India, a land of opportunity with three high growth sectors for next 5 years.
On 1 February 2021, India released its budget for the fiscal year ending March 2022 (fiscal 2021). The budget's focus on higher capital expenditure, financial sector reforms and asset sales will help to stimulate growth and supply broad-based credit support.
There is tremendous opportunity for using technology in sectors which are of high importance to economic recovery and prosperity. Below is the summary
Asset reconstruction company to resolve legacy problem loans will be credit positive for banking system - The pooling of stressed assets can lead to faster resolution and better recovery rates for lenders. Further, government's plan to divest stakes in two public sector banks and IDBI Bank Ltd will help banks become more market oriented with technology.
Insurers’ FDI increase, plan to privatize government-owned insurers - The increase in the limit on foreign direct investment (FDI) in insurers will provide new sources of funding, and access to external know-how. India’s insurance market is still untapped and is small compared to United States and China despite it’s massive population.
There will be a positive impact from the proposed initial public offering (IPO) of Life Insurance Corporation of India Co., Ltd (LIC) and the privatization of a government-owned insurer. These changes come at a time when there is continued increased demand for and awareness of the health and protection business. Facilitated by regulatory guidance, insurers have been developing products and strengthening their digital offering to harness growth potential.
Tax incentives and measures to increase consumption - Income tax incentives and a vehicle scrappage policy will propel demand in the housing and automobile sectors, supporting other areas such as steel. Measures to incentivize foreign portfolio investment will further promote growth. India is yet to experience the drive for electric vehicles with more opportunities to come.
Public spending to remain high for highways and railways; divestment of public infrastructure planned. The government announced it would set up a dedicated infrastructure financing body. The authorities will also divest operating public infrastructure to finance new infrastructure. There is tremendous opportunity for regulatory oversight and using new technology to build modern infrastructure.
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Source: Moody's, Ft, Public source.