NIRMALA’S MANTRA

Present pain, future gain

Published: Feb 15, 2022
Updated: Feb 15, 2022

It was perhaps a budget like no other in the history of independent India. Not only was Finance Minister Nirmala Sitharaman’s budget speech short and to the point, it laid a singular thrust on a mega capex vision for the country’s economy, apparently keeping in mind Prime Minister Narendra Modi’s grandiose vision for the next 25 years including that of a $ 5 trillion economy by 2025.

Unfortunately for the long-suffering ‘aam aadmi’, further beset by the last two years of the Covid-19 pandemic, Madam FM’s grand canvas had no place for bread-and-butter issues like millions of jobs lost, badly affected household incomes, rampant retail inflation and the need for tax or other monetary reliefs.

While there is no denying the positive aspects of a ‘big bang’ budget, the country’s popular and electoral compulsions may yet throw up surprises for the Centre. Meanwhile, all that the common man can do till the next Union budget is to tighten his belt and keep praying for the elusive ‘acchhe din’.

The fourth Union budget presented by Finance Minister Nirmala Sitharaman on February 1 seems to have broken the mould of all previous budgetary exercises. It is starkly clear that she has consciously focused on bigbang economic growth and in the process turned a blind eye to the litany of expectations and grievances of the ‘aam aadmi’ of India. Neither electoral imperatives, nor the reduced purchasing power of the common man in a time of galloping inflation, nor the nationwide ravages of two years of the deadly Covid-19 pandemic, have shifted her focus from the mega capex path of economic growth.

Consider the following popular expectations which turned to bitter disappointment even before she had finished her budget speech:

• People in election-bound states like UP and Punjab were expecting an ‘election budget’ with sizeable benefits, but at no point in her short 90-minute statement did she refer to the polls at all.
• Hard hit by the pandemic, the middle class and low-income groups were expecting substantial relief but Madam FM displayed an ‘all is well’ attitude to the common man’s woes and did not announce any income-tax or other financial/monetary reliefs.
• As if this was not enough, she did not do anything to contain the rising inflationary price spiral. Incidentally, during the pandemic period, India’s rich have become richer and the poor poorer, but she had nothing to offer to the miserable bottom of the pyramid.
• During the last two pandemic years, it is estimated that millions of people (over 10 million, according to the Centre for Monitoring Indian Economy) have lost their jobs and as many as 97 per cent of households have registered a sizeable drop in their incomes. But Ms Sitharaman apparently had ‘loftier’ goals to focus on.
• The Indian economy has not recovered as yet from the ravages of the pandemic. Millions of MSMEs have been forced to down shutters, per capita income as well as per capita expenditure have declined sharply, and almost 50 million people have been pushed below the poverty line. But there was not the slightest nod to these harsh realities in the FM’s budget speech.

INDUSTRY WOES

Besides the common man’s woes, several industries, including automobiles, hospitality, and travel and tourism have been hit hard by Covid-19. But the Union budget is deafeningly silent on these developments – what to speak of remedial actions to revitalise them.

On the flip side, while ignoring the common man’s expectations, the FM has undeniably pumpprimed the economy with a massive hike in infrastructure spend aimed at roads, railways and logistics. Her focus was clearly on physical asset creation to kickstart growth and help India retain the ‘fastest growing major economy’ tag for the second year running.

In her budget speech, she maintained that the ‘PM Gati Shakti’ national master plan was a transformative approach for economic growth and sustainable development, and would be driven by seven engines — roads, railways, airports, ports, mass transport, waterways and logistics infrastructure — with all seven engines pulling forward the economy in unison.

GROWTH ENGINES

These engines will be supported by the complementary roles of energy transmission, IT communication, bulk water and sewerage infra, and social infrastructure. The scope of ‘PM Gati Shakti’ will encompass the seven engines for economic transformation, seamless multimodal connectivity and logistics efficiency. It will also include infrastructure developed by state governments as per the master plan. The four focus areas will be: planning, financing (including through innovative ways), use of technology and speedy implementation. Projects related to these seven engines in the national infrastructure pipeline will be aligned with the ‘PM Gati Shakti’ framework.

