State Bank of India hails Budget 2021, calls it 'bold' and 'proactive'

State Bank of India, the country’s largest lender, has hailed the Budget presented by FM Nirmala Sitharaman.

Dinesh Khara, Chairman, State Bank of India, said the Budget is a well-crafted statement of intent and enhances India’s soft power by giving due recognition to its culture and heritage.

“This is well and truly an ‘infrastructure Budget’. The budget proposals address the challenges created by COVID-19 pandemic. The budget proposals have skillfully addressed the demand side by expanding the role of the government through a sharp increase of 34.5% in capital expenditure over the BE 2020-2021 to Rs 5.54 lakh crore,” he said.

Khara noted the budget proposals are a continuation of the Aatmanirbhar packages and gives major thrust to the initiative, which includes doubling farmers’ income, strong infrastructure, healthy India, good governance, opportunities for youth, among others.

“Infrastructure, the foundation of Aatmanirbhar Bharat, has been segregated into five parts namely – ‘Health and Wellbeing’ covering health infrastructure, ‘Physical & Financial Capital’ covering physical infrastructure and industry; ‘Inclusive Development for Aspirational India’ covering agriculture infrastructure; ‘Reinvigorating Human Capital’ covering education infrastructure; ‘Innovation and R&D’ covering digital infrastructure and future technologies.” he said.

Khara also said the thrust on rural health infrastructure is noteworthy and the government’s commitment towards boosting infrastructure is also evident in the Budget.

“The pressing issue of infrastructure financing has been well addressed covering debt component, asset monetization and foreign participation through InVITS and REITs route. In order to facilitate funding of infrastructure, it is proposed to make zero coupon bonds issued by notified IDF eligible for tax benefit. The budget has also addressed the long pending debate of creating an apex level development financial institution to address the infrastructure financing requirement. The monetisation of existing infrastructure in roads, oil, power transmission, airports and railways is also a welcome move,” he said.

Khara said the budget has rightly recognised the role of core equity capital in financial sector by increasing the FDI limit in insurance companies to 74% and allow foreign ownership and control.

“The public sector banks will have capital infusion of Rs 20,000 crore. An Asset Reconstruction Company Limited and Asset Management Company would be set up to consolidate and take over the existing stressed debt thus preventing any further erosion of capital. Over and above this NCLT framework will be strengthened, e-courts system shall be implemented and alternate methods of debt resolution and special framework for MSMEs shall be introduced,” he said.

Khara said the budget has been sensitive to immediate concerns of the economy.

“In all, given the background of COVID-19 pandemic, this year’s budget has achieved a balanced demand stimulus to correct the output gap. The measures for ease of doing business to ease of living, minimum government and maximum governance have only gathered pace. The minimal tinkering to personal income tax and promotion of self-employment deserves appreciation,” he said.