Union Budget 2021: Major Expectations and Predictions to look

With 2021 not having much of great news, apart from Elon Musk reaching new heights of net worth and breaking records; big news for India will start from February first week – when the Union Budget 2021 will be announced by Finance Minister Nirmala Sitharaman. Here are some of the major expectations Indians need to see for and these are the predictions government may change about.

Pharmaceuticals: Important Sector to look for in Budget 2021

While pharma sector has sustained the Indians during the harsh times of COVID-19 and still showing potential growth with vaccines distribution; this will be major look out for all. For this reason, Budget 2021 has task to justify both; transitional and strategic needs. As far as transitional needs are concerned, it mostly includes vaccine drive to control the corona virus spread and this part is surely a multi-year plan for govt. Reportedly, the average cost of vaccine doses is expected to be around Rs. 500. This means if even 50% of population needs to be covered than it translates to about 30,000 crore budget. And then there will be add-ons like storage, transportation, distribution and so on; which becomes to 80,000 crore one-time allocation.

Looking for another bit i.e., strategic needs; there are two elements in it. One of them is Total Health expenditure in India which is approximately 1.3% of GDP. This is much lower than BRICS countries which have a window of 3.6% atleast and many other having average 7.6% allocation of GDP. Seemingly, current pandemic situations boost allocations in Ayushman Bharat & Jan Aushadhi schemes.

Another aspect is self-reliance or “Aatmanirbhar”. Due to pandemic and supply-chain system getting cut-off in international market; countries are switching over to producing starting materials and raw products on their own. This has led to Govt. launching different a series of product-linked incentives to promote bulk drug parks and production of medical devices locally. This all will be enhanced during the allocation of Budget 2021 potentially.

Agriculture Sector: Crucial Side of Budget 2021

While the farmer’s protest reaching new heights and govt. not been able to still settle the issue down; Agriculture Sector will be a major aspect where all eyes will be focused on. Many reports confirm that union may roll out measures to compensate the farmers and present a farmer-centric policy. Speculations also rise that government has already made regulations and changed measures for the sector and thus there might not be any major decision that finance ministry take.

Already government has introduced various schemes for both farmers and farm workers like PM Kisan, MGNREGA, 1 lakh crore agriculture infrastructure fund and many more. In Budget 2021, few schemes related to insurance for farmers and their goods or schemes similar to MSMEs can be expected for sure.

Tourism & Hospitality: How Finance Ministry plans to revive this sector?

The Tourism and Hospitality sector faced a major hit during this pandemic situation and made some huge losses. With Unlock guidelines from government it is reviving bit by bit; but still left to get back on track. Interestingly, Malaysia has provided a exempted hotel accommodation from service tax for a 6-month period. This small but unique change reduced the hotel fares by nearly 15% and attracted many people to stay overnight – giving rise to the industry. India may take some similar measures to help grow its own tourism and hospitality sector.

Talking about such unique and extraordinary steps taken by governments; United Kingdom had one of its own. They launched “Eat Out to Help Out (EOHO)” scheme. Under this, government provided 50% off discount on food and/or non-alcoholic drinks eaten-in at registered restaurants all over UK. Similar steps taken by the government can help boost the sector again and recover well in the economy.

Educational sector: Pioneering skills with Budget 2021

This Budget will be first union budget since the New Education Policy (NEP) was announced last year by Prime Minister Narendra Modi along with Education Ministry. NEP solely focuses on removing rigidness of Indian society towards extracurricular and vocational skills in comparison to academic skills. To achieve the desired policies mentioned in NEP, strong and crucial steps need to be taken towards the educational sector. These reforms were needed for Indian Education System since many decades and to compete with global learning standards, the financial view of NEP is most important aspect. By normalizing and liberalising the FDI, philanthropic and private investment in Budget 2021 – this economical aspect can surely be enhanced.