The touchstone of the master plan will be world-class modern infrastructure and logistics synergy among different modes of movement and location of projects. This will help raise productivity and accelerate economic growth as well as development. The ‘PM Gati Shakti’ master plan for expressways will be formulated in 2022-23.

According to CII vicepresident Pawan Munjal, the focus on infrastructure will not only improve the quality of life for the common man and generate jobs but will also help Indian industry become globally competitive

Ms Sitharaman said the plan would facilitate faster movement of people and goods. She added that the national highway network would be expanded by 25,000 km in 2022-23. Further, Rs 20,000 crore would be mobilized to complement public resources. Moreover, 100 ‘PM Gati Shakti’ cargo terminals will be developed over the next three years.

'MANAGING' CRYPTO

On the plus side, the FM has taken a radical decision on the controversial crypto currencies. While not banning it, realizing that it is gaining popularity in several countries, her budget has taken a major step to discourage its growth in India by imposing a hefty 30 per cent tax on capital gains in crypto currencies.

Ms Sitharaman has also significantly announced the launch of a digital version of the rupee. While outlining plans for a 30 per cent tax on income from digital assets, she also announced that very soon the Reserve Bank of India will start issuing digital currency.

In her speech, she proposed to amend the RBI Act to include a central bank digital currency (CBDC) alongside traditional bank notes. The government had received a proposal from the RBI in October to amend the relevant Act and enhance the scope of the definition of 'bank note' to include currency in digital form. "Digital currency will lead to a more efficient and cheaper currency management system. It is, therefore, proposed to introduce a digital rupee, using blockchain and other technologies, to be issued by the Reserve Bank of India starting 2022-23," the FM intoned. "The introduction of a central bank digital currency will give a big boost to the digital economy," Ms Sitharaman added.

According to experts, the 30% tax will not be allowed to be set off against any other losses or expenses. This is only going to increase the tax burden for crypto currency investors, who will have to shell out a third of their returns towards taxes.

There will also be income tax if crypto assets are 'gifted' by anyone. In such a case, the recipient of such a gift will have to pay the 30% tax. This is set to impact 'air dropped' crypto assets - that is, crypto currencies transferred to investors without any cost, or sometimes at a lower cost, when they are launched. Besides, the proposed 1% TDS will allow the government to track crypto transactions. Experts believe that the government's objective of discouraging business of cryptocurrencies in India will be a grand su

PAT FOR DIGITISATION

Focusing on digitistion in her budget speech, the FM said, "In recent years, digital banking, digital payments and fintech innovations have grown at a rapid pace in the country. The government is continuously encouraging these sectors to ensure that the benefits of digital banking reach every nook and corner of the country in a consumer-friendly manner. Taking forward this agenda, and to mark 75 years of our Independence, it is proposed to set up 75 Digital Banking Units (DBUs) in 75 districts of the country by scheduled commercial banks."

According to industry experts, the thrust on digitisation is once again evident in the budget, especially with the setting up 75 digital banking units in 75 districts in the country. They feel the focus on payment platforms that are economical and user-friendly with boost digital payments and contribute to the growth of the fintech sector

Dr. Jaijit Bhattacharya, President, Centre for Digital Economy Policy Research, says, "The budget is high on technology focus and technology-led provisioning of services to vulnerable sections. The focus on a digital economy through a focus on start-ups, auctioning of the 5G spectrum and fintech adoption will surely boost the economy. Overall, it is a budget that is clearly forward-looking

According to Ms Sitharaman, 100 per cent of 1.5 lakh post offices in the country will come into the core banking system to enable financial inclusion and access to accounts through net banking, mobile banking, ATMs and online transfer of funds between post office accounts and bank accounts. "This will be helpful especially for farmers and senior citizens in rural areas, enabling interoperability and financial inclusion," she said.

