Updated: February 1, 2021 1:52:19 pm
Budget 2021 Highlights: The Union Budget 2021-22, which has come at a time when India’s economy is reeling under the aftereffects of the Covid-19 induced lockdown, was presented by Union Finance Minister Nirmala Sitharaman at Parliament Monday. During her speech, Sitharaman announced a total spend of around Rs 2 lakh crore on healthcare, Rs 35,000 crore for the Covid-19 vaccine, Rs 1.10 lakh crore outlay for railways and said the government aims to complete 11,000 km of national highway infrastructure this year. The budget for 2021-22, meanwhile, imposed a Rs 2.5 per litre agri infra cess on petrol and Rs 4 on diesel.
Sitharaman also scrapped income tax for senior citizens under certain conditions and said new rules will be notified for removal of double taxation for NRIs, and also announced a reduction in the time period of tax assessments among other measures.
During her Budget speech, Sitharaman said that the government is committed to farmers’ welfare, adding that the MSP regime has undergone a “sea change” to assure price at least 1.5 times of production cost with sharp increase in procurement of foodgrains and payment to farmers. She also said the procurement of crops like paddy, wheat, pulses and cotton has jumped manifold in the last six years.
According to the Economic Survey 2020-21, which was tabled by the Finance Minister in the Lok Sabha Friday, the government sees the Indian economy growing at 11 per cent in the financial year 2021-22 (FY22). However, the GDP growth rate is estimated at minus 7.7 per cent for the ongoing fiscal. The annual document by the Ministry of Finance under the guidance of Chief Economic Advisor KV Subramanian provides a summary of annual economic development across the country during the financial year 2020-21.
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This was Sitharaman’s third budget under the National Democratic Alliance (NDA) government led by Prime Minister Narendra Modi. In a significant departure from the tradition, this year’s Budget was unique as it was paperless. The papers did not get printed for the first time since Independence, due to the COVID-19 pandemic. Last year, the Finance Minister had ditched the leather briefcase for a traditional “bahi khaata” — or red, handmade ledger — saying that it was “high time we move on from the British hangover, to do something on our own”.
Union Budget 2021 highlights:
# FM Sitharaman said Budget 2021 was prepared in “unprecedented times” and thanked the essential workers who continued to serve the country amid the lockdown.
# Sitharaman highlighted what the government has done for the poor, the migrants, children as well as senior citizens under various schemes. “Announcements made earlier were like 5 mini budgets themselves,” she said.
# Sitharaman quoted Tagore during the Budget presentation. “Today, India has two vaccines and is not only comforting citizens of her own country, but those of neighbouring nations too,” Sitharaman said as she highlighted the Covid-19 pandemic related efforts of the government. Quoting Tagore, Sitharaman said, “Faith is the bird that feels the light when the dawn is still dark,” adding that this moment in history is the dawn of a new era, where India is well-poised to be the land of promise and hope”. She also remembered the Indian cricket team victory’s in Australia.
# Sitharaman said the budget for 2021-22 rests on six pillars – from healthcare to infrastructure. She has also announced a total spend of around Rs 2 lakh crore on healthcare.
# “So far only three times the budget has followed a contraction. Our government is fully prepared to support and facilitate a reset of the economy,” she said, adding that 2021 is the year of “milestones.”
# The Finance Minister said India could have never imagined the health crisis that was about to unfold when she presented the budget for 2020. “The total impact of Atmanirbhar Bharat and measures by RBI was Rs 27.1 lakh crore, which amounts to 30 per cent of GDP,” Sitharaman said.
# The budget proposals of Part A will strengthen the ‘Sankalp of Aatmanirbhar Bharat’. The focus, Sitharaman said, will be on 6 pillars, which include Health & well-being, Physical & financial capital & infrastructure, Inclusive development for aspirational India, Reinvigorating human capital, Innovation & R&D and Minimum Govt & Maximum Governance.
# FM Sitharaman announced PM Aatmanirbhar Swastha Bharat, which will be launched with an outlay of 64,180 cr over 6 years. “Intend to focus on reduction of single-use plastic, air pollution and segregation of waste,” she added.
# Sitharaman also said that the government will launch Mission Poshan 2.0 and Jal Jeevan Mission Urban. “The Urban Swachh Bharat scheme will be implemented with an outlay of over Rs 1.4 lakh crore,” she said.
# Sitharaman announced Rs 35,000 crore for the Covid-19 vaccine. “The government is committed to providing more funds. The Budget outlay for health and welfare is Rs 2,23,846 crore in the 2021-22 Budget. This is a 137 per cent increase.”
# The Finance Minister said 217 projects worth over Rs 1 lakh crore were completed under National Infrastructure Pipeline.
# She also announced that she would soon table a bill on DFI essentially to fill the gap in long-term finance for infrastructure sectors.
# The Budget also mentions seven ‘Textile Parks’ to be developed in the next three years and that Railways will monetize dedicated fright corridor assets for operations and maintenance after commissioning.
# The Finance Minister also announced that Rs 95,000 crore will be spent on roads in West Bengal. The announcement for the state of Bengal got the loudest thumping of desks, as the state goes to polls in a few months.
# “For 2022, I propose a sharp increase in capital expenditure at 5.54 lakh crore, from Rs 4.39 lakh crore in 2021. More economic corridors being planned to boost road infrastructure,” FM Sitharaman added.
