COVID-19 impacted every single industry. The Indian automobile sector, which was already facing an unparalleled slowdown, was further atrophied due to the pandemic and subsequent localised lockdowns. Carefully and cautiously, the auto sector started recovering in 2021 January and now its going to be strengthened further. Thanks to the Historic & “First Of Its Kind” Union Budget 2021-22.The concluded Union Budget 2021 was very crucial and important in many ways.
It is the first budget of the decade and also very crucial as it comes after an unprecedented pandemic. It is also the milestone for crossing to and defining the new era. In a nutshell, the budget was presented with an aim to stimulate and sustain growth following an unprecedented year affected by the COVID-19 pandemic says, Business Astrologer and Astrostrategist Hirav Shah.
In the last few years, the government has been emphasising on localisation and the Union Budget 2021 further contributes to the ‘Go Local’ cause. But here, the catch is that the automotive industry has been placed at the centre of the country’s economic activities which means that the auto sector has emerged as a clear winner.
Hirav Shah’s Astrological Analysis
1.Mars / Kuja
Different planets in transit in favourable positions either increase or decrease the momentum of a particular sector. Mars is the powerhouse of the Zodiac. Mars is the ruler of Aries and is the planet for Technology . So since Mars is in a favourable transit, the automobile industry will do very well, since the planet represents the automobile sector.
Also, Mars is neutral to Ketu(South Node). Ketu is for Innovation and Creativity.Ketu rules over the Automobile Sector. Automobile sector will certainly get an upsurge when Mars and Ketu are aspected by benefic planets and Sun transits through Aries or Scorpio.
Lastly, Mars signifies fuel-efficient, environment-friendly vehicles & hence, electric vehicles will be the central focus in 2021.
2021 adds to 2+0+2+1=5 which is ruled by Mercury, the planet of Communication & Travel. Mercury has a neutral relationship with Mars and he rules over communication and travel. Hence, when Mercury is in his own house or in the house of a friendly planet, there will be progress in the field of communication, and this will certainly assist the automobile industry.
3.Chandra / Moon
Ketu and Moon get along very well. Moon is the planet for Emotion and Intuition. Hence, the ailing Auto-Industry will very soon realize how to acknowledge emotional buyers and logical niche buyers, so customers /consumers will end up buying more and more vehicles giving the sector a ‘never-seen-before’ boost.
Union Budget Impact On Auto Sector
1.Voluntary Vehicle Scrappage Policy to Phase Out Old & Unfit Vehicles
Finance Minister Nirmala Sitharaman today announced the voluntary vehicle scrapping policy in the Union Budget 2021. As per the policy, old and unfit vehicles will be phased out. This comes in as a big support to automakers, who will benefit from this policy. Basically, the announcement came after a wait of over a decade. If incentivised properly, this will certainly spur demand for passenger and commercial vehicles. However, this will have efficacy only if the roadworthiness test of the vehicles are made mandatory after a definite period.This policy is also expected to gradually reduce the prices of cars.
a.The vehicle scrappage policy will be effective from 1st April 2022 and will benefit automakers and reduce air pollution at the same time. Vehicles would have to undergo fitness tests after completing 20 years for passenger vehicles (PV) and 15 years for commercial vehicles (CV). If their car is declared unfit or polluting, the owners will have to phase out their personal vehicles. People who are taking their old cars to the scrapyard will be further given some compensation to help them in buying a new car.
b.As per the Federation Of Automobile Dealers Association (FADA), there are about 37 lakh commercial vehicles and 52 lakh private vehicles eligible for voluntary scrapping, taking 1990 as the base year. As an estimate, about 10% of CVs and 5% of PVs are still plying on the road.
c.While tabling the Union Budget for 2021-22, Finance Minister Nirmala Sitharaman said that the policy would help in encouraging fuel-efficient, environment-friendly vehicles, thereby reducing vehicular pollution and the oil import bill and can help in reducing vehicle pollution by up to 25 per cent.
d.Major automakers like Maruti Suzuki, Tata Motors and Mahindra have already been exploring scrappage options for a while now.
2. Allocation of Rs 50,000 crores for National Research Foundation
The auto industry is one of the 13 sectors that have been earmarked for extended financial support over a period of the next five years via the PLI scheme. This industry will alone receive about Rs 50, 000 crore for the same. It will ensure that the overall 24 research ecosystem of the country is strengthened, with a focus on identified national-priority thrust areas. This will certainly help the sector in terms of encouraging R&D.
3.MSME and Startups
The customs duty on steel products have been uniformly reduced to 7.5 per cent to bring down the cost of raw materials and help the struggling Micro, Small and Medium Enterprises (MSME) sector. The MSMEs sector has received Rs 15,700 crore, which is double than the previous year.
4.Infrastructure Allocation and 100% tax exempted for investment in Indian infrastructure projects
The finance minister has announced Rs 1.18 lakh crore financial allocation for Ministry of Road Transport and Highways. The highway infra work includes building 8,500km of highways by March 2022. This includes a 3,500km corridor in Tamil Nadu, 1,100km in Kerala at an investment of Rs 65,000 crore, 675km in West Bengal at a cost of Rs 95,000 crore, and 1,300km in Assam in the next three years.This will help in boosting the construction equipment sales and heavy truck and tipper industry and eventually also result in better demand from the rural and wage-earning community in the country.
5. INR 18000 crore to Support Acquisition of over 20,000 buses
a.A new scheme will be launched at a cost of INR18,000 crore to support augmentation of public bus transport services. The scheme will facilitate deployment of innovative PPP models to enable private sector players to finance, acquire, operate and maintain over 20,000 buses. The scheme will boost the automobile sector, provide a fillip to economic growth, create employment opportunities for our youth and enhance ease of mobility for urban residents. This will certainly boost the demand for the ailing commercial vehicle industry and M&HCV segment.
b.Raising the share of public transport in urban areas through expansion of metro rail network and augmentation of city bus service will be worked on.
c.Meanwhile, a total of 702 km of the conventional metro is operational and another 1,016 km of metro and RRTS is under construction in 27 cities.
d.Two new Technologies, ‘MetroLite’ and ‘MetroNeo’, will be deployed to provide metro rail systems at much less cost with the same experience, convenience and safety in Tier-2 cities and peripheral areas of Tier-1 cities. This will boost the last mile connectivity and LCV segment.
The concluded Union Budget 2021-22 could be easily called a ‘pro-growth’ budget in these unprecedented times, which will give a boost to the Indian economy, which is on its path to recovery.
Rightly, there is a huge emphasis on the auto-industry, which will help revive the economy as well as generate employment.
Finally the much awaited scrappage policy has been announced, which is a welcome step. Overall, this budget will help enhance sales of new vehicles and in turn boost vehicular demand and demand for electric vehicles concludes, Business Astrologer Hirav Shah.