SHARP CRITICISM

However, there is a growing chorus of criticism that in the name of future growth, the Finance Minister has totally neglected the current pathetic situation of the economy as well as the low-income and lower middle-class segments. Former Union Finance Minister P. Chidambaram minced no words. "I was astonished and shocked that the Finance Minister was outlining a plan for the next 25 years. The government seems to believe that the present does not need any attention and the public can be asked to wait patiently until 'Amrit Kaal' dawns. This is mocking the people of India," he quipped

Criticising the logic behind the budget, Sanjay Jha, a keen observer of the economic scenario, says that what we often forget is that India was sluggish and struggling at a GDP of 4 per cent in the pre-pandemic phase. The gargantuan devastation that followed the Covid-19 wave in March 2020 resulted in India's first technical recession and a negative GDP of 6.6 per cent (lower than the estimated 7.3 per cent) in FY 2020-21. "The Economic Survey's estimation that India's GDP for FY 2021-22 will be 9.2 per cent must be looked at in that light; it is on a significantly shrunk base that naturally amplifies growth in the following year(s). It can be deceptive. Thus, the government's pontificating that 'India will be the fastest-growing economy in the world' is a chimera. It is a mathematical boondoggle," Mr Jha says pithily.

Maintaining that (the budget) "camouflages the real 'Third World' issues that still plague us -- rising inequality, a disrupted informal sector, increasing inflation and the perennial Damocles' sword of joblessness," Mr Jha adds, "Ms Sitharaman's budget frankly is underwhelming in totality when measured against what were the critical thresholds that needed to be accomplished. Let us examine that by just a few data points."

"First, let us look at the agricultural sector, where 70 per cent of India resides. The year-long farmer protests concluded anti-climatically with Prime Minister Narendra Modi announcing the abrupt withdrawal of the farm laws. With the big state elections, and with the BJP looking down a slippery slope, Ms Sitharaman was expected to play a political card on a wider coverage of the rural impoverished, with enhanced income security thrown in. Strangely, she did not. Populism, if it helps millions, is not a bad thing.

'BLUFF & BLUSTER'

"Incidentally, FY2022 was supposed to be the 'lodestar year' when farmer incomes were supposed to double, a promise made by the PM in FY 2017. Agriculture growth in the current fiscal is a below-par 3.9 per cent. The government basically bluffed and blustered away -- zero accountability by a headline manipulating government.

"What is astonishing is that MNREGA allocations remain lower at Rs 73,000 crore (down from Rs 98,000 crore in FY 2021-22). That is nothing short of a shocker. After the nightmarish humanitarian tragedy of March-April 2020 when migrants were compelled to walk hundreds of kilometres home, MNREGA had become their mainstay. India was seeing a reverse migration. Nearly 230 million Indians crossed the Rubicon below the poverty line.

"A recent report indicated that even MNREGA-destination states such as Tamil Nadu, Maharashtra, Gujarat and Karnataka experienced increased MNREGA demand. But MNREGA wages have remained depressed, their payouts erratic. Given that 85 per cent of India's workforce is in the informal sector, the world's largest social security scheme deserved at least a 50 per cent increased budgetary outlay."

It is incontrovertible that economy has not recovered fully from the headwinds of the Covid-19 pandemic. But instead of taking steps to speed up recovery, the FM has starting planning for the next 25 years. "This is ridiculous", points out an expert. According to him, the pandemic has hit the common man very hard. With hundreds of thousands of people losing their jobs and incomes, and in the face of rising inflation, their lives have become miserable. The FM has neither opted for cash distribution nor any exemption or reduction in the tax burden

Budget Reaction - P Chidambaram

Total disregard for poor! : Every key subsidy slashed

After the budget was presented on February 1, we asked ourselves: What has the budget done to address any of these grave challenges? The blunt answer is: NOTHING.

Obdurate and callous

The government behaves and acts as though it is on the right path and has delivered on the issues that matter to the common people. This is false. This is also bull-headed obduracy. This also reflects the government’s contemptuous disregard of the burdens and sufferings of the people.

