Gautham Pai: The Budget encourages spending, but expected special attention to packaging

Budget 2021 was aimed at reviving an economy that plunged into the deepest recorded slump amid the Covid-19 pandemic and Union Finance Minister Nirmala Sitharaman has done exactly that by encouraging spending more and much more. Keeping the taxes at where it is and funding the requirements through additional borrowing is the right thing to do to revive the economy. This could help bring the expected growth in fiscal 2021 when the economy is expected to bounce back with the highest growth rates for a while now.

A welcome development of the budget is the large fund allocations for health, infrastructure and agriculture. India has the second largest load of Covid cases in the world and we need to spend to keep our citizens healthy and also to upgrade the healthcare infrastructure. The infrastructure segment is affected by labour shortage and needs large investments to complete the pending projects and make new projects viable. Steel prices are set to reduce. Agriculture needs more support as some of the production cycles were disturbed during the pandemic.

Meanwhile, additional credit infusion through banking channels will help address the issue of asset quality and liquidity crunch and will go a long way in containing the loss in business. Reducing the threshold limit of units to be considered as small will help small businesses, the backbone of Indian business space, in a big way.

In the distress financial situation, it was a welcome measure to avoid any additional tax burden. The much-feared Covid-19 cess was avoided and this is an unexpected but welcome measure which will help retain cash for business spend. The continued focus on ‘Atmanirabhar Bharat’ is important and will help in developing local industry.

However, in the Budget, business groups in India expected opening up of more sectors to Foreign Direct Investment, particularly when the world looks at India as a good option for their sourcing facilities. We saw increase in FDI only in the insurance sector and two PSU banks in the Budget.

A lot was expected on export promotion incentives, which should have helped making Indian firms more competitive in the international market. Increasing the CD alone will not help promote Indian businesses.

Again, more time to realise the outstanding against exports should have been a welcome measure as most countries across the globe are still reeling on the impact of Covid-19 with most of them having deep and long issues to address in their own economies.

Also, logistical support for all businesses in India, on both exports and imports, has turned out to be an issue, including the steep cost escalation post-Covid. This is affecting all businesses, but there was no budget measure to improve the situation.

Specifically, Manipal Technologies expected support for the printing business in the Budget. Printing, which centres around the physical movement of products, has taken a severe beating and needed some extra support, including reigning in the import price of paper products. The ever-escalating fuel prices have had an impact on logistics costs across all businesses. So, we were looking for specific actions to manage overall logistics issues.

The way Indian customers shop has undergone a sea-change pos-Covid. Online platform sales with more personalised buying has given space for small size packaging in place of mass B2B sales. The wide spread distribution and logistics challenges, coupled with small order personalising requirement, has reduced the margins. Yet again, a special attention was expected to the essential service of packaging in the Budget.

The fintech companies are now playing a much more important role in the overall payments, micro-loans and support for the retail industry. They engage large workforce in rural areas. These businesses need lot of seed capital to expand. There should have been a budgetary support to drive the digital penetration and digital engagements in rural India.

Indian companies like us play a significant role in supporting the agenda of Atmanirabhar Bharat by developing local products and solution. These efforts and actions reduce dependency on foreign technologies. We were expecting specific and direct actions towards supporting local companies to create specific technologies and solutions for building the nation.