Registered with the Registrar of Newspapers for India under R.N.I 53640/91
Vol. XXX No. 20, February 16-28, 2021
It was to be expected of course – with a high stakes election to the State Assembly just around the corner, Tamil Nadu and Chennai were bound to receive special attention in the Union Budget. Not that we are complaining. Following the Finance Minister’s presentation of the 2021-22 Union Budget, Madras Musings spoke to Srivats Ram (MD, Wheels India and President, Madras Chamber of Commerce & Industry) on the budget’s biggest takeaways for our state and city.
With it’s considerable focus on infrastructure development, the Union Budget 2021-22 has largely been well-received. “It brought people a sense of relief,” said Srivats Ram. “Taxes have not been raised. The Budget also spends money where expected – healthcare and infrastructure have increased significantly.” He also pointed out that the Budget has allocated for quite a few five-year-plan projects, underlining a certain degree of policy continuity.
“Interestingly”, said Srivats, “the announcement also spoke of privatising two national banks and one insurance company, adding that any government entity not operating in a strategic area would be open for privatisation. This is a fairly big statement – while there has been talk of disinvestment in the past, privatisation is a new term that has been highlighted in this Budget.”
With Tamil Nadu enjoying reasonable success in bringing in investment to the state, the Budget’s infrastructure spends augur well for the state’s appetite for growth. In fact, Tamil Nadu has been given a fair amount of emphasis in the Budget, which has left people feeling largely positive. “Funds to the tune of approximately Rs.1 lakh crore have been set aside for 3,500 kms of national highway projects in the state,” pointed out Srivats. The construction of two major routes – the Bengaluru-Chennai Expressway and the Salem-Chennai Expressway – is also slated to commence this year. Better roads mean better logistics, which facilitates a greater degree of trade and commerce.
Chennai and other TN cities are also expected to benefit from spends set aside for the expansion of the Metro rail and the public bus service. The Budget has earmarked funds to the tune of Rs. 63,246 crores to support Phase 2 of the Chennai Metro Rail expansion. This is a sharp UTurn considering that it was just a couple of years ago when this funding was withheld on the grounds that the phase I of the Metro had not lived up to its expectations in terms of financial returns. Evidently a sudden realisation has set in that public utility schemes such as these usually prove their viability in the long run.
It was also announced that two new technologies would be launched to provide metro rail systems at a lesser cost without compromising on the experience in Tier 2 cities and the periphery of major metros- MetroLite and MetroNeo. In Chennai it is understood that the former will be explored as an option to connect Tambaram and Velachery in Chennai. As for the bus service, there are plans to augment the fleet of buses by 20,000 vehicles. This is not just exclusive to Chennai but across several other cities.
The Budget also spoke of plans to develop Chennai into a major fishing hub. It is reported that the city can expect its harbour to be equipped with state-of-the-art infrastructure and amenities to bolster export potential, benefiting its fishermen. Further, the Budget shared it’s plans to establish a multipurpose seaweed park in Tamil Nadu, with the aim of promoting seaweed cultivation as an alternative livelihood. With an expected investment of Rs. 100 crores, Tamil Nadu’s seaweed park aims to serve the entire value chain from harvest and logistics to marketing and export promotion. It also plans to encourage the use of technology and innovation in the sector.
Touching upon the Budget’s implications for the auto sector, Srivats said, “Apart from augmenting the city bus service, there was also announced a voluntary scrappage scheme that can entered into by anyone who has a private vehicle of more than 20 years or a commercial vehicle of more than 15 years. However, the details are yet to be framed, so we will have to wait before the potential impact can be analysed.”
Speaking on the Budget’s weak points, Srivats felt that the Budget has possibly left small businesses and the hospitality industry feeling lukewarm. “Perhaps more could have been done to encourage lending to small businesses that are going through a financial crunch. Similarly, hotels are facing hard times which are expected to continue in the medium term, because of the pandemic. They need support, too,” he said.
However, prioritization is inevitable when one is faced with limited resources, admits Srivats. “By and large, I would say that this is a positive Budget for medium-sized and large businesses,” he said.
While the budget spends for Chennai and TN are welcome what however remains to be seen is how these pan out on the ground.