Our finance minister has introduced the budget for FY21 on 1st Feb 2021 and after the budget Sensex jumped 2,314 points i.e. 5% in a single day! This is one of the biggest jumps in a long time. And while I am recording this video on the next day, Sensex has jumped another 1250 points and is very close to hitting the level of 50,000! Clearly, the market has reacted positively towards the budget.

So in this article, we will review the budget and identify the top 11 key takeaway from the budget.

We will look at each news highlight and identify the sectors that would benefit from the budget and explore the key companies in each sector.

Takeaway #1

• The biggest takeaway from the budget is that FM has announced a capital expenditure of Rs 5.54 lakh Crore for FY22 against the FY21 capital expenditure of Rs 4.12 lakh crore. 
• That’s an increase of 34%. I think this is the most important aspect of the budget. After the Covid crippled the economy, we needed the government to revive the economic activity by spending more money. This would eventually benefit every sector of the economy.
• Government has planned to raise the capital via strategic divestment in 2 PSUs and one from LIC. With this, the government is planning to raise 1.75 lakh cr by FY22.

Takeaway #2

• 2nd key takeaway is that Health & well-being sector would get Rs 2,23,846 Cr from this budget which is an increase of 137% as compared to Rs 94,452 Cr last year.
• Government has launched a new scheme called PM aatmnibhar swasth bharath scheme with a total budget of Rs 64,180 crore over the next 6 years. This would positively impact the healthcare sector in India.
• The scheme is to develop capacities of primary, secondary, and tertiary care health systems, strengthen existing national institutions, and create new institutions, to cater to detection and cure of new and emerging diseases.

I think this is again a great move by the government. COVID had exposed the issue in our healthcare system and it needed strong attention.

Takeaway #3 Another sector that has been the focus in the budget was Infrastructure.

• Infrastructure is a heavy investment sector and it requires a long term debt financing. Government has set up a “Development Financing Institution” with an initial amount of Rs 20,000 Cr. 
• Our FM said that “the ambition is to have a lending portfolio of at least Rs 5 lakh crore for this DFI in three years time.” This would play a key role as an enabler in infrastructure financing in the country.
• She also announced the launch of a "National Monetization Pipeline" of potential brownfield infrastructure assets, stating that monetising operating public infrastructure assets is a very important financing option for new infrastructure construction. An asset monetisation dashboard will also be created for tracking the progress and to provide visibility to investors. This is again a great move!
• Now when we have an asset monetization program to monetize the public infrastructure, it would attract more investment from foreign investors. And that is the key for growth.
• For road and highway infrastructure - more than 13,000 kilometre length of roads at a cost of Rs3.3 lakh cr already awarded under the Rs5.35 lakh cr Bharatmala Pariyojana project. FM says, by March 2022, the government will be awarding another 8,500 kilometres and complete an additional 11,000 national highway corridors.

Please understand why infrastructure is important. The economy needs reliable infrastructure to connect supply chains and efficiently move goods and services from one place to another.. Infrastructure connects households across metropolitan areas to higher quality opportunities for employment, healthcare and education. The adequate infrastructure in the form of road and railway transport system, ports, power, airports and their efficient working is also needed for integration of the Indian economy with other economies of the world.

Takeaway #4

• 4th takeaway is in the Insurance sector. Government has increased the FDI investment in the insurance sector from 49% to 74%. This would boost the insurance sector in India. There are some top notch companies in the insurance sector including HDFC life, SBI life and ICICI prudential life insurance.

Takeaway #5