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Industry Watch

Union Budget 2021: Pulp and Paper Industry’s Outlook

Mr. P.S. Patwari, Executive Director & CEO, Emami Paper Mills Ltd.
Mr. P.S. Patwari, Executive Director & CEO, Emami Paper Mills Ltd.

The Union Budget 2021 clearly signals a move to return India to a higher growth trajectory after the record contraction caused by the pandemic. The announcements about infrastructure spending, health and wellbeing of the people and strengthening of the financial sector have clearly shown this intent. The pattern of reforms is focused on boosting growth and removing bottlenecks across the industries. It will protect purchasing power, create more jobs and encourage demand.

Paper and paper board is a core industry that plays a vital role in the economic growth of our country. The industry is expected to grow in the range of 12-15% in the coming year due to increased economic activities. Infrastructure spending and rural growth being the focus areas of this budget — all industries like FMCG, pharma, health and hygiene are expected to grow significantly. Subsequently, more than 75% of the paper and paper board industry producing packaging paper and board is also expected to witness a high growth opportunity. Consumer awareness concerning eco-friendliness, sustainability, replacement of plastic, rise of e-commerce and growth in retail are again big boosters for the demand of packaging paper and paper board. Indian paper mills are investing and would be required to invest more in the capacity building and technology upgradation of their facilities to address the demand growth.

Mr. Pawan Agarwal, Managing Director, Naini Group of Industries
Mr. Pawan Agarwal, Managing Director, Naini Group of Industries

The Union Budget 2021 is a path breaking budget in the sense that it has done away with the old custom of Finance Ministers getting overawed by the pressure of controlling fiscal deficit. Instead, it focuses purely on growth, thereby stimulating demand. The growth is expected due to considerable budget outlay in the areas of infrastructure, health, education, agriculture and defence. This is the most prudent path for a developing economy like India. It will certainly drive various sectors of economy along with pushing the case for Atmanirbhar Bharat.

The creation of separate legal entity for handling bad debts of the banks is also a welcome step. The banks can now focus on supporting creation of quality assets without taking the stress for bad assets. Further, the enormous increase in expenditure has not been planned to be met by putting new taxes, as was the fear. The current level of taxes is already the lowest in the world and it will surely give suitable disposable income at the hands of both the individuals and the corporates. The budget has shown the right path, and the share market has already given a standing ovation. Now, it is up to the industry to sit up and start planning to reap benefits as this decade has taken a turn around the corner with this reformist budget.

Mr. Satya Pal Gupta, Chairman Narsingh Dass Group and Former President - Federation of Paper Traders Association of India
Mr. Satya Pal Gupta, Chairman Narsingh Dass Group and Former President – Federation of Paper Traders Association of India

I feel that there is nothing concrete in the Union Budget 2021 — specifically for the traders. However, we are positive that the situation will be again examined by the government when the normalcy prevails.

For this session, the Government has focused only on the following sectors — corporates, MSME and service sector. In the present circumstances the government has completely ignored the traders.

Business is not about industry and manufacturing alone. It can neither be limited to large or MSMEs, DISCOMs, HFCs, NBFCs, MFIs and so forth on one end and labourers, self-help groups and cottage industry on the other. There is a section in between the two, and that is the trader and or self-employed person, wholesaler, retailer, shopkeeper, merchant, internal trade, call or name it in any way. Pre- and post-independence, successive governments have deliberately ignored the existence and welfare of this segment of the business sphere.

In deeply troubled times like the present one, it’s hard for traders to sustain. In an era where traders struggle with discrimination, it’s difficult to build a healthy economic culture.

Whatever the benefits and tax concessions that were announced during the Union Budget 2021 session, will only benefit the above three mentioned sectors. As the traders are not allowed to register as MSME – it is now imperative for the government to also recognize the trading fraternity.