Primus Partners releases pre-budget report

The upcoming budget for 2022-23 comes in the backdrop of the third wave of COVID-19 in India and reflects new realities for the Indian economy, which requires a new direction.

Primus Partners released a report on its expectations from the Union Budget to be presented by the Union Finance Minister Nirmala Sitharaman on 1st February 2022. In the report, PRIMUS recommends a few cross-cutting expectations that will help place India on a rapid growth path and go a long way in securing the country’s long-term future. These include a focus on sectors such as Defence & Healthcare, more PLIs in sectors given the export potential, an increased focus on Climate Financing, reforms in the Banking and Energy sector, and the need to improve the effectiveness of social protection and welfare programmes.

Commenting on the Pre-budget expectations, Nilaya Varma, Co-founder and CEO, Primus Partners said “This year’s budget comes in the backdrop of two years of interspersed positives and negatives. As the Indian economy gets back to pre-COVID levels and charts a faster growth path beyond, it will be important to nurture the key drivers. A balance needs to be achieved between monetary and fiscal tightening while at the same time seeing that growth is not impacted. A Gordian knot it is! But who said Budget is easy work!

For consideration of the next budget, PRIMUS recommends measures in key sectors that are expected to have a significant impact on the Indian economy going forward.

For the Infrastructure sector, the introduction of innovative financing mechanisms for meeting NIP and NMP targets for social infrastructure development, the introduction of industrial REITs and REITs for warehousing and logistics infrastructure and operationalizing an empowered office in DEA to set up institutional mechanisms to track and deliver the NIP and NMP are some of the suggested measures.

For the defense sector, Primus hopes there is a larger allocation for private industry from within the separate budget for domestic capital procurements, Constitution of a ‘Defence Fund’ to support capital procurements.

Within the automotive sector, the inclusion of auto components and parts under RoDTEP will help to boost exports, reduce taxation on luxury cars and restore the tax credit for R&D expenditures to 200% from 150%, among others.

As part of measures for the Banking & Financial Services Sector, there is expectation that the government defines a roadmap for privatization of PSU banks while improving their balance sheet with adequate capitalization, increase in the share of NCDs available for FPIs to invest in – from more than 15% at present to improve FPI Participation.

Within the Healthcare segment, the government is expected to introduce one-year bridge courses for higher trained medical workers (like nurses) who can be authorized to man primary care centres, prioritize current investment in digital health technologies such as telehealth to promote greater access to care.

For the MSME sector, Primus expects the rationalization of import duties & anti-dumping duties on input materials such as Aluminium, steel etc., continuation of the tenure of Emergency Credit Linked Guarantee Scheme beyond Mar’22, and parity in GST-registration requirements for businesses selling online and offline.

In Direct Taxes, Primus recommends the Rationalization of Corporate Tax Rates, Taxability of Cryptocurrency and Tax certainty & pre-agreement, and on the indirect taxes side, the       Rationalization on controversial GST issues such as Clarification on the overlapping provision of job-worker and manufacturer, Modifications in Form GSTR 3B in order to provide negative figures, among others are some of the suggested measures.

The report offers in-depth analysis of each sectors and also contains expert views from leading luminaries and industry stalwarts such as Dr. Satish Verma, RBI Chair Professor, CRRID, Mr. JD Patil Whole Time Director (Defence & Smart Technologies) and Member of the Board – L&T, Baba Kalyani, Chairman & MD, Bharat Forge ltd., Vipul Mathur, MD & CEO, Welspun Corp Ltd, Atanu Chakraborty, Former Economic Affairs Secretary and part-time chairman of HDFC, Dr B D Kalla, Honourable Education Minister, Govt of Rajasthan, Amit Shukla, Founder, EasyGov of HDFC, Mr. Joy Chakraborty, COO, P. D. Hinduja National Hospital & Medical Research Centre, Rajan Bandelkar, President, Naredco India, Mr. Ashok Kumar Khurana, Director General, Association of Power Producers (APP), and Mr. Vinod Kumar, President, India SME Forum.

Primus Partners believes the listed measures in the report will provide the Indian economy with the much-needed push it needs to overcome the obstacles brought on by the COVID-19 pandemic and place it on a sustainable high growth path for the foreseeable future.

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