Budget 2021: Highlights

Finance Minister’s Commentary

Global economy, which was slowing down, was pushed into uncertainty due to COVID-19. The risk of not having a lockdown was far more, far too high
Preparation of budget was undertaken in an environment like ‘never before’
Through the past year, the Finance Minister announced a Rs 30-lakh-crore plan, in ‘mini-budgets’ to beat Covid
The total estimate of all relief measures announced by govt & RBI so far is Rs 27.1 lakh cr (13% of GDP)
The government stretched its resources to provide for the most vulnerable

Budget Speech: Part A

Budget a vision for Atmanirbhar Bharat
FY22 budget proposals based on six pillars

Health and Wellbeing

India has two COVID-19 vaccines available and we expect two more vaccines soon
Rs 35,000 crore to be allocated for further funds for COVID-19 vaccines
FM lays out a Rs 64,180 crore spending plan for healthcare over the next six years

Physical and Financial Capital & Infrastructure

The government has set an ambitious target of building infrastructure in the country
Rs 1.41 lakh crore for Urban Clean India Mission
Vehicles to undergo fitness tests after 20 yrs for PVs, 15 years for CVs, says FM, announcing a voluntary vehicle scrapping policy
Government to set-up a Development Finance Institution (DFI), capitalised with Rs 20,000 crore
Will implement Jal Jeevan Mission with outlay of Rs 2.87 lakh crore to cover houses and to be implemented over five years
FY22 capital expenditure up 34.5% (Vs FY21 BE), at Rs 5.54 lakh crore
National Monetisation Pipeline for brownfield projects to be launched. NHAI and PGCIL have sponsored one InvIT each. National Infrastructure Pipeline has been expanded to 7,400 projects
Highway infra work proposed include building 8,500-km of highways by March 2022
More than 13,000 km of roads awarded under Bharat Mala project
FY22 allocation for railways at Rs 1,10,055 cr
Pipelines of GAIL (India) Ltd, Indian Oil Corp (IOC) and HPCL will be monetised
Ujjwala Scheme will be extended to cover 1 cr more beneficiaries. Will add 100 more districts in the next 3 years for city gas distribution
Proposal to consolidate provisions of SEBI Act, Depositories Act, Securities Contracts Regulation Act, Government Securities Act
Government to amend Insurance Act to allow higher FDI to 74 percent from 49 percent – with safeguards
Government allots Rs 20,000 crore for bank recapitalisation, as FM emphasizes the need to clean up banks’ books
Proposal to revise definition under Companies Act, 2013 for small companies by increasing their threshold for capitalization to not exceeding Rs 50 lakh to not exceeding Rs 2 crore and turnover not exceeding Rs 2 crore to not exceeding Rs 20 crore
Government to now allow one-person companies
Divestment target for FY22 at Rs 1.75 lakh cr
BPCL, CONCOR, Pawan Hans, Air India divestments to be completed in FY22
Government allots Rs 20,000 crore for bank recapitalisation, as FM emphasizes the need to clean up banks’ books
Government to privatise 2 PSU banks, one general insurance company in FY22
FM announces enhanced agri credit target for FY22, gives update on welfare schemes
69 crore beneficiaries or 86% covered under one-nation, one-ration
MSME allocation to be doubled. Government to set aside Rs 15,700 crore in FY22

Reinvigorating Human Capital

Minimum wages to now apply to all categories of workers. Women to be allowed to work in all categories with adequate protection
Leh set to get a Central University
Government announces multi-state co-operative for ease of doing business
National Research Foundation to get Rs 50,000 crore over five years
Announced allocation of Rs 1,500 crore for a proposed scheme to provide financial incentives to promote digital modes of payment
Finance Minister allocates Rs 3,726 crore for forthcoming Census. This will be the first digital census

Fiscal Situation

FY21 fiscal deficit at 9.5% of GDP
FY22 fiscal deficit has been pegged at 6.8% of GDP
Gross market borrowing target is at Rs 12 lakh crore for FY22
Hope to get to back to fiscal consolidation path by FY26. Fiscal deficit will reach below 4.5% by FY26

Budget Speech: Part B

Tax assessment reopening period reduced to three years
The pandemic necessitated deviation from glide path to achieve fiscal deficit target under FRBM Act
FM reduces tax burden on senior citizens above 75 years. Pensioners over 75 years of age are exempt from filing returns
Govt to set-up a faceless dispute resolution mechanism for small taxpayers
Tax audit threshold raised to Rs 10,000 crore for digital transactions
Dividend payment by REITs and InvITs not subject to TDS
Advance tax liability to arise only after payment of dividends
Government to notify rules to eliminate double tax for NRIs on foreign retirement funds
Revenue grant of Rs 1.18 lakh crore has been given to 17 states in FY22
Aviation gets a boost, FM eases burden on aeroplane leases and rentals
Govt to extend eligibility of erstwhile tax sop on home loan up to FY22; propose that affordable housing projects can avail tax holiday for one more year
Government to provide tax exemption for relocating funds to IFSC
Income tax return filers increased to 6.48 cr in 2020 from 3.31 cr in 2014

Indirect Tax Proposals

“Will take every possible measure to ease GST compliance,” says FM
The FM proposes extension of tax holiday for start-ups by one more year
Government will borrow Rs 80,000 crore in the remaining two months to meet FY21 expenditure
FM proposes to review more than 400 old exemptions in customs this year. To put into place new customs duty structure by Oct-1, 2021