The budget for FY 2021-22 clearly stands out with its singular focus on growth. Clearly outlining the need to generate funds to plug the deficit that needs to be advanced to push growth, the budget spells plans for privatization, asset monetization and non-core assets sale in a clear, time bound fashion.
Opening up of key sectors further such as permitting 74% in Insurance, allowing IDFs to issue zero coupon bonds to fund infrastructure, setting up an Asset Reconstruction Company to resolve bad loans and PSU bank privatization stand out.
Overall capex spends have been raised to 2.5% of GDP estimated at INR 5.54 trn in FY 22 from INR 4.12 trn in BEFY2021.
While fiscal deficit for FY 22 at 6.8% is on the higher side, a return to high single digit real growth rates in the medium term should help to lower the deficit over time.