“Overall, the 2021 Union Budget attempts to achieve the difficult balance between structural populism and prudent measures, and demonstrates a reasonable level of policy stability, with some strategic positive interventions which are critical during times of upheaval. The voluntary vehicle scrapping policy for example will provide a fillip to the auto sector which is important not only because it is one of the largest organized sector employer, but also since it sustains a lot of retail lending from banks and NBFCs. The multiplier effect of this policy on the back of a period that witnessed a good crop yield in rural areas combined with the pent up demand from the pandemic and increased disposable income, will be beneficial for the auto sector. Investments in infrastructure are also consistent, and the proposal to establish a Development Financial Institution will hopefully boost infrastructure related projects which require financing and are not getting adequate interest from the banking sector.”