I was astonished that the Finance Minister was outlining a plan for the next 25 years, which she called the Amrit Kaal! The government seems to believe that the present does not need any attention and the people living in the present can be asked to wait patiently until the Amrit Kaal dawns. This is nothing but mocking the people of India, especially the poor and the deprived.

There was not a word in the speech about any cash assistance to the very poor who have been pushed into extreme poverty and suffered immensely during the last two years; not a word for those who had lost their jobs; not a word about creating jobs for those whose education stopped at some stage at the school level; not a word about reviving MSMEs that had shut down; not a word about distributing more food to combat malnutrition and hunger; not a word about cutting indirect taxes, especially GST, to contain inflation and bring down the prices of goods; and not a word about giving tax relief to the tax-paying middle class or the tax-bearing head of a household.

By any standard, the budget speech was the most capitalist speech ever read by a Finance Minister. The FM has mastered the jargon of capitalist economics. Read her speech again: count the number of times she used the words digital, portal, IT-based, paperless, database, ecosystem, global, atmanirbhar. The word ‘poor’ occurs twice in paragraph 6, and we thank the FM for remembering that there are poor people in this country.

Welfare thrown to the winds

There are worrying macro-economic indicators: top of the list is that the fiscal deficit (FD) for 2021-22 has overshot the target of 6.8 per cent and is estimated at 6.9 per cent. For next year, it will be 6.4 per cent. That is an insufficient correction if the goal is to reach 4 per cent three years hence by 2025-26. The financing of the FD is also a matter of concern. 70 per cent of the FD in 2022-23 will be financed by market borrowing as against 55 per cent in the current year, crowding out private sector borrowing.

The worry from the welfare angle is greater. Every key subsidy has been slashed:

The total subsidy bill has been cut by a humongous 27 per cent. This is the “unkindest cut” in this budget. The FM may have forgotten the poor but the poor have long memories. The next worry is about raising more resources. The FM is betting on heavy market borrowing and increases in corporate tax (+85,000 cr), personal income tax (+85,000 cr) and GST (+1,05,000 cr). There is not a word about raising more resources from the rich, especially the very, very rich 142 persons whose wealth in the last two years has increased from Rs 23,14,000 crore to Rs 53,16,000 crore.

You will ask me, no doubt, if there is not any aspect of the budget that I welcome. There is a short list of three:

• The FM has promised capital expenditure of Rs 7,50,000 crore in 2022-23 as against the RE of Rs 6,02,711 crore in 2021-22.
• The FM has promised an additional borrowing of Rs 1,00,000 crore to the states free of interest.
• The budget speech was mercifully short at 1 hour and 30 minutes.

Parliament may vote this budget because the ruling party has a brute majority in the Lok Sabha, but the people will reject this capitalist budget.

(Palaniappam Chidambaram is a former Union Finance Minister)

Budget Reaction - Deven R Choksey

Single-minded focus on growth : Gati Shakti Yojna a game-changer

Agriculture-led growth:

• Rs 275,000 crore has been allocated for MSP payments to farmers. Along with crop insurance, subsidized urea and micronutrients, the budget has also provided for food processing
• 5-7% biomass is now proposed to be fired in thermal power plants, resulting in carbon savings of 38 million mtpa. On the one hand, it will save burning of farm waste and on the other it will result in generating income for farmers.
• Agriculture credit of Rs 18 lakh crore (Rs 16.50 lakh crore in 2021-22) is also provided for helping farmers increase farm output.
• Food processing at the farm gate is the new initiative which will result in value added output by the farmer. Higher realization of farm produce with a thrust on food processing should result in more income in the hands of the farmer.

The budget is systematically dealing with increasing prosperity of rural masses and leaving more in their hands, which should result in higher consumption of FMCG and FMEG products in the economy.

