Budget Analysis for Investment and the numbers from 'Health and Wellbeing'
If the proposed actions are executed, it would benefit the investors, but the usage of the infrastructure is necessary to keep the value increasing. What is the use of ‘better travel experience’ when people are locked inside their houses?
News and announcements are just 10% of what we see and 90% of what we think and expect out of it, rather, what we expect others to do with the news. Thinking about this ratio and its effects (don’t think chaos theory) puts us in a loop, and conventional knowledge can only help us a little but being patient and analyzing past trends does way more to keep us safe. The budget analysis or its breaking down to reach the holy grail of ‘Best investment’ is just another interpretation by us. This should not be taken as an investment recommendation. Conduct your due diligence before making investment decisions.
The budget could mean an increase in many sectors, a few that we intend to discuss here but the most important is the functioning of the capital markets and the safety of the investors. What has the budget done to address this issue? A separate ‘Investor Charter’ is said to be laid for investor protection. The main 4 Acts of the Indian Capital Markets are proposed to be converted into one ‘Securities Market Code’ for better streamlining of processes. The 4 Acts being; SEBI Act, Depositories Act, Securities Contract Regulation Act, and the Government Securities Act. This would give incidental benefits to the investors, but direct benefits would come to the institutions and big companies or even Securities Lawyers, who now must be familiar with just 1 Code to advise all their clients.
The commodity market ecosystem is going to benefit as there is a plan to strengthen the Gold Exchanges. This would be very vital for the domestic investors as Gold has a higher acceptance amongst Indians. There is also a drive to increase the usage of digital gold investing.
Just as there was an announcement to strengthen the debt resolution process, the government has bought in various intensive measures to increase the bond market. A Fintech hub is proposed to be institutionalized at the IFSC to increase the corporate bond market. There is another proposal to set up a Development Financial Institution by an Act, to provide debt funding of five lakh crores for infrastructure.
There seems to be a great future for the hydrogen and solar energy sectors. There is a proposal to infuse 1000 crore to the Solar Energy Corporation of India. Hydrogen energy machines are planned to be strengthened. As a part of Atmanirbar Bharat, an International Solar Alliance is planned to boost this sector. The stocks in this sector could be a good pick.
Overall, there is a great promise for Infrastructure and capital expenditure, as they were the key focus of the budget. Many airports and seaports are planned to be built. The management of ports and shipping will be delegated through Private-Public Partnerships. The recycling of ships will increase the turnover of this industry. This also promises to increase the job opportunities of this sector. There is proposed funding for infrastructure pipeline funding. The share of capital expenditure will be increased in the state and central budget. The focus on the Infrastructure and growth of the City gas distribution network will imply growth in the value of Infrastructural Investment Trust (InvIT) and Real Estate Investment Trust (REIT). There is a proposal to monetize operational ‘Public Infrastructural Assets’. More ‘Brownfield’ infrastructural assets will be launched. This will offer more value and cash returns. More roads and highways are planned to be launched. This will boost the logistics industry; the share prices of the related industry will also increase if more roads are built. Railway Infrastructural assets are also in the pipeline. Power infrastructure and Urban infrastructure are also planned with heavy amounts.
There is a proposal to enhance the metro and public bus transport services, aimed to boost the automobile sector. But does this translate to public benefit, at a time when there is no travel and rural migration? If the proposed actions are executed, it would benefit the investors, but the usage of the infrastructure is necessary to keep the value increasing. What is the use of ‘better travel experience’ when people are locked inside their houses? Economy reviving and better usage of capital assets and infrastructure is the judgment of the investor, but there are heavy chances that work from home and subsequent rural migration might be the new normal.
Many would say that the Software and Technology industry grew after the ‘Dotcom Crash’. The Investment industry and the fintech industry grew after the 2008 Housing bubble. Yes. new industries will become multi-baggers. The quest lies in finding the right industry that would grow after a crash.
Analysis of Health and Wellbeing
The budget 2021-2022 is divided into six pillars, the first being “Health and Wellbeing” instantiating that healthcare is the paramount pivot of the budget. Under this pillar, a total budget of Rs.2.23 lakh crore is allocated for 2021-22.
Spending in the health sector:
The Government of India divulged that there is going to be 134% augmentation in the spending towards health. However, the total budget allocated towards this sector shows a decrease of 9.76%. This is because the increased spending is in respect of sanitization which is not represented under the health sector.
Drinking water and sanitization budget (in lakh crore rupees):
The Finance Minister announced that Rs.35,000 crore had been allocated towards COVID-19 vaccine, which is of supreme importance in the present state of affairs and that additional funds will be allocated, if need be, in the future. The Ministry of Finance has stated that India has already sanctioned the use of two vaccines in January 2021. These vaccines are already in use for restricted groups of people, i.e. 3 crore healthcare and frontline workers. There will be two more vaccines lining up along with them soon. We can observe that the share price of Pfizer has increased by Rs 100 after the vaccine drive was announced.
Further, a new centrally sponsored scheme, PM Aatmanirbhar Swasth Bharat Yojana, was announced at the cost of Rs.64,180 crore. Over a span of six years, the scheme aims to strengthen the primary, secondary, and tertiary healthcare systems’ capacities. It also builds new institutions and boosts the existing institutions to be able to detect and cure any new and emerging diseases in addition to the National Health Mission.
Under the PM Aatmanirbhar Swasth Bharat Yojana, the following proposals were made:
- Support for 17,788 rural and 11,024 urban health and wellness centers.
- Setting up integrated public health labs in all districts and 3,382 block public health units across 11 states.
- Critical care hospital blocks and 12 central institutions will be installed in 602 districts.
- Support will be provided to the National Centre for Disease Control (NCDC), its 5 regional branches, and 20 metropolitan health surveillance units.
- Provisions will be made to expand the Integrated Health Information Portal to connect public health labs across all states and union territories.
- Proposal to build 17 new public health units and strengthen 33 existing public health units at the Points of Entry of 32 airports, 11 seaports, and 7 land crossings.
- Plans to set up 15 Health Emergency Operation Centers and 2 mobile hospitals.
- Installation of a national institution for One Health, a regional research platform for WHO South-East Asia Region, 4 regional National Institutes for Virology, and 9 Bio-Safety Level III laboratories.
When it comes to the Nutrition section, the Finance Minister proposed the launch of Mission Poshan 2.0 where the Supplementary Nutrition Program and the Poshan Abhiyan are merged. The new scheme aims to strengthen the nutritional content, delivery, outreach, and outcome of the individual programs. An intense strategy will be adopted to improve the nutritional outcomes across 112 aspirational districts.
On the whole, it is a good maneuver on the part of the GOI to step up the budget for health care. However, in order to garner the benefits of this budget, plans must be implemented and corruption must be obviated. Mismanagement of these funds will emanate invariable outcomes or even worse.