India budget
A file picture from the 2019 Budget... But India's Finance Minister Nirmala Sitharaman faces challenges like never before when announcing the latest one on February 1. The expectations will be as onerous as the challenges. Image Credit: AP

Make up for a lost year – India’s Finance Minister Nirmala Sitharaman will have that one target in mind as she puts the policies and plans that make up Budget 2021-22, which is to be revealed on February 1.

As she works on the various options towards recovery, Sitharaman cannot afford to put any brakes on government spending. Call it by any name – stimulus, relief, incentives – heavy government spending is the only way growth is going to come back. Period.


What India is targetting its economy to be by 2024. It is currently at $2.8 trillion. The pandemic will have the Government rework its targets.

Will this mean NRIs could pay more on customs duties?

The ‘Make in India’ initiative remains a core principle for the Modi Government. At a time when the country’s manufacturing sector needs all the help it can get, it’s domestic buying that India wants. Not imports.

NRIs should brace themselves to pay more on any goods they plan to take to India.

“The aspirations of ‘Atamnirbhar Bharat’ and a $5 trillion economy should drive Budget 2021,” said Pankaj S. Jain of the tax consultancy AskPankaj. “Custom duties on finished goods, especially electronics, could see an increase to promote domestic manufacturing."

In other words, NRIs flying back to India with the latest 4k/8K TV will have to pay more… and TVs won’t be the only goods that face a higher duty. Last year, India raised import taxes on a range of products such as furniture and footwear by up to 20 per cent.

This year too, I will not be surprised to see imposition of new custom duties on imported items, particularly in electronic manufacturing space

- Anita Yadav, CEO of Credit Advisory ltd.

What’s likely to happen to the rupee? Should NRIs hold or send now?

This may be the time to hold... Government wants the rupee to weaken and make exports easier. NRIs will not be complaining. Image Credit: Reuters

Chances are that the rupee could see a slide in the coming days.

The government is keen for the rupee to weaken, and that could help make India’s exports more competitive. Recent days had seen the rupee get stronger, and this will likely be something the government – or RBI (Reserve Bank of India) – will attempt to change.

“The rupee has been in strengthening mode on account of FPI (foreign portfolio) inflows,” said a spokesperson at LuLu Exchange. “The rupee is expected to stay in the range of 72.75-73.45 to the dollar. It will remain volatile during the budget session as traders might swing it both sides.”

Abhishek Goenka, CEO of Mumbai-based IFA Global, echoes the sentiment. "The RBI shall be on the front foot defending the rupee with the help of its surplus forex reserves it has been hoarding for some time.  The forex intervention, so far this fiscal year, has touched around $73.7 billion.

"It  is likely to spend at least $20 billion more to support the rupee and taking its overall forex intervention to $93 billion."

Hiking duties would have serious implications on economic revival. It is important to understand that exports are increasingly import-led and an increase in duties would only weaken this

- N.R. Bhanumurthy, Economist and Vice-Chancellor at B. R. Ambedkar School of Economics

Should NRIs be thinking of investing in property? Will the government offer more incentives?

The Indian Government - just like state governments - was quick to announce a series of incentives to prop up the real estate sector after the pandemic hit. And to an extent, these measures helped; home sales across cities are improving, and NRIs were quite active participants.

Is there room for more support from the government?

It's not just developers offering incentives to buy.. the Indian Government as well as the states are doing their bit to make buying homes an attractive proposition. Image Credit: Bloomberg

“There is a difference between relief package during the pandemic and measures to help speed up growth,” said Dr. Niranjan Hiranandani, President of India’s developer grouping NAREDCO. “Some of the announcements over the past few months would fall in both categories.

“The stressed project SWAMIH fund by the Centre or Maharashtra reducing stamp duty and slashing premiums on real estate project sanctions - these can be interpreted in both ways. The path ahead is challenging. Any step - be it in the Budget or incentives - will have a multiplier effect on the economy.

“New incentives need to be announced, existing ones need to be enhanced.”

It’s for the government to show they are listening. NRI property buyers will be watching those space closely.

Is shopping for gold likely to turn more expensive?

Will the Government make buying gold in India more expensive? Will it be one of the categories that will likely see duty hikes? February 1 will provide the answer. Image Credit: Reuters

Off and on, there has been much speculation about the Indian Government wanting to put the gold assets held by resident Indians to better use. And wanting a measure of how much of gold is actually owned in the country.

Gold and jewellery buying was an instant casualty of the pandemic, and demand dropped by 40 per cent-plus last year. In this scenario, the government may not immediately add to the import duties on gold, which are already quite high.

If they do raise duties and make buying gold costlier in India, then expect the UAE jewellery market to be a beneficiary. And of course, help any expat buying gold here to sell later in India…

Another budget expectation would be to see if the Government allows NRIs to invest directly into the stock market to shore up funds. NRIs may see the continuation of relief on residential status because o travel restrictions due to COVID-19.

- Pankaj S. Jain of AskPankaj consultancy

What next for Air India?

Stock Air India
Nailing the Air India privatisation will be a key goal for the Government this year. Whatever be its future, NRIs in the UAE and elsewhere will take lot of heart from Air India's role in the Vande Bharat mission. Image Credit: Agency

Through the pandemic months, Air India rose to the challenges in carrying out the repatriation flights from the UAE and elsewhere. The ‘Vande Bharat’ mission was a notable success, by any yardstick.

But the legacy issues for Air India remain – and finding a buyer for it is the biggest challenge for the Modi Government when it comes to privatization.

The Government is selling its entire 100 per cent stake in the struggling airline, which has been suffering losses since its merger with domestic operator Indian Airlines in 2007. The Indian conglomerate Tata Group and US-based fund Interups Inc. are among the entities that have shown interest in making initial bids for Air India.

Will a sale mean lower ticket rates?

India economy 1
Whether on an international route or domestic, fliers can expect heavily discounted ticket rates and special offers. India's airlines will be counting on the government to restore the industry back to some strength. Image Credit: Agency

That’s a long shot. But once the full frequency of flights between India and the UAE is restored, expect airlines to offer some highly competitive rates. At least initially.

Once fliers shake off all worries related to COVID-19 and the route sees demand return to normal, expect rates to spike. Some facts of life will never change…

Huge volatility is expected during this time in equities... which shall influence the trend of the rupee.

- Abhishek Goenka, CEO of IFA Global