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The ProsGovernment’s intention is to reduce its role in businesses and focus on governance.Government expects real GDP to grow in the range of 6% to 6.5% compared to 5% estimated in FY20.Huge divestment plan of Rs2.1 lakh crore compared to only Rs 0.18 lakh crore till date which provides a strong intention of the government.Custom duty increased which is positive for Make in India, manufacturing like electronics.Very encouraging measures provided for Infrastructure, Rural market and Aquaculture (Fisheries).To raise fish production to 200 lakh tons by FY23 and to raise fishery exports to Rs.1 lakh Cr by FY25.Huge plan of Rs103 lac cr infrastructure spending in the next 5yrs which is double that of last 6 yrs.To double farmer’s income.Debt borrowing plans are to be moderated. Debt as a percentage of GDP reduced to 49% from 52% in FY21. This is positive for bond market; interest yield can reduce in the medium to long-term.New direct tax regime will be positive for salaried class between Rs5 to Rs15 lakhs.Dividend Distribution tax has been abolished which is positive for FIIs & MNCs, marginally positive for retail investors but negative for promoters and HNIs.The cons:Fiscal deficit increased only marginally to 3.5% for FY21. But higher Government spending was required to boost the economy.Budget speech has shown importance of Rural & Infra development but expenditure as per the budget document is subdued with only a 3% growth in rural development, defence, low deficit, subsidy and borrowing plans. This indicates that the government spending remains cautious and will depend on the trend of the overall economy and revenue.The budget expects the nominal GDP to grow by only 10% in FY21. The real GDP growth will depend on the inflation which is high at 7.35% in Dec 2019.The forecast for FY20 and FY21 does not look very realistic. FY21 economy is expected to be better but net revenue is expected to be muted than FY20. Income from divestment is very high (depending on LIC, BPCL and Air India sales).Overall the budget has given a big push to set the Indian economy on a high growth path for the rest of this decade. A path breaking budget that has resisted the calls for fiscal deficit focus and debt/GDP centricity. 2021, along with the Atmanirbhar announcements of 2020, will be remembered as the new 1991.nion Budget 2021The Budget has also focused on the development agenda, keeping diverse interests of the nation and its citizens. The six-part budget has stressed significantly on ‘self reliance’ by boosting infrastructure and domestic trade. In addition to budgetary outlay for the MSMEs, revision in custom tariffs are also aimed at increasing economic activity. For example, changes in duties for leather, synthetic stones and on gold and silver will increase business for artisans, 'karigars' and craftsmen. Agri products, metal components and electronic duty changes are also aimed to provide better opportunities to the MSMEs. These initiatives will positively impact the e-commerce activities. The start-up ecosystem will see benefit from some structural changes to encourage entrepreneurship. Relaxations in definitions of ‘one person company’ or OPC will boost start-up activity, especially by NRIs who can now incorporate OPCs.Impact of budget on plethora sections of Indian economy is listed below:▪︎Life Insurance Corporation of IndiaThe announcement of a potential IPO of LIC of India in 2021-22 is a fantastic announcement in the Union Budget 2021. LIC is the pride of India and has the ability to impose the highest level of confidence in investors and policyholders. Its value creation over the years is immense. Even if a divestment of 10% is contemplated, the income generated could constitute a significant part of INR 1.75 lakh crore of budgeted divestment income. The IPO preparedness process of LIC would be unique and interesting, and its listing will enable its evolution to become a much stronger global insurance conglomerate and continue to be the darling of its policyholders.▪︎ AgricultureIt is apparent that the Budget for the agriculture sector is building on the existing initiatives such as PM-Kisan, Agri Infrastructure Fund, APMC reforms, Kisan Rath, 10,000 FPOs, export promotion and PMKSY for irrigation. The announcements address priority areas with increasing outlay for road and rail logistics, expanding the scope of Operations Green to include 21 crops (from three), a higher target for agriculture credit, doubling outlay for micro irrigation, strengthening infrastructure at Agricultural Produce & Livestock Market Committees under Agricultural Infrastructure Fund, etc., to enhance the competitiveness of the supporting chemicals and fertiliser industry import tariffs rationalisation on raw material inputs is on the agenda.Further, farmer welfare has been reinforced with announcements on minimum selling price, Svamitva scheme and significant outlays for animal husbandry and fisheries to double farmers' income.However, certain gaps exist in terms of continued depressed investment towards R&D and extension services, which has been less than 0.5% of agricultural GVA.