Infrastructure-led consumption growth:

• About Rs 7.50 lakh crore is being reserved for capital expenditure and building infrastructure, which is about 2.3% of GDP. In real terms, along with grants to states, the actual amount spent will be about Rs 10.25 lakh crore or 4.1% of GDP.
• Rs 100 lakh crore infrastructure spending under PM GSY (Gati Shakti Yojna) over the next 10 years. GSY is a game changer and has the potential to produce 10% GDP growth on a sustainable basis, as can be seen from the success of South Korea and China in the last century. Both these nations could produce 10% GDP growth on a sustainable basis for 2-3 decades.
• Under GSY, the engine of growth will be development of new roads, railways, ports, airports, mass transportation systems, waterways and logistic infrastructure across the length and breadth of the country.
• 400 new trains will be added in 3 years, which will also strengthen local manufacturing apart from providing faster transportation for goods and services.
• About 25,000 km of new highways and roads will be developed by 2023.
• For water in every tap, an additional sum of Rs 60,000 crore is allocated, connecting 3.80 crore new homes.
• For housing to masses, Rs 48,000 crore has been allocated.
• 5 river-linking projects are planned at an estimated cost of about Rs 45,000 crore, benefiting about 9 lakh hectares of farmland, providing drinking water to about 62 lakh people and production of 100 MW hydel and 27 MW solar power.
• In the next 25 years, 50% of India’s population will be staying in urban areas and significant attention is being paid to build new 2- and 3-tier cities and infrastructure.
• These initiatives will result in spending the allocated amount for material and manpower, among others, which would lead to generating newer demand for goods and services, and employment.

Industrial development-led growth:

About 14 sectors are now covered under the PLI scheme, which is expected to produce an incremental output of Rs 30 lakh crore over the next 3 years and holds the potential to create 50-60 lakh new jobs

Rs 19,500 crore has been allocated for solar panel manufacturing under the PLI scheme.

5G spectrum will be auctioned in 2022 and holds the potential to raise about Rs 75,000-100,000 lakh crore by the government. The 5G rollout is expected to accelerate the growth in the economy in the years to come.

The Optical Fiber network will be allotted in 2022-23 and by 2025 is expected to be completed under Bharat Net project.

68% of capex in defence will be for domestic production and also allowing the sector R&D benefits will eventually bring down the import bill for India, apart from producing growth and employment in the economy.

Infrastructure status to data centres, clean energy storage, battery swapping policy with inter-operability standards, recycling of waste, promoting sunrise industries like AI, drones, GPS, green energy, clean mobility, genomics and pharmaceuticals are some of the initiatives which will attract new investments in the economy.

To meet the export target of $ 300 billion, the SEZ is being redefined and may be replaced with new regulations.

To encourage clean fuel, blending in petrol and diesel will be allowed, and to discourage non-blended fuel an additional excise of Rs 2 a litre will be levied from October 1, 2022. Ethanol-based blended fuel, which is targeted to reach 30%, is expected to get a further thrust, benefiting ethanol manufacturing sugar plants.

MSMEs will be benefitted by the Rs 200,000 lakh crore fund over and above Rs 50,000 crore provided under ECLGS.

Money for Growth:

With 9.2% GDP growth in 2021-22 and 8.5% in 2022-23 and massive infrastructure-led growth in the economy under PM GSY of Rs 100 lakh crore, India is expected to attract massive foreign capital. With the Western world continuing to have negative interest rates, India is expected to attract debt and equity funds in building infrastructure-led growth. India’s economy is likely to be a $ 5 trillion economy in 2026 at the projected growth rate of about 8% on a CAGR basis.

On a GDP growth of 9.2%, the tax receipts are growing above 14-15% (1.5x growth rate). Both direct tax and GST and indirect tax collections are likely to cross 25.2 lakh crore in FY22 and could grow to 27.6 lakh crore in FY23. On a projected receipt of Rs 23 lakh crore (without borrowings) and expenditure of Rs 39.50 lakh crore in FY 22-23, the fiscal deficit is projected at 6.4%. It is not out of place to expect that through higher participation of public private partnership, India will end up attracting higher inflows in FY23.

