Union Budget 2021 Commentary
By Ola Mobility Institute
The attention on ‘Travelnomics’ in the 2021–22 union budget is much appreciated. The Government has allocated a record sum of INR 1,08,230 crores to MoRTH and INR 1,07,100 crores to railways for capital expenditure. The financial allocations underscores the emphasis on improving passenger and freight mobility in the country. These capital investments will aid India’s economic recovery from the pandemic as well as propel the country on its path to a $5 trillion economy.
The Government continues its push towards environment-friendly vehicles in the budget. The voluntary vehicle scrapping policy will act as an incentive to switch from old ICE vehicles. The allocation of INR 757 crores towards the FAME scheme will further bolster India’s EV manufacturing efforts. Similarly, the emphasis on clean air through the allocation of INR 2,217 crores for 42 urban centres with a million-plus population can be expected to drive the shift in favour of EVs. However, the increase of import duty on certain auto parts to stimulate indigenous capacity building may increase the cost of EVs in the near future.
Investments in urban rail and bus infrastructure will help in raising the share of public transport. A commitment to invest INR 18,000 crores to deploy innovative PPP models in bus systems will strengthen the urban transport infrastructure. There is an opportunity to procure electric busses under this initiative and further improve the clean quotient of public transportation. Transport planners should leverage New mobility solutions delivering improvements in first and last-mile connectivity to expand the reach and impact of public transport.
Earmarking of INR 20,000 crores to set up a Development Finance Institution will help in providing critical long-term debt capital for infrastructure. This in turn can be an important lever to nudge the development of sustainable, universally accessible, inclusive and clean transport systems in the country.
The Government’s measures to provide social security benefits to the gig and platform workers mark a step in the right direction. These measures will be sustainable only when worker protection is delivered without increasing the cost of job creation. Additional stakeholder deliberations will be needed to formulate a balanced approach.
The budget presents several opportunities as India navigates out of a pandemic. We look forward to the government, the businesses, and the citizenry working together to make 2021 the year of hope.
