Union Budget 2021: Top Key Highlights

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Maybe, Dalal Street is cheering lack of negative surprises from the finance minister. She surprised bond markets with a fiscal deficit number of 9.5% for FY21 and a very long, slow glide path towards lowering it. The 10-year yield spiked to above 6% from a pre-speech 5.89%. But the biggest reaction came in from the equity markets, after the speech was over. As expected, the health sector also received additional money. In a two-hour long (or short) speech, Finance Minister Nirmala Sitharaman announced a higher capital expenditure for this fiscal and next, focused on infrastructure building. A 3.5% rally on the Sensex, Nifty 50 and 6% jump in Nifty Bank.

  • Equity markets rally 3.5% on budget speech with no negatives.

  • Long, slow fiscal glide path: deficit to reduce from 9.5% in FY21 to 4.5% by FY26 137% increase in health spend.

  • Big infra push via 34.5% higher capital budget at Rs 5.54 lakh crore; infra monetization via InVITs.

  • Gross expenditure up 13% at Rs 35 lakh crore for FY21; same expenditure number for FY22.

  • DFI @ Rs 20,000 crore capitalization + Bad Bank (no amount provided yet) + PSU bank recap @ Rs 20,000 crore.

  • Divestment target at Rs 1.75 lakh crore: 2 PSU banks + one general insurance company + LIC IPO + Air India + BPCL + SPV for PSU land sale.

  • 7 mega textile parks to be set up over three years; FDI in insurance raised from 49% to 74%.

  • Yet another power discom rescue scheme @ Rs 3 lakh crore over five years.

  • Proposal to consolidate SEBI Act, Depositories Act, SCRA Act, Government Securities Act into one.

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