Sanjay Aggarwal, president, PHD Chamber of Commerce and Industry, recently joined NewsX for an exclusive interview as part of its special series NewsX India A-List. Reviewing Budget 2021-22 from an up-close lens, he shared his key takeaways and expressed his confidence in India’s post-Covid economic recovery.
Highlighting his key takeaways from Budget 2021-22, Aggarwal said, “The main takeaway from Budget 2021-22 is the absolute and unwavering focus on infrastructure. I think this is what PHD Chamber had been insisting on from the nearly one year, especially since the onset of Covid-19 pandemic. This is what the government has decided to do which is the need of the hour. We cannot be bothered about fiscal deficits or borrowings. The government is reconciled to 6.8% of fiscal deficit. The government is reconciled to 15 lakh crore of borrowings which will not be something out of the ordinary for any other economy or comparable economy. I think we have done the right thing and I agree with the statement made in the economic survey, ‘You can’t put one foot on the accelerator and another on the break’.”
“We as a trader industry have been rather hoping that the cap would be opened early. To an extent, in hindsight, it seems to be the right approach now when we are confident that we are in a comparatively comfortable situation as far as the pandemic is concerned, our numbers seem good and the curve seems to have flattened. This is the right time to open up and push money into the economy. The best thing that the government has done is that when you spend money in infrastructure and building long-term assets, you invest money into the economy, your multiplier is very huge. The economic survey says that in current circumstances, probably the multiplier one should be considered is 2.5. Even otherwise, the government has done and should continue to do its bit in terms of direct benefit transfers to the vulnerable sections, whether it is in cash or food grains. The 35,000 crore of allocation for Covid vaccine is again something that shows the intent of the government to not try and save on the health expenditure. This time, health expenditure is actually more than double. These are some very positive aspects,” he added.
Expressing his confidence on India’s post-Covid economic recovery, Aggarwal pointed out, “The five mini budgets as it is called, or the Aatmanirbhar Bharat announcements, the major impact of these was to preserve the supply side of the economy. I think a lot was done. The actual cash expenditure was not too high, but, at the same time, a lot of non-budgetary measures were also there which ensure a good flow of credit to MSMEs. Although again, a Rs 3 lakh crore of emergency credit guarantee scheme, we still have a disbursal of less than Rs 2 lakh crore, even that is a pretty big amount, considering the state of difficulty that the MSMEs were facing. I think all those measures were on the supply side and now that the situation has improved, the government is looking strongly at the demand side and what they need to do. We are going to have expenses wherever needed and invest where it is required. Making announcements of the specific PSUs that we hope to disinvest this year, the decision to disinvest two PSU banks and one general insurance company again is a solemn intent. Additionally, the government is also looking to form an SPV through which all the excess lad could be transferred.”
Commenting on the market’s positive reaction, he said, “The markets have taken a lot of liking for the Budget and it is quite evident. It is one of the rare market jumps that has happened in the aftermath of the Budget. The market also appreciates the sort of buoyancy that one should expect. One aspect that the chamber pointed out in a report on Sunday was that we have analysed various parameters on which economies are being rated. When you look at 10 largest economies and rate them on various parameters, what we found was that only Germany is ranking higher than India. All of these numbers are being raised on the IMF numbers and this is called the International Economic Resilience. Our economy has shown that much resilience in the international funds and international organisations are recognising that.”
When asked if he feels something was missing from the Budget, Aggarwal shared, “There would be hundreds of things that would be missing. Everybody has such a long wish list. On my wish list, it was infrastructure. 2020 has been a lost year; we should start counting our first year from now. We have made some excellent strives and good arrangements. The chamber has also requested filling up the judicial vacancies, something which is holding up both law and order and also the ease of enforcement. The foreign investors are also looking at that.”
On a parting note, he said: “Let us also still be clear that the first bout of vitality has to be introduced by government expenditure into the infrastructure. As that builds up the basic demand and as the industries find their capacities which were lying idle instead of being filled up, they will be anxious to go out, invest, and create more capacities. The government has taken the first step. Hopefully, as the industries seize the market scope.”