Budget 2021: Highlights

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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
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