▪︎Customs DutyThe Finance Minister has announced an increased on certain critical components of mobile phone including parts for manufacturing Printed Circuit Board Assembly , Camera modules, moulded plastic for chargers/adaptors etc. The hike in duty is ranging from 2.5% to 10% for different products effective April 1, 2021. This will effective increase the cost of imports and subsequently the cost of mobile phones across the Board since the margins are limited in the Industry.Local mobile manufacturing has grown exponentially in the country and now India is exporting mobile phones and chargers to other countries. Increase in customs duty will promote more local manufacturing which is in line with PM’s vision of Aatmanirbhar Bharat▪︎Dedicated Freight CorridorMajority of the revenue for the Indian Railways comes from freight trains. A dedicated freight corridor (DFC) will now handle major freight traffic for the Indian Railways and in turn allow the Railways to improve its profits and also propose newer passenger trains, which will significantly take the load off the current railway network. INR 1.07 lakh crore, as opposed to INR 70,000 crore, has been sanctioned in this year for the DFC. Budget 2021 also hints at the potential of PPP to be introduced for the DFC.The detailed budget on state/city wise plans and expenditure data on metro lines, busses, roads and highways and similar infrastructure investments show desire and hope by the government to increase income and create demand. Not being constrained by the fiscal deficit norms, the Budget 2021 pushed for investment and consumption aimed at bringing the economy to the pre-COVID-19 era.▪︎Auto & ManufacturingUnion Budget 2021 has spurred the automobile and manufacturing sector for growth ahead and laid the foundation for a vibrant and self-reliant nation.Top 4 hitsEnhanced outlay of INR 1.97 lakh crore in PLI scheme and INR 5.54 lakh crore for capex spending would help support core competencies in global supply chains along with potential and preferred Foreign Trade Agreements with global playersIncentivising start-ups and MSMEs for making India self-reliant, restricting imports through hike in custom duties on specific auto parts from 7-10% to 15%, will foster high scale local manufacturingBenchmarking skilling with training initiatives and investments in road and urban infrastructure by extending national highway corridors is an impetus for growth for the ecosystem, particularly for the commercial vehicles segmentThe vehicle scrappage policy has immense potential in supporting original equipment manufacturers (OEMs) and suppliers to induce demand and auto salesTop 3 missesAdditional outlay towards National Automotive Testing and R&D Infrastructure Project (NATRIP) to make India a preferred hub for auto design and engineeringLowering GST on two-wheeler and smaller vehicles to adopt personal mobility in a post pandemic eraRationalisation of customs duties on Semi Knocked Down/Completely Knocked Down (SKD/CKD) for faster market penetration by new auto OEMs in the country.▪︎Bsfi sectorTop 4 hitsBad bank set up to help invigorate economy by providing impetus to banking balance sheets for credit revivalRationalisation of single market reforms code would go a long way in promoting ease of business in India and attracting foreign capitalIncrease in FDI limits in the insurance sector to bring in more foreign capital would also help bring in more players helping deepen insurance penetrationFocus on incentivising digital payments for increasing digital adoption will directly contribute to financial inclusionTop 4 missesWhile some reforms did exist for NBFCs with a minimum asset size of INR 100 crore, the liquidity window facility for NBFCs was not directly addressedINR 17,5000 crore is the planned receipt from divestments, which is an aggressive assumption as the timing of the market may not necessarily support the sameWhile rationalisation of the deposit insurance framework is a welcome reform, there is a need for a focus on a special resolution framework for financial institutions that currently does not existImportant miss on the indirect tax side is in relation to the reduction of GST on medical insurance premium, which was a significant expectation of the industry. Lower GST rate could have further benefitted insurance industry and would have made the medical insurance premium more affordable▪︎healthcareTop 3 hitsIncreased spend on the sector through PM Atmanirbhar Swasth Bharat Yojana to improve infrastructure and access in line with industry expectation of 2.5%-3% of the GDPCommitment to increase COVID-19 vaccine spends beyond INR 35,000 crore and no cess or additional taxes to fund the vaccine driveIncreased Production-linked Incentive Scheme (PLI) allocation in line with the Aatmanirbhar Bharat campaign to be self-reliantTop 3 missesReduction in GST on API from 18% to 12% to reverse the inverted duty structureReduction of import duty on medical devices to reduce cost of healthcare servicesIncentives to attract