Statement of CH S. S. Mallikarjuna Rao, MD & CEO, Punjab National Bank for Union Budget 2021-22
We welcome the measures announced by Finance Minister in Union Budget 2021-22. The budget rightly strikes a reasonable balance between addressing the key pillars of Health & Well-being, Inclusive Development, Human Capital, Innovation and R&D, apart from laying the path for a robust economy by providing a major infrastructure boost.The array of measures announced are in line with people as well as market expectations and will go a long way to bring the nation back on track by boosting spending on infrastructure and rural development while fighting the pandemic through health focused measures.
Dr. Harsh Kumar Bhanwala, Executive Chairman, CIFL on the Union Budget 2021, “This is an infrastructure focused budget in urban and rural area with an emphasis on Capex. This will pay dividends in the long run. The professionally managed DFI to catalyze infrastructure financing is a huge boost for the sector. It is a much needed step to fill-in the financing gap and make it more organised. To enhance the infra pipeline, the sector requires a strong capital inflow. Further, an increased outlay for rural development, the RIDF will accelerate the infra growth for agriculture and allied activities.”
As far as the financial sector is concerned, further recapitalization of Rs 20,000 crore for PSBs in the FY 2021-22 is a welcome step. The other measures which are expected to strengthen the sector are as under:
- Various measures have been announced on the infrastructure front, which are expected to take the economy into a new trajectory of growth. In addition to over a 34% increase in capital expenditure, new highway projects have also been announced.
- Setting up of a professionally managed Development Financial Institution will catalyze infrastructure funding.
- Creation of an ARC and Asset Management Company that will take over the stressed assets and sell to Alternative Investment Funds(AIFs), is also welcome as it will help improve the health of the banking sector through impact on price discovery and improving competition in the market.
- The NCLT system will be strengthened and e-Courts will be adopted and alternate mechanism of debt resolution will be set up.
- The massive program for monetization of completed/ running projects will help in creating required resources through the instruments like INVITs.
- Other important announcements of bringing in the IPO of LIC, hiking the FDI limit in insurance increase to 74% from 49%, strategically divest 2 Public Sector Banks and 1 general insurance company, are steps in the right direction.
The voluntary scrapping policy proposed for discarding old commercial vehicles will boost the automobile industry. The gross borrowing programme is also helpful to maintain the fiscal health of the economy, while providing necessary funding towards growth and development of the infrastructure.