# Sitharaman said that the government aims to complete 11,000 km of national highway infrastructure this year. Highway works proposed include 3,500 km corridor in Tamil Nadu, 1,100 km in Kerala at investment of Rs 65,000 cr, 675 km in West Bengal at a cost of Rs 95,000 cr and 1,300 km in Assam in the next 3 years.
# The government aims to spend Rs 1.97 lakh crore on various PLI schemes over the next 5 years, starting this fiscal. This is in addition to the Rs 40,951 crore announced for the PLI for electronic manufacturing schemes.
# The Finance Minister also announced Rs 1.10 lakh crore outlay for railways, of which Rs 1.7 lakh crore is for capital expenditure. Also, Centre will provide Rs 18,000 crore for public buses, she added.
# Sitharaman announced Rs 3.05 lakh crore outlay for the power sector and added that 100 more cities to be added in the next 3 years to the gas distribution network.
# Coming to Jammu and Kashmir, Finance Minister Nirmala Sitharaman announced a new gas pipeline project for the state.
# Rs 1,000 crore to solar energy corporation and Rs 1,500 to renewable energy development agency were also announced.
# Also, as per the Budget 2021, the FDI in insurance sector proposed to be hiked to 74% from 49% now.
# Government will support the development of a world-class fintech hub at GIFT and an investor charter will be introduced, said Sitharaman.
# The FM announced further infusion of Rs 20,000 crore for public sector banks. “The government plans to sell part of its holding in Life Insurance Corporation of India through an initial public offering in the coming year. An amendment to the existing Act to facilitate the public offer,” Sitharaman said.
# Taking about the farm laws, Sitharaman said, ” The government is committed to the welfare of farmers.” Amid protests from opposition leaders, she further said, “MSP has gone through a sea change. Over Rs 75,000 crore paid to wheat farmers in 2020-21, 43.36 lakh benefited from this.”
# Sitharaman proposed an increase in agriculture credit target to Rs 16.5 lakh crore. “The MSP regime has undergone a change to assure price that is at least 1.5 times the cost of production across all commodities. The total amount paid to paddy farmers surged to Rs 1.72 lakh crore in 2020-21.”
# The Finance Minister put disinvestment receipts at Rs 1.75 lakh cr for the fiscal year beginning April 1, 2021. Two PSBs and one general insurance company to be divested, legislations amendments to be introduced in this session, she added.
# National Education Policy also got mentioned in Sitharaman’s Budget speech. Asserting that the policy got a good reception, the FM said, “Over 15,000 schools to be qualitatively strengthened under National Education Policy.”
# The Finance Minister announced a special scheme for welfare of women and children in Assam and West Bengal and Rs 1,000 crore for Bengal and Assam tea workers.
# Fiscal deficit was estimated at 9.5% of GDP for 2020-21 and for 2021-22, the Fiscal deficit is estimated at 6.8% of GDP.
# Also, the forthcoming Census could be India’s first digital Census, said Sitharaman allocating Rs 3,768 crore for FY21.
# During her speech, Sitharaman also proposed portal to collect info on gig-workers, building and construction workers. “Social security benefits will be extended to gig and platform workers. Minimum wages will apply to all categories of workers. Women will be allowed to work in all categories and also in night shifts with adequate protection. To further extend efforts towards unorganised labour force, I propose to launch a portal to collect relevant information on gig workers, building/construction workers among others. It’ll help formulate health, housing, skill, insurance credit &food schemes for migrant workers,” the FM said.
# Finance Minister Nirmala Sitharaman announced an allocation of Rs 300 crore to the state of Goa for celebrating the 60th anniversary of the liberation from Portuguese rule.
# In significant changes to the taxation process, Sitharaman announced the scrapping of income tax for senior citizens under certain conditions, new rules for removal of double taxation for NRIs, and a reduction in the time period of tax assessments among other measures. Startups will get an extension in their tax holiday for an additional year. Sitharaman also announced that the advance tax liability on dividend income shall arise after declaration of payment of dividend.
# It was also announced that the government will increase maximum threshold paid-up capital of small companies from Rs 50 lakh to Rs 2 crore and increase the threshold of maximum turnover from Rs 2 crore to Rs 20 crore.
# Sitharaman said, “The G=government removes threshold limits of paid-up share capital of Rs 50 lakh and average annual turnover of Rs 2 crore over the past three financial years. The government has also eased requirements of residency for a person setting up a One person company from 182 days to 128 days in India.”
# Talking about GST, FM Sitharaman said that the government is focused to further ease the process. “Customs duty on copper scrap cut to 2.5 per cent. Customs duty on some auto parts to be raised to 15 per cent.”
# Budget for 2021-22 imposed a Rs 2.5 per litre agri infra cess on petrol, Rs 4 on diesel.
# Agri infra cess has been imposed on several things including 100% on alcoholic beverages, 30% on kabuli chana, 10% on peas, 50% on bengal gram/chick peas, 20% on lentil (mosur); 5% on cotton,17.5% on crude palm oil, 20% on crude soyabean, sunflower oil, 2.5% on gold, silver and dore bars; 35% on apples; 5% on specified fertilizer; 1.5% on coal, lignite and peat.
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