What Indian students thought of Nirmala Sitharaman’s 2021 Budget

Much talk, but where’s the action?
Much talk, but where’s the action?
Image: Reuters/Prakash Singh/Pool
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For India’s youth, finance minister Nirmala Sitharaman’s budget speech on Feb. 1 was mostly salad dressing and hardly any meat.

All eyes were on the Narendra Modi government’s budget for the financial year 2021 to kickstart economic recovery after the coronavirus outbreak. Big announcements around disinvestment were made. In Nirmala Sitharaman speech, fiscal prudence took a backseat, healthcare got a much-anticipated boost, startups got a small reason to cheer and taxpayers’ slabs remained unaltered.

But upon a closer look, Sitharaman sprung a lot of jargon and hardly any details for little under two hours.

Keeping tradition intact, Quartz invited graduate students from the Indian Institutes of Management in Shillong (IIM-S), Bangalore (IIM-B), Lucknow (IIM-L) and Calcutta (IIM-C), and the Indian School of Business (ISB), among other schools, to share their reactions to the budget.

The responses have been edited for length, grammar, and clarity:

Of health, wellbeing, and vaccines

Speech: A new centrally sponsored scheme, PM Atmanirbhar Swasth Bharat Yojana, will be launched with an outlay of about Rs64,180 ($8.8 billion) crores over 6 years. This will 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.

Sumit Kumar, IIM-C: Rs64,000 crores over six years is not a huge amount. Although, I do believe that the government is moving in the right direction by increasing the spending on the healthcare sector.

Amrita Mishra, IIM-C: I This year’s budget took health and wellbeing very seriously. It covered everything from sanitisation to vaccines. However, Covid-19 wasn’t enough to make mental health a part of the budget.

Aritro Datta, IIM-S: The proposed spending in health care will not only help in the implementation of the vaccination programme but also in building a more robust delivery system which will prepare the country to handle future health crises as well.

Vehicle scrapping

Speech: We are separately announcing a voluntary vehicle scrapping policy, to phase out old and unfit vehicles.

Sandhaan Goyal, IIM-S: The initiative can reduce vehicular pollution and provide a further push to the automobile sector. People buying new vehicles can possibly adopt newer technologies like electric vehicles. It is important in the case of commercial vehicles that the benefit of scrapping is enough for the cost of buying a new vehicle otherwise it can lead to high rentals which will be passed on to the consumer.

Infrastructure boost

Speech: The National Infrastructure Pipeline (NIP)…will require a major increase in funding both from the government and the financial sector. In this budget, I propose to take concrete steps to do this, in three ways: Firstly, by creating the institutional structures; secondly, by a big thrust on monetising assets, and thirdly by enhancing the share of capital expenditure in central and state budgets.

Sohum Sen, IIM-C: The NIP is an idea whose implementation is yet to see the light of day, and monetisation of assets, although underway, is not always of the nature one would like to see. Forcing one state-owned firm to buy another in order to generate cash does not constitute successful monetisation in the true sense of the term.

Keshav Khanna, Graduate Institute of International and Development Studies (IHEID), Geneva: The budget seems to bet almost too much on the belief that public infrastructure investment will undoubtedly act as a multiplier for the rest of the economy. That seems to provide the onus for much of the GDP numbers stated herein. This is bound to be tested rigorously with any recovery this year.

Speech: To further augment road infrastructure, more economic corridors are also being planned. Some are (in Tamil Nadu, Kerala, West Bengal, and Assam.)

Chirag Mahawar, IIM-L: Though most of the national highway projects have been announced in the upcoming election states, it will be interesting to see how it might swing some votes. But infrastructure, especially in industrial states, has been a longstanding demand and hence will likely boost investments in the states.

Asset monetisation

Speech: Monetising operating public infrastructure assets is a very important financing option for new infrastructure construction.

Goyal, IIM-S: Considering the pandemic-hit economy, monetising assets such as national highways and airports instead of raising taxes is a smart move by the government. Monetisation of idle assets such as surplus lands with the government paves the way to further unlock value. The funds raised can help India fulfill its expansionary ambitions and at the same time alleviate the fiscal deficit.

Khanna, IHEID, Geneva: Asset monetisation is a long-touted promise of the current regime, not entirely sure how viable this will be as a source of deficit financing. With the ongoing response to agro reform, it’ll be interesting to see how the labour unions (frequently politically-aligned) respond.

Financial capital, insurance, and more

Speech: To instill confidence amongst the participants in the corporate bond market during times of stress and to generally enhance secondary market liquidity, it is proposed to create a permanent institutional framework. The proposed body would purchase investment grade debt securities both in stressed and normal times and help in the development of the bond market.

Abhinav Jha, IIM-B: Development of corporate bond markets is of great importance for investment in infrastructure projects that are generally of long-term, which can be financed with matching long tenor corporate bonds bought by the insurance companies and pension funds. The corporate bond market penetration in India with respect to GDP is low (~15%) as compared to the other emerging markets such as Brazil and Turkey. The finance minister has taken a positive step to improve the liquidity of these bonds in the secondary market which will encourage more investors to invest in these instruments.

Speech: I propose to amend the Insurance Act, 1938 to increase the permissible FDI limit from 49% to 74% in Insurance Companies and allow foreign ownership and control with safeguards.

Sen, IIM-C: The insurance industry in India is yet to hit a stage of maturity due to the low rate of adoption and awareness. Foreign funding can produce a faster rate of penetration and provide firepower to the innovation in products in the space.