investment in R&D▪︎ Tech SectorAs Finance Minister presented the first digital budget, it reflected the government’s commitment on digital, technology, innovation and R&D. The adoption of new-age technologies, such as AI and ML, in administration of companies, tax administration and focus on fin-tech, digital payments as well as proposed investment of INR 500,000 crore towards National Research Foundation all substantiate the government's endeavour. The proposals around setting up of Fintech Hub at GIFT City, INR 1500 crore fund as incentive for digital payments and impetus to the start-up sector by extending tax benefits by one year would further strengthen the Digital India programme. One would, however, have welcomed a move to direct overseas listing as it would have been an impetus to new age tech companies.▪︎InfrastructureReforms, disinvestment, status quo on tax rates and long-term infrastructure development have been the focus of this year’s Budget. As expected, the government has stepped up the expenditure on various large-scale projects to provide impetus to the economy and largely relied on asset monetisation and borrowings to fund the same.▪︎Retail DepositorsTo further restore the confidence of retail depositors in banking industry, an effective implementation framework would be in place, whereby the depositors would be able to withdraw up to INR 5 lakh against their deposits, which now stands insured under the Deposit Linked Insurance Scheme. The success of this initiative can be measured only when the process of withdrawal could be made seamless and agile since depositors during such times already face a lot of stress and have a home to run and daily expenses to be incurred.▪︎Affordable HousingTax exemption for affordable housing projects will provide the necessary fillip to the rental housing and will lay out a framework for built to rent asset class. This has the potential to increase the rental yields with more green field housing projects being launched with focus on leasing and also increase significant investor and developer participation.▪︎Asset ReconstructionConstitution of Asset Reconstruction Management Company in the banking sector to transfer bad and stressed loans is a great reform which would reduce the stress on account of NPAs and bad loans.▪︎TechnologyThere is a strong focus on digital covering setting up of fintech hub at gift city, enhancing digital payments and use of AI ML etc in governance – all provides the a great platform for digital India.▪︎Digital PaymentsThe key to financial inclusion today is digital adoption and the allocation of 1500 cores as incentives for promoting digital payments is a step in the right direction.▪︎ FDI in InsuranceIncrease in FDI limit to 74% in the insurance industry is a welcome change, where control and significant ownership can rest with foreign JV partner/s with specific safeguards, such as the majority directors to be Indian residents and whereby 50% of the board will comprise independent directors. The proof of the pudding is in eating and it would be wait and watch to experience how many global insurance players having presence in India would be keen to take benefit of such an increase.▪︎ Start-upsImpetus for startups continues with tax holiday extended to 31 March 2022 and capital gains tax exemption also to 31 March 2022.▪︎ Public Sector BanksAn outlay of INR 20,000 crore has been proposed to further capitalise the Public Sector Banks which would continue to improve the financial health of PSBs and provide easy capital to them during the difficult times the PSBs in general have been going through.▪︎ AutomotiveThe Budget has laid the foundation for a cleaner and environment-friendly mobility ecosystem. Hydrogen energy mission for generating hydrogen from green power sources; enhancement of CNG – city gas distribution network for vehicles to over 100 more districts and mandatory fitness assessment of personal and commercial vehicles will push adoption of alternative fuel vehicles and accelerate R&D in alternative fuel technology.▪︎HealthcarePM Aatmanirbhar Swasth Bharat Yojana to develop capacities of health care systems, develop institutions for detection and cure of new and emerging disease is the first step to boost rural health and keep country ready for emergency handling of pandemic situations.▪︎ PrivatisationOne Public Sector Insurance Company to be privatised is a great step towards demonstrating the willingness of the government to focus on privatisation and enabling a better platform for this PSU (currently) to effectively compete with other players in the industry.▪︎TransportThe infusion of multiple thousand crores into the public transport system in the country and government’s dedication to investments into construction of metro lines and in improving public bus service, specifically in the Tier 2 cities has the potential to give boost to the much-needed employment generation.▪︎ Real EstateAmendment in InvIT and REIT structures for debt investors will ease fund raising and will provide the momentum to commercial real estate asset class.Hope this helps.