India doubles healthcare spending, opens up insurance to more FDI to get growth back up

India proposed doubling healthcare spending in an annual budget unveiled on Monday and lifted caps on foreigners investing in its vast insurance market to help revive an economy that suffered its deepest recorded slump as a result of the pandemic.

Delivering her budget statement to parliament, Finance Minister Nirmala Sitharaman projected a fiscal deficit of 6.8% of gross domestic product for 2021/22, higher than the 5.5% forecast by a recent Reuters poll of economists. The current year was expected to end with a deficit of 9.5%, she said, well up from the 7% expected earlier.

India, which has the world's second highest coronavirus caseload after the United States, currently spends about 1% of GDP on health, among the lowest for any major economy.

Here are some reactions from Indian businesses, economists and analysts:

MAHESH SINGHI, FOUNDER & MD, SINGHI ADVISORS, MUMBAI

"Even as the government navigates the tightrope of balancing economic growth and addressing fiscal concerns, a hike in infrastructure spending by FM Nirmala Sitharaman in budget 2021 holds the potential to propel the Indian economy on a high growth trajectory."

"The proposal to enable entry of FPIs into debt financing of Infrastructure Investment Trusts will boost global and domestic investor sentiments in the country's infrastructure sector and open new funding avenues. The move holds the potential to position India as a dominant player in the global infrastructure segment."

SHASHANK MENDIRATTA, ECONOMIST, IBM, NEW DELHI

"The fiscal deficit is on the higher side as the pandemic led to a sharp decline in the nominal GDP alongside revenue collections. Budget FY22 has a dual focus on physical infrastructure and social sector. The emphasis on public spending on rural segment, public distribution, transport, and health are likely to boost growth potential in the medium term. Spending push is likely to provide support to key growth drivers, especially rural demand and pandemic-hit segments."

"Higher allocation for capital spending in FY22 is expected to support recovery with a multiplier effect. The realisation of FY22 fiscal deficit target and concomitant spending targets nonetheless depend on attaining high disinvestment estimates."

SAKSHI GUPTA, SENIOR ECONOMIST, HDFC BANK, GURUGRAM

"The 2021-22 budget announced some long-awaited reforms and was a big bang in many ways. The government refrained from consolidating the fiscal deficit significantly and focused on supporting growth."

"The set-up of a development finance institution to finance the infrastructure pipeline is a significant step. The other notable step has been the introduction of an asset reconstruction company, which is likely to provide the much-needed support for banks as stressed assets rise due to the pandemic."

RAJOSIK BANERJEE, PARTNER AND HEAD, FINANCIAL RISK MANAGEMENT, KPMG, MUMBAI

"To address concerns around asset quality, credit loss and liquidity stress, this budget has been proactive to infuse additional capital of 200 billion rupees to PSU banks for providing continued credit access to wholesale and retail borrowers, and therefore push growth agenda."

RUPA REGE NITSURE, GROUP CHIEF ECONOMIST, L&T FINANCIAL HOLDINGS, MUMBAI

"A strong capex push of 5.54 trillion rupees ($75.76 billion) is growth positive. This, combined with the enhanced spending on the health sector, will go a long way in supporting economic recovery. However, the actual revenue generation, both via tax and non-tax receipts during FY22 will be instrumental in the management of fiscal situation."

SUJAN HAJRA, CHIEF ECONOMIST, ANAND RATHI SECURITIES, MUMBAI

"The indications are that the government is going to do more to promote growth rather than maintaining fiscal discipline. This is a welcome move as it will have a positive impact on growth. Also, we are seeing a lot of measures on conditions of doing business which was required. The intent for reforms is also strong."