Budget 2021: New announcements will energise economic growth engine

It is heartening to see that Budget 2021 is based on crucial pillars of inclusive development and innovation. Moreover, the all-important digital push with a focus on digital payments, innovation and startups will strengthen three crucial areas critical to overall economic growth.

We believe the multiple initiatives that FM Nirmala Sitharaman has announced will will help energise the economic growth engine in the country.

The government support on setting up Global Fintech Hubs at GIFT, allotting Rs 1,500 crore for promoting digital mode of payments, incorporation of one-person companies to incentivise innovation in startups, focus on R&D and enabling skill development in artificial intelligence (AI) and Machine Learning (ML), and extending capital gains tax exemption for investment into start-ups by another year,  will boost the startup- and Fintech ecosystem and also greatly support ease of doing business.

The setting up of a separate Asset Reconstruction syndicate for dealing with the NPAs is a step in the right direction as it will aid better recovery and will prompt banks to increase credit.

Recapitalisation of PSBs with Rs 20,000 crore is also a much-needed step that will strengthen the banks and in turn raise credit construction capability.

The escalation in the threshold of paid-up capital for small companies from Rs 5 million to Rs 20 million will ease the compliance burden for micro- and small firms. Plans to reinforce the NCLT framework, adoption of e-courts and alternate mechanism of debt resolution, are likely to boost creditor optimism.

Additionally,  the proposed use of data analytics, Artificial Intelligence and Machine Learning, and the inclusion of additional modules in MCA-21 database, will help in strengthening corporate governance when cases of fraud have become increasingly common. Increase in Capex by around 35% to Rs 5.54 lakh crore will bring sharp increase in capital expenditure, and will be a positive harbinger for reviving market growth.

The fiscal deficit has been much higher than expected at 9.5% for 2020-21, but in the ensuing year, it is estimated at 6.8%. Further, the government has indicated the roadmap of fiscal consolidation and to achieve less than 4.5 percent of GDP by FY25-26.”

(The writer is CEO, Aquapay Payment Technologies Pvt Ltd. Views expressed are personal)