If we glance back to a year ago, the funding for Educational sector was increased to 5% of GDP in previous budget. Looking to provide robust research & innovation and strengthening the core educational system along with all the infrastructure required; this funding needs to be around 8-10% of GDP. This is surely a major portion to allocate, but youth is power and youth is future for any country. So, it will be one of the foremost sectors to look for in Budget 2021.

Ease of doing business: Boosting small-scale and start-up industries

Due-dates, tax rate changes, GST laws, frequent notifications amending procedures – all these make business complicated and keep taxpayers always in a hurry and tension. Thus, govt. may plan launch major amendments and policy decisions in the union budget 2021 easing the business proceedings.

Also, the security for global trade transactions needs to be maintained, which currently is not up to the mark. At the same time, special valuation branch (SVB) is burdened with large pile of pending cases which can only be resolved with more rigorous administration.

Legislative Expectations and GST in Budget 2021

With aim of ‘one nation, one tax’ GST is currently in the market levied at different rates – from 0.25% to 28%. This not only makes the taxation system complex, but also does not make India tax-friendly and competitive globally. It will be major expectations from stakeholders whether or not Union relaxes or reduces the rate slabs in Budget 2021 seeing the current revenue pressure.

Also, there is a demand of including petroleum products under the eye of GST, which seemingly was being neglected in the previous budgets. At present, the prices for these products include 70% taxes from central and state. Making them under GST will surely rationalize the petroleum prices; which are just now hovering around Rs. 80/litre. This step will potentially reduce the transportations costs, logistics and distribution costs & in turn reducing the prices of locally made goods.

Railways: Modernizing to become world-class

During the harsh pandemic times; railways not only remained an important goods carrying linkage nation-wide; but also provided covid-safety services. Govt. took full advantage of train compartments to transform them into Covid-19 wards where there was lack of beds in hospitals and thus this sector is important looking towards the future economical growth.

Reportedly, Indian Railways will develop several world-class railway stations across the nation. Budget 2021 is expected to give a boost to railway infrastructure as they are considered to be lifeline for country. Regarding this, the Indian Railways Development Corporation has been working on redevelopment of two airport-like world-level Railway stations even during the pandemic situation. They are to be built at Habibganj and Gandhinagar cities. Both the stations will have ultra-modern facilities; from plush retail shops to luxurious waiting lounges and 5-star hotels and amenities along with sustainable infrastructure to help promote government’s “Green Railway” dream by 2030. The work for both these stations is on advanced stage and likely the phase 1 will be executed by end of Jan 2021.

Another flagship redevelopment project for Railway Ministry is for Delhi and a capital expenditure of Rs. 6500 crores is expected to be allocated for the New Delhi railway station. With such projects incurred for several other cities of multiple states; railway sector will surely grow with leaps and help promote tourism, employment, real estate and other markets along with it.

Other Important sectors to look for in Budget 2021

Other sectors which can see potential reforms would be Real Estate, Highways & Transportations and Defence sector. Apart from this reskilling, relearning and remote working areas of the society can see many positive allocations after the whole pandemic situation. There will also be advent to increase digital market and move towards sustainability in many sectors and green tech companies with solar power manufacturers will hope some growth in their sector too.

Facts, Conclusion & Key takeaways

Interestingly the Budget 2021 will be completely paperless for the first time in history of independent India. Considering the threat of corona virus spread, the members will be provided soft copy of the Budget and the Finance Minister will present the Budget directly. This move also breaks the traditional convention of ‘Halwa Ceremony’ which is attended by all people connected to Budget formation and marks beginning of printing process.

Well, facts apart. Overall view for budget would be a justified one. Notedly, the Pharma, Agri & Edu sectors are the most important sectors to look for. Also, common man or a middle-class man can expect some positive and key allocation for them in taxation system. Economically weak and farmers are always a focus in each budget and so will they for this one too. Techno, start-ups, digital market and green & sustainable sector are some other which can also have few reforms and allocations.

References:

Business Standard

The Financial Express