To fund infrastructure projects, global green funds will be attracted. Green funds are available at a cheaper cost. Gift City IFSC is expected to attract global funds and facilitate funding for the GSY infrastructure.

To penetrate the reach of banks in rural India, 75 digital banking units are being proposed to be set up in 75 districts of the country by scheduled commercial banks. Channelizing funds from rural India at an attractive cost could be best done also when 1.5 lakh post offices will be brought under the core banking system, providing anywhere banking and online transfer of funds.

Digital Rupee:

India will be among the first worldwide to introduce a digital rupee. The digital currency using blockchain is expected to result in systematically bring down circulation of black money and help rotate currency faster, resulting in growth.

Tax on digital assets @ 30% is expected to cover crypto and NFTs to begin with. This regulation is among the first of its kind globally and should result in incremental revenue for the government.

Overall, budget 2022 is growth-oriented and reflects India’s long-term vision of sustainable 10% GDP growth on a cumulative basis.

For investors, this is a happy time. The first half of 2022 might throw up lots of volatility in the market. Selective investing is recommended.

(Deven R Choksey an erudite financial and investment expert, is managing director, KR Choksey Investment Managers Pvt Ltd)

Budget Reaction - Anand Rathi

Rural demand will push growth : Positive impact on stock market

• Corporate India: Your overall assessment of the budget. Will it revive the economy that has been hit hard by Covid-19?
• Anand Rathi: The budget continues to focus on fostering the nascent growth recovery. An investment rather than consumption-led growth strategy initiated since late 2019 continues through this budget. For investment recovery, budgetary allocation for public capex in infrastructure has been increased. The budget tried to improve rural demand by enhanced food procurement, support for natural chemical-free farming and technology deepening. These can improve rural demand. Increased allocation and extended credit guarantee for MSMEs would be positive for the growth of this segment. A multipronged approach has been rolled out to improve digitization, including roll-out of a digital currency by the RBI, setting up 75 Digital Banking Units and greater digital delivery of government services. These should improve ease of doing business. All these measures should help sustained recovery of growth.
• CI: What will be its impact on the stock market?
• AR: I think the impact on the stock market is likely to be positive. Though the interest rate on long-term government securities are likely to increase marginally, it may not have a great impact on our equity market as happens in the US market. The current strong macro and corporate fundamentals are positive for the Indian equity market. Increased allocation by Indian households in equity assets makes the equity market positive. On the valuation front, the overall market is reasonably valued post the recent corrections in the market. Thus, the combination of favorable fundamentals and higher liquidity augurs well for higher GDP growth. Increased allocation of savings in equity markets and reasonable valuations indicates the positive outlook for the stock market in the medium to long term.
• CI: Where should investors invest after the budget – sector wise as well as script wise? Please suggest 5 stocks worth investing in after this budget.
• AR: The PM’s Gati Shakti plan will benefit, among others, water, housing, railways, roads, ports and the overall logistics supply chain. Infrastructure-related sectors like infra, construction, cement and other building materials will be the direct beneficiaries. There will also be indirect beneficiaries like banks, CVs (because of the rise in road construction), construction-related automobiles, and companies catering to the railways. Customs duty restructuring, norm changes and the focus on domestic capacity creation will aid manufacturing, including capital goods, defence-related industries and those under the ambit of PLI. Even before the budget, we were positive on investment-linked sectors and relatively negative on consumption-linked sectors. The budget measures increase our conviction further.

Anand Rathi is a top corporate executive-turned financial and stock market expert is Chairman of Anand Rathi group of financial companies. He is a former President of the Bombay Stock Exchange.

Budget Reaction - Mahavir Prasad Taparia

Gati Shakti is key to progress : 10 per cent GDP growth possible

CHALLENGES NOTED

The budget takes note of and signals awareness of contemporary challenges: the looming climate threat, procedural hindrances that continue to thwart the ambition to capitalise on the post-pandemic anxiety to diversify global supply chains, and the need to upgrade the education infrastructure by starting a digital university and bringing in celebrated foreign universities.

