD and CEO of ESAF Small Finance Bank on Union Budget 2021-21

Posted On : 2021-02-01 22:24:22( TIMEZONE : IST )

K Paul Thomas, MD and CEO of ESAF Small Finance Bank on Union Budget 2021-21

The budget is a progressive one that could tackle the economic challenges. Happy to see the focus on sectors like health and wellbeing, inclusive development, innovation and R&D. Focus on Swach Bharath 2.0 and Swasth Bharath is a welcome idea that would complement the focus on health measures. The idea of a Development Finance Institution is another good move as a provider, enabler and catalyst for infrastructure financing. Initiatives like textile parks and modern fishing harbors could encourage MSMEs and mobilize employment opportunities. The focus on rural areas through farmer welfare schemes like an extension of agriculture credit targets, Ujjwala scheme, and support to migrant laborers through one nation one ration card scheme is truly appreciable. Less compliance to small companies through 2 cr capital and 20 cr turnover is a move that can accelerate the revival of MSMEs.

There is a visible thrust on innovation and digital transformation through policies like faceless IT Appellate Tribunal, fintech hub, scrapping of vehicles, etc. All these measures can potentially facilitate a reset of the economy.

Closer to home, support extended to Kerala for highways and metros can contribute significantly to the infrastructure development of the state. Also, the Product-Linked Incentive scheme can attract global players in the manufacturing sector. Developing capacities of primary, secondary, and tertiary healthcare will augment the infrastructure of rural India. Funds of 2500 cr allocated to solar and renewable energy was another futuristic move. The move to hike the FDI limit in insurance is likely to increase capital and could boost a potential segment. Infusion of 20000 cr to PSBs compounded with Asset reconstruction and management Company for Stressed Assets could revive the economy as a whole. This could strengthen the state-owned banks and hasten the process of clean-up of their balance sheet.

Education policy to strengthen rural education, Reduction of the tax burden to senior citizens, etc is also other notable and welcome initiatives. An increase in cash transfer under PM Kisan was expected but was not mentioned in the budget.

Source : Equity Bulls