There is no 'loss' to anyone from this budget, the alarm bell may ring in the bond market

image source ; economic times

 Finance Minister Nirmala Sitharaman presented the expansionary budget in front of the country on Monday, in which the emphasis was on health expectation and growth. The government maintained the same position on direct tax, while also keeping away from the increase in wealth tax. During this period, the government also increased the capital expenditure by 26 per cent as compared to the estimate of FY 2020-21, while maintaining its debt level at Rs 12 lakh crore. The market expected a similar budget, in which no additional burden was put on anyone. However, the pressure of this budget may fall on the bond market as the bond yield has reached the peak level of four months as the market believes that the efforts taken by the budget may increase inflation.

The Finance Minister assured that the IPO of Life Insurance Corporation of India will come in the next financial year. Apart from this, the government is going to privatize two public sector banks and one government general insurance company. Analysts believe that less money has been kept for capitalization of public sector banks. This time the Finance Minister read the budget speech from the 'digital tablet', while the traditional 'ledger' was removed. The Finance Minister described this budget based on six pillars. In this budget, capital expenditure was encouraged in the main areas.

The six pillars of government include Health and Services, Physical and Financial Capital and Infrastructure, Inclusive Growth for Aspiring India, Outstanding Development of Human Resources, Renewal Research and Research Emphasis and Minimum Government and Maximum Governance.

The finance minister allocated good capital to many sectors. In this, 2.24 lakh crore rupees have been kept for health care, 1.10 lakh crore rupees for railways, 1.18 lakh crore rupees for road sector, 2.87 lakh crore rupees for water life mission.

The government has set a capital expenditure target of Rs 5.54 lakh crore for the coming financial year, which was Rs 4.39 lakh crore for the financial year 2020-21. However, the government did not make any major announcement on private tax.

He expected the fiscal deficit to be 9.5 per cent of GDP in the financial year 2020-21, lower than the market expected. He predicted a fiscal deficit of 6.8 per cent for the fiscal year 2021-22 and expected to gradually bring it down further.

On the revenue front, the government decided to revisit the 400 old customs duty. While duty was increased on many things. The government reduced the custom duty on steel to 7.5 percent, copper scrap from 5 percent to 2.5 percent and naphtha to 2.5 percent.

Apart from this, the government reduced the import duty on precious metals like gold and silver. Duty on many auto parts has been increased by 15 percent. Through these announcements, the government has emphasized on domestic production.

For the financial year 2021-22, the government has set an investment target of Rs 1.75 lakh crore. This includes the privatization of two public sector banks and one insurance company with an IPO of LIC. A capitalization amount of Rs 20,000 crore has been kept for public sector banks.

Talking about reforms, the government has raised the limit of foreign investment to 74 percent on the insurance sector. Now a person's startup can also be registered. ARC and AMC will be introduced for pressurized assets. Many works will be given a digital look. Also, the period of discount on affordable housing has also been extended by one year. The government has announced the merger of SEBI Act, Depositories Act, Securities Contracts Regulation Act and Government Securities Act to halve the market code.