On the controversial crypto currency issue, she administered a body blow to the growing menace by imposing a 30 per cent tax on gains in crypto currency, which will discourage people from resorting to such instruments. What is more, she took a historic decision to introduce a ‘digital rupee’.

The unprecedented spurt in capex for infra development will certainly take Indian infrastructure to global levels, besides showering liberal benefits on various segments of the economy. However, much depends on timely and effective implementation of the plan. I have no doubt that if the capex plans are properly and efficiently implemented, India’s GDP will start growing at least at 10 per cent going ahead.

(Mahavir Prasad Taparia is the Managing Director of Supreme Industries and a strong advocate of good corporate governance)

Leading budget gainers

The Indian stock market has, contrary to the disappointment of the common man, welcomed the Union budget presented by Finance Minister Nirmala Sitharaman. In particular, the market has cheered the thrust on capital expenditure. But the most cheering factor for the market is the absence of any negative announcement. “The total absence of any negative news is the most positive aspect for the stock market,” quipped a seasoned stock broker, adding, “There were fears that the budget will hike the capital gains tax on stocks, and taxes on high-bracket incomes and corporates will be hiked. However, the Finance Minister did not touch income taxes at all.”

The market has not only heaved a sigh of relief but is positively chuffed by the announcement of huge capital expenditure plans. Reflecting the market’s mood, the Sensex, the most popular index based on 30 pivotal stocks quoted on the BSE, jumped from 58,014.17 quoted on January 31 to 59,618.51 on February 2, before reacting to global bearish trends. Likewise, Nifty, the darling index of analysts which is based on 50 leading stocks quoted on the National Stock Exchange, shot up from the pre-budget level of 17,339.85 to 17,794.60, before reacting to global bearish reports.

Though the budget has not given any tax breaks, any increase in income-tax exemption limits or any tax benefits to corporates, certain industry segments got remarkable benefits and companies operating in these segments will stand to be big gainers. These industry segments include:

Information Technology: The budget has placed a thrust on digitalisation. This will give a boost to the Information Technology segment, and major beneficiaries will be TCS, Infosys, Wipro, Tech Mahindra, Persistent Systems, Happiest Minds and L&T Infotech, among others

Metals: The government’s move to increase water supply to households in rural areas means there will be a huge requirement for water pipes. Leading metal companies which are likely to benefit on account of this include Tata Steel, JSW Steel, and Jindal Power & Steel.

Batteries for electric vehicles: The budget has devised a battery swapping policy to promote electric vehicles and this will benefit battery makers substantially. The major beneficiaries in the segment will be Tata Power, Tata Chemicals, Exide and Amara Raja Batte

Renewable energy: With a view to giving a ‘green’ boost, the government has given several benefits to companies engaged in the generation of clean and green energy – mainly solar and wind. The major beneficiaries will be Tata Power, Borosil Renewable, Reliance Industries, Adani and Suzlon.

Defence Products: The budget proposals will go a long way in modernising the Indian armed forces further, while ensuring the current government’s commitment to reducing dependence on imports of defence equipment. Another notable update in the area of defence is the opening up of defence R&D to industry, start-ups and academia by earmarking 25% of the defence R&D budget for them. Since state-of-the-art defence projects involve huge investment and time costs, this will further incentivise domestic manufacturing in the sector.

The budget further showcases the government’s commitment to ‘Make in India’ by earmarking 68 per cent of the capital budget for domestic companies. The major beneficiaries will be L&T, Bharat Forge, HAL, Paras Defence, Astra Microwave, Solar Industries, Premier Explosively, Bharat Dynamics and MTAR Technologies, among others.

The budget proposals will benefit several companies. We have given a list of 100 companies in this issue elsewhere.

The top ten beneficiaries of these are:

1. Larsen & Toubro
2. Tata Power Co.
3. Tata Steel
4. Tata Motors
5. Tata Chemicals
6. Reliance Industries
7. Infosys
8. Ultratech Cement
9. Bharat Forge
10. Finolex Industries