Union Budget 2021- Indian Market View

BUDGET AND IMPACT ON SECTORS

1 February 2021, Union Budget with Made in India Tablet marked the milestone for the Indian economy. It’s one of the best budgets amid the tough time of coronavirus pandemic. Indian share market response positively and rallied for more than 4.5 percent.

Health and Sanitation

A new scheme, titled PM Atma Nirbhar Swasthya Bharat Yojana, to be launched to develop primary, secondary and tertiary healthcare

Mission POSHAN 2.0 to improve nutritional outcomes across 112 aspirational districts 

Operationalization of 17 new public health units at points of entry 

Modernizing of existing health units at 32 airports, 15 seaports, and land ports 

Jal Jeevan Mission Urban aimed at better water supply nationwide 

Strengthening of Urban Swachh Bharat Mission

Education

100 new Sainik Schools to be set up 

750 Eklavya schools to be set up in tribal areas 

A Central University to come up in Ladakh

Infrastructure

Vehicle scrapping policy to phase out old and unfit vehicles – all vehicles to undergo fitness test in automated fitness centers every 20 years (personal vehicles), every 15 years (commercial vehicles) 

Highway and road works announced in Kerala, Tamil Nadu, West Bengal, and Assam 

National Asset Monetising Pipeline launched to monitor asset monetization process 

National Rail Plan created to bring a future-ready Railway system by 2030 

100% electrification of Railways to be completed by 2023 

Metro services announced in 27 cities, plus additional allocations for Kochi Metro, Chennai Metro Phase 2, Bengaluru Metro Phase 2A and B, Nashik and Nagpur Metros 

National Hydrogen Mission to be launched to generate hydrogen from green power sources 

Recycling capacity of ports to be doubled by 2024 

Gas pipeline project to be set up in Jammu and Kashmir 

Pradhan Mantri Ujjwala Yojana (LPG scheme) to be extended to cover 1 crore more beneficiaries  

Tax

No IT filing for people above 75 years who get pension and earn interest from deposits

The reopening window for IT assessment cases reduced from 6 to 3 years. However, in case of serious tax evasion cases (Rs. 50 lakh or more), it can go up to 10 years 

Affordable housing projects to get a tax holiday for one year 

Compliance burden of small trusts whose annual receipts does not exceed Rs. 5 crore to be eased 

Duty of copper scrap reduced to 2.5% 

Custom duty on gold and silver to be rationalized 

Duty on naphtha reduced to 2.5%. 

Duty on solar inverters raised from 5% to 20%, and on solar lanterns from 5% to 15% 

All nylon products charged with 5% customs duty 

Tunnel boring machines to attract customs duty of 7% 

Customs duty on cotton raised from 0 to 10% 

Agriculture infrastructure and development cess proposed on certain items including urea, apples, crude soybean and sunflower oil, crude palm oil, Kabuli chana, and peas

Economy and Finance

The fiscal deficit stands at 9.5% of the GDP; estimated to be 6.8% in 2021-22 

Proposal to allow States to raise borrowings up to 4% of GSDP this year 

A Unified Securities Market Code to be created, consolidating provisions of the Sebi Act, Depositories Act, and two other laws 

Proposal to increase FDI limit from 49% to 74% 

An asset reconstruction company will be set up to take over stressed loans 

Deposit insurance increased from Rs 1 lakh to Rs 5 lakh for bank depositors 

Proposal to decriminalize Limited Liability Partnership Act of 2008 

Two PSU bank and one general insurance firm to be disinvested this year 

An IPO of LIC to debut this fiscal 

Strategic sale of BPCL, IDBI Bank, Air India to be completed

Agriculture

Agriculture infrastructure fund to be made available for APMCs for augmenting their infrastructure 

1,000 more Mandis to be integrated into the E-NAM market place 

Five major fishing hubs, including Chennai, Kochi, and Paradip, to be developed 

A multipurpose seaweed park to be established in Tamil Nadu 

Employment

A portal to be launched to maintain information on gig workers and construction workers 

Social security to be extended to gig and platform workers 

Margin capital required for loans via Stand-up India scheme reduced from 25% to 15% for SCs, STs, and women

Major Impact/Sector/Stocks

Income Tax

Tax relief for senior citizens. A senior citizen who is above 75 and only has a pension and interest income will not have to file income tax.

Impact: A huge relief for the elderly as creep up

Infra

A higher capital expenditure target has been announced

The FM announced the FY22 Capex target at Rs. 5.54 lakh crore against FY21’s Rs. 4.39 lakh crore.

Impact: Sharp increase in capital expenditure is positive for the market as it was a key ask of the markets for reviving growth.

Stock to Watch- ABB, Siemens

Affordable Housing

Cheer for Home Buyers

Additional Interest deduction (Sec 80 EEA) of Rs. 1.5 lakh for affordable housing to be extended for loans taken till March 31, 2022

Impact: It will help homebuyers and boost to government’s housing for all missions. _

Stock to Watch- DLF

Real Estate

The Deduction on Payment of Interest

The Deduction on Payment of Interest for affordable housing has been extended by 1 Year

Impact: Tax exemption for notified affordable housing for migrant workers will help the poor.

Stock to Watch- DLF, Oberoi Realty

Bad Bank

Bad Bank to ease NPA stress

The FM announces ‘Bad Bank’ to address the problem of stressed assets of Bank. To be set up through as Asset Reconstruction Company model.

Impact: A major boost for bad asset resolution in the financial system, which will allow banks to focus on new business.

Stock to Watch- Positive for Overall liquidity in the market.

Energy

Scheme to assist Discoms will be launched

Scheme to assist Discoms will be launched with an outlay of over Rs. 3 lakh crore

Impact: The plan for a framework that helps consumers choose their electricity supplier will unleash competition.

Finance

FM announces a Development Financial Institution

NaBFID to help in the process of infrastructure financing. Impact: The Development Financial Institution will play a key role as an enabler for infrastructure financing in the country.

Stock to Watch- LT, and NCC.

Auto

A voluntary Vehicle scrapping policy

The aim is to phase out old and unfit vehicles. Vehicles would undergo fitness tests in 20 Years in the case of private vehicles. Impact: Fitness testing for both PVs and CVs a positive move to create employment and demand for cleaner cars.

Stock to Watch- M&M, Maruti, Heromotocorp.

Health Care

New Scheme called PM Aatmanirbhar Swastha Bharat to be launched

FM announced setting up of a new scheme called PM Aatmanirbhar Swastha Bharat

Impact: The total outlay of this scheme will be Rs 64180 crore over the next 6 years. This will give impetus to healthcare

Stock to Watch- Fortis Healthcare, Apollo Hospital.

Farm Sector

Higher allocation, Cess Boost

Outlay for agriculture and rural sector increased to Rs 16.5 lakh crore in the previous budget 

Impact: It will boost farm income, which in turn will help demand which the economy badly needs.

Aviation

Tax exemption on aircraft lease rental

The government announces tax exemption on the aircraft lease rentals paid by air carriers to foreign lessors.

Impact: It should come as a relief for the aviation sector that has been ravaged by the coronavirus, as lockdown restricted travel.

Stock to Watch- Indigo, Jet airways

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Regards,

Team Indian Market View