Budget 2021: Opportunity to develop capital market missed

India’s first-ever digital Union Budget and the first in the new decade rests on six pillars for rebuilding the nation in the post-pandemic era. If the broader objectives under all the six pillars of the Union Budget 2021-22 are achieved, it will go down in history as one of the most impactful Budgets ever that paved the way for financial sustainability and expansion.


The Hon’ble Finance Minister’s budget touches upon all industries and sectors. Even though there isn’t much on the direct and indirect taxes front, a roadmap has been laid for an overall growth and that too at a much faster pace, given that there is now an urgent need to cover the much ground lost and set the tune for the future.


There is a determined effort to maintain fiscal deficit up to 6.8 per cent of the GDP. To support this target, large investment plans have been rolled out for building core infrastructure, such as the objective of building national highway projects to connect every part of the country. Indian Railways will also roll out a programme with major investments and adopt the public-private partnerships model to create the proposed ‘future ready’ Railway system by 2030.


Significantly, the foreign direct investment (FDI) limit in the insurance sector has been increased up to 74 per cent, which will be a trendsetter in the days to come. The plan proposal for privatisation of ports is also a step in the similar direction. The budget also has proposals for boosting agriculture projects and policies, provides incentives for affordable housing, besides making other provisions which are definitive moves towards nation building.


The proposals to remove hurdles in various processes and enhance digitisation by giving more incentives are with an objective to facilitate ease of doing business and. The proposal of recapitalisation of public sector banks is also a step in the right direction, but the predetermined recapitalisation amount of Rs 20,000 crore should have been higher in order to meet the targets. The higher gross borrowing target from the market for the next year should also have been more than the current target of Rs 12 lakh crore.


Introduction of SEBI as a regulatory authority for the gold exchange is a welcome step. SEBI, since long, has been a regulator of the Indian capital markets and has been instrumental for its robust growth.


There is a bit of disappointment as well as the Budget ignores the suggestions made by ANMI for Capital Market development. The recommendations were made after a study of cost of transaction /dividend etc at major global exchanges. Had the cost rationalisation been carried out, it would have gone a long way in rebuilding a robust capital market.


Overall, the Union budget has been a well thought out proposal and has been well accepted. It will lead to a sustained growth for the economy at a faster rate in a situation which calls for an additional shot in the arm.


The author of the article is the President of Association of National Exchanges Members of India (ANMI)