This has been the big budget week. So we throw light on some sectors and how the budget plans to deal with these. From disinvestment to privatisation, to a focus on rural development and health, this budget has its pros and cons. Read our analysis below. Also, check out how Jeff Bezos' moving on from the Amazon CEO post affects Amazon India. Finally, find out how MPL gets closer to unicorn status!
Today's Highlight:
Budget 2021 is out. For the middle-class man, not much has changed. But there are a few interesting highlights that the budget brings out. Check them out in this article. Or read our analysis!
Why is this relevant to you, the MBA student?
We'll, it is the Budget. A plan of how and where the Government plans to spend and how it plans to make revenue is an evergreen GD-WAT-PI, placement topic. No matter what domain you're planning to get into, this is a relevant topic you must know about.
So let's look at different sectors and the Budget allocation they received.
Healthcare
A sector that's super important this year. We are amidst a pandemic. The Government's central sponsored scheme to create health care centers was expected after all. In fact, the government promised to spend ~₹65,000 crores over the next six years in a bid to kickstart this program. And, they topped it by suggesting that they plan to spend 137% more in the next financial year on health care programs. But is this beneficial to the nation? The fact remains that the budget has allocated a good part of this funding to water and sanitation programs. Keeping the COVID situation in mind, is this really the need of the hour? It remains to be seen.
Monetising Govt. Assets + Privatisation To Tackle The Fiscal Deficit
No matter what initiatives the Government takes, a huge amount of money is being spent. And not all monies are being spent to work on economic growth. A lot of the money goes towards paying off dues. So how does the Government plan to earn revenue enough that they have the capital to manage these expenditures? One thing that the budget highlights is selling public assets to generate income.
Does this mean that the government will literally sell off public assets to private players? Well not quite. It's more about outsourcing authority so that private players can take a state asset and develop it. Like the National Highways Authority of India (NHAI) has been trying to do. This basically means that the private entity may not own the public asset, but they can profit from it. What does the Government get then? Well, the private entity would pay the Government a large sum to be able to manage the public asset. In the case of national highways, the private entity can collect toll tax for a period of the next 20 years for example. And the Govt. gets a cash infusion! And they'll not need to manage the highways either. Quite a few public assets will be monetized thus.
Roads operated by NHAI, power transmission assets operated by the Power Grid Corporation, oil and gas pipelines of GAIL, IOCL and HPCL, Airports in Tier 2 and Tier 3 cities, Rail infrastructure, Warehouses, and Sports Stadiums, etc.
But this is not all public to private shift. There will also be disinvestment. This means that 2 public sector banks, a general insurance company, as well as Air India, will be privatised. But will the private sector readily invest in Air India or other such entities that are already disputed/ moss making, etc.? This remains to be seen!
Infrastructure
While we are speaking of the private sector. We also need to speak of the Government's plan to create a DFI - Development Financing Institution. The government has promised to set aside ₹20,000 crores to fund the DFI and the hope is that this will create new loans worth ₹5 lakh crores over the next three years. Basically, with new infrastructure projects, it's possible to create more jobs as well as involve the private sector. And to ensure that the private sector can comfortably participate in these initiatives, the fund giving out loans for the long term at reasonable rates seems like a smart idea. The only question is the implementation of this project. Will, it really work towards benefitting the nation, or is it a risk? Only time will tell.
FDIs
The Government plans to increase the FDI limit in the insurance sector. Foreign investors can now hold a majority stake in an Indian insurance company , 74% as opposed to 49% earlier. The hope is that this will further incentivize outside investors and the added competition might benefit Indian consumers. But with India's current political climate, it remains to be seen how successful this will be.
What do you think? Do you think this Budget addresses the pressing problems the nation faces? Do you think the emphasis on developing rural areas will work out positively? What do you think about the job situation in the country? Share your thoughts and opinions in the comments section below!
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In Other Highlights:
The Amazon-Future-Reliance Retail saga aside,. Jeff Bezos' exits the company when AWS (Amazon Web Services), led by incoming CEO Andy Jassey, is stepping up its presence in India. So what are the implications for Amazon India? Read this article to find out!
Bengaluru-based Mobile Premier League (MPL) has raised $95 million in a Series D round led by Composite Capital and Moore Strategic Ventures, taking the mobile eSports company's valuation to $945 million. Check out the details in this article.
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