Budget Review 2021-22E: Stepping on the growth pedal - ICICI Direct
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Budget Review 2021-22E: Stepping on the growth pedal…
The Union Budget 2021-22 was clearly growth focussed with sharp increase in capex allocation (up ~26% YoY), and outlining manufacturing as the key pillar for the economy, while rightly allowing for higher fiscal deficit, given the low interest scenario. Most importantly, along with capex path, the budget has also outlined the additional financial avenues to attain the same, through setting up Development Financial Institution (DFI), monetization of infra assets and divestment plans of non-core asset.
Key budget highlights :
* Given the need for high growth push to revive the economy from pandemic shock, the government has significantly revised fiscal deficit target upwards to 9.5% for FY21E and 6.8% for FY22E vs 3.8% reported in FY20
* The government has pegged nominal GDP growth at 14.4% for FY22BE. The numbers assumed in the budget estimates for FY22 are realistic and achievable
* As expected, the government has pegged capital expenditure at | 5.54 lakh crore (up 26% ) in budget. It has also allocated |2.0 lakh crore towards additional capex for states.
* The key focus for allocation to spur infra growth is spread across segments like railways, roads, water, urban infrastructure like metros and healthcare etc.
* On the disinvestment front, the government has remained realistic by revising target downwards to |1.75 lakh crore vs budgeted target of |2.1 lakh crore for FY21BE
* PLI launched to create manufacturing global champions across 13 sectors with amount committed nearly ₹1.97 lakh crore in next 5 years starting FY2021-22
* The Budget also proposes a new centrally sponsored scheme, PM Atmanirbhar Swasth Bharat Yojana, to be launched at an outlay of about | 64180 crore over six years. Apart from this, additional | 35000 crore was allocated for Covid-19 vaccine
* Further, the biggest positive surprise was no major tweaking in the direct and indirect taxes.
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