Speech: An Asset Reconstruction Company Limited and Asset Management Company would be set up to consolidate and take over the existing stressed debt and then manage and dispose of the assets to Alternate Investment Funds and other potential investors for eventual value realisation.

Saee Mandlekar, IIM-L: Stressed assets in the banking system are expected to surge once Covid-related regulatory forbearance is relaxed. Setting up a government-backed stress assets manager, given the paucity of capital, is a great idea. It will help the banks focus on fresh credit growth which is much needed.

Khanna, IHEID, Geneva: While a good idea in the short run, it might end up encouraging banks to deal more unscrupulously. The need of the hour was to address some of the fundamental reasons why NPAs are so endemic to public sector banks in the first place (i.e., cronyism in Indian industry).

Disinvestment dilemma

Speech: A number of transactions namely BPCL, Air India, Shipping Corporation of India, Container Corporation of India, IDBI Bank, BEML, Pawan Hans, Neelachal Ispat Nigam Limited among others would be completed in 2021-22. Other than IDBI Bank, we propose to take up the privatisation of two Public Sector Banks and one General Insurance company in the year 2021-22.

Mahawar, IIM-L: Disinvestment in loss-making units when markets are almost at peak valuation might be a good move but the response from buyers will complete the story.

Sen, IIM-C: Disinvestment of public companies has been a stated objective of the government for many years now but having overplayed their hands on certain matters at various times, their promises each year seem to hold less and less water. The LIC IPO is a good move but the overall success of the disinvestment plan of the Modi government is not a sure thing. We have seen this particular script play out before and it has not played out very well.

Jha, IIM-B: The government has to deal with the backlash from unions in these companies who are vehemently against the privatisation and have raised concerns over the same. Having seen the current environment around the farm laws, I suspect the government will be cautious to execute the sale of any such companies in the near term as it won’t want any protest arising from the unions to join the furor. Further, strengthening the argument is the fact that the finance minister did not specify which two banks will be targeted for privatisation, which doesn’t send a strong signal to the market regarding any such deals materialising in the near-term.

Actions for agriculture

Speech: Our government is committed to the welfare of farmers. The MSP (minimum support price) regime has undergone a sea of change to assure price that is at least 1.5 times the cost of production across all commodities. The procurement has also continued to increase at a steady pace. This has resulted in increase in payment to farmers substantially


The Agriculture Infrastructure Fund would be made available to APMCs (Agricultural Produce Market Committees) for augmenting their infrastructure facilities.

Khanna, IHEID, Geneva:  The ability of APMCs to tap into AIF is a clear response to farmer’s protest claim of the government’s desire to weaken the APMC system. However, the budget did not provide any structural reforms to a broken agricultural sector. No emphasis on crop diversification is a big miss. MSP itself continues to be relegated to a few crops. A more targeted investment was needed to encourage crop diversification.

Supporting migrants and labourers

Speech: We have launched the One Nation One Ration Card scheme through which beneficiaries can claim their rations anywhere in the country.


To further extend our efforts towards the unorganised labour force migrant workers particularly, I propose to launch a portal that will collect relevant information on gig, building, and construction-workers among others. This will help formulate Health, Housing, Skill, Insurance, Credit, and food schemes for migrant workers

Khanna, IHEID, Geneva: Seems to be an overly simple solution for a very broadly defined segment of workers. Gig workers could include anyone from taxi drivers to freelance app developers. Also a bit unclear how the portal would assist with data collection and/or policy formulation. The sentence is full of buzz words but clears up little.

Sizing up the National Education Policy

Speech: More than 15,000 schools will be qualitatively strengthened to include all components of the National Education Policy.

Vasundhara Misra, IIM-S: Qualitative strengthening of schools can play a huge role in  development of human capital which can consequently contribute to economic growth and development in the long run and can also improve India’s position on the Human Development Index.

Sen, IIM-C: The NEP in itself is a document whose efficacy in creating value for the Indian education system can be debated. On top of that, “qualitative” being the qualifier added to this idea of strengthening schools to do better seems to suggest that there is no way to gauge the impact of the intervention at first glance.

A bold fiscal stance

Speech: The fiscal deficit in RE 2020-21 is pegged at 9.5% of GDP.

Raghav Behani, ISB: On the fiscal deficit front, the government for the first time has gone on the front foot and taken bold measures. The general consensus on the street was that there will be a corona tax or a corona cess to make up for the government’s revenue loss and increasing expenses. However, the finance minister has given due consideration to the sharp recovery and decided not to shock the industry with tax hikes.

Kumar, IIM-C: The FRBM (Fiscal Responsibility and Budget Management) Act is a dead act that has no significance in current times. Government willingness to spend on capital intensive projects and going well beyond 3.5% fiscal deficit target is a welcome sign.


Speech: …we shall reduce compliance burden on our senior citizens who are 75 years of age and above. For senior citizens who only have pension and interest income, I propose exemption from filing their income tax returns. The paying bank will deduct the necessary tax on their income.

Mahawar, IIM-L: The relaxation is more of a political stunt and doesn’t really resolve much for senior citizens. The stringent relaxation to only selected senior citizens with only two mentioned income streams will deprive a majority of the senior citizens of availing the benefit.

Speech: To further reduce litigation for small taxpayers, I propose to constitute a Dispute Resolution Committee for them, which will be faceless to ensure efficiency, transparency and accountability.

Datta, IIM-S: A key concern for investors and businessmen has been tax uncertainty. The proposed board for advanced ruling dispute resolution committee, faceless appeals to ITAT, and reduction of time for reopening assessments (from six years to three years) shall go a long way in boosting the confidence.

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