1-Feb-2021: Key Highlights of Union Budget 2021-22

Presenting the first ever digital Union Budget, Union Minister of Finance and Corporate Affairs Smt. Nirmala Sitharaman stated that India’s fight against COVID-19 continues into 2021 and that this moment in history, when the political, economic, and strategic relations in the post-COVID world are changing, is the dawn of a new era – one in which India is well-poised to truly be the land of promise and hope.

The key highlights of the Union Budget 2021-22 are as follows:

6 pillars of the Union Budget 2021-22:

1.  Health and Wellbeing
2. Physical & Financial Capital, and Infrastructure
3. Inclusive Development for Aspirational India
4. Reinvigorating Human Capital
5. Innovation and R&D
6. Minimum Government and Maximum Governance

Health and Wellbeing 

• Rs. 2,23,846 crore outlay for Health and Wellbeing in BE 2021-22 as against Rs. 94,452 crore in BE 2020-21 – an increase of 137%
• Focus on strengthening three areas: Preventive, Curative, and Wellbeing
• Steps being taken for improving health and wellbeing:
  • Vaccines
    • Rs. 35,000 crore for COVID-19 vaccine in BE 2021-22
    • The Made-in-India Pneumococcal Vaccine to be rolled out across the country, from present 5 states – to avert 50,000 child deaths annually
  • Health Systems
    • Rs. 64,180 crore outlay over 6 years for PM AatmaNirbhar Swasth Bharat Yojana – a new centrally sponsored scheme to be launched, in addition to NHM
    • Main interventions under PM AatmaNirbhar Swasth Bharat Yojana:
    • National Institution for One Health
    • 17,788 rural and 11,024 urban Health and Wellness Centers
    • 4 regional National Institutes for Virology
    • 15 Health Emergency Operation Centers and 2 mobile hospitals
    • Integrated public health labs in all districts and 3382 block public health units in 11 states
    • Critical care hospital blocks in 602 districts and 12 central institutions
    • Strengthening of the National Centre for Disease Control (NCDC), its 5 regional branches and 20 metropolitan health surveillance units
    • Expansion of the Integrated Health Information Portal to all States/UTs to connect all public health labs
    • 17 new Public Health Units and strengthening of 33 existing Public Health Units
    • Regional Research Platform for WHO South-East Asia Region
    • 9 Bio-Safety Level III laboratories.
  • Nutrition
    • Mission Poshan 2.0 to be launched:
    • To strengthen nutritional content, delivery, outreach, and outcome
    • Merging the Supplementary Nutrition Programme and the Poshan Abhiyan
    • Intensified strategy to be adopted to improve nutritional outcomes across 112 Aspirational Districts
  • Universal Coverage of Water Supply 
    • Rs. 2,87,000 crore over 5 years for Jal Jeevan Mission (Urban) - to be launched with an aim to provide:
    • 2.86 crore household tap connections
    • Universal water supply in all 4,378 Urban Local Bodies
    • Liquid waste management in 500 AMRUT cities.
  • Swachch Bharat, Swasth Bharat 
    • Rs. 1,41,678 crore over 5 years for Urban Swachh Bharat Mission 2.0
    • Main interventions under Swachh Bharat Mission (Urban) 2.0:
      • Complete faecal sludge management and waste water treatment
      • Source segregation of garbage
      • Reduction in single-use plastic
      • Reduction in air pollution by effectively managing waste from construction-and-demolition activities
      • Bio-remediation of all legacy dump sites
  • Clean Air
    • Rs. 2,217 crore to tackle air pollution, for 42 urban centers with a million-plus population
  • Scrapping Policy 
    • Voluntary vehicle scrapping policy to phase out old and unfit vehicles
    • Fitness tests in automated fitness centres:
      • After 20 years in case of personal vehicles
      • After 15 years in case of commercial vehicles

Physical and Financial Capital and Infrastructure

 Production Linked Incentive scheme (PLI)

• Rs. 1.97 lakh crore in next 5 years for PLI schemes in 13 Sectors
• To create and nurture manufacturing global champions for an AatmaNirbhar Bharat
• To help manufacturing companies become an integral part of global supply chains, possess core competence and cutting-edge technology
• To bring scale and size in key sectors
• To provide jobs to the youth.

Textiles

• Mega Investment Textiles Parks (MITRA) scheme, in addition to PLI:
• 7 Textile Parks to be established over 3 years
• Textile industry to become globally competitive, attract large investments and boost employment generation & exports.

Infrastructure

• National Infrastructure Pipeline (NIP) expanded to 7,400 projects:
  • Around 217 projects worth Rs. 1.10 lakh crore completed
• Measures in three thrust areas to increase funding for NIP:
  1. Creation of  institutional structures
  2. Big thrust on monetizing assets
  3. Enhancing the share of capital expenditure

1. Creation of  institutional structures: Infrastructure Financing
   • Rs. 20,000 crore to set up and capitalise a Development Financial Institution(DFI) – to act as a provider, enabler and catalyst for infrastructure financing
   • Rs. 5 lakh crore lending portfolio to be created under the proposed DFI in 3 years
   • Debt Financing by Foreign Portfolio Investors to be enabled by amending InvITs’ and REITs’ legislations.
2. Big thrust on monetizing assets
   • National Monetization Pipeline to be launched
   • Important asset monetization measures:
     1. 5 operational toll roads worth Rs. 5,000 crore being transferred to the NHAI InvIT
     2. Transmission assets worth Rs. 7,000 crore to be transferred to the PGCIL InvIT
     3. Dedicated Freight Corridor assets to be monetized by Railways, for operations and maintenance, after commissioning
     4. Next lot of Airports to be monetized for operations and management concession
     5. Other core infrastructure assets to be rolled out under the Asset Monetization Programme:
        • Oil and Gas Pipelines of GAIL, IOCL and HPCL
        • AAI Airports in Tier II and III cities
        • Other Railway Infrastructure Assets
        • Warehousing Assets of CPSEs such as Central Warehousing Corporation and NAFED
        • Sports Stadiums
3. Sharp Increase in Capital Budget
   • Rs. 5.54 lakh crore capital expenditure in BE 2021-22 – sharp increase of 34.5% over Rs. 4.12 lakh crore allocated in BE 2020-21 :
     • Over Rs. 2 lakh crore to States and Autonomous Bodies for their Capital Expenditure.
     • Over Rs. 44,000 crore for the Department of Economic Affairs to provide for projects/programmes/departments exhibiting good progress on Capital Expenditure

Roads and Highways Infrastructure

• Rs. 1,18,101 lakh crore, highest ever outlay, for Ministry of Road Transport and Highways – of which Rs. 1,08,230 crore is for capital
• Under the Rs. 5.35 lakh crore Bharatmala Pariyojana, more than 13,000 km length of roads worth Rs. 3.3 lakh crore awarded for construction:
  • 3,800 km have already been constructed
  • Another 8,500 km to be awarded for construction by March 2022
  • Additional 11,000 km of national highway corridors to be completed by March 2022
• Economic corridors being planned:
  • Rs. 1.03 lakh crore outlay for 3,500 km of NHs in Tamil Nadu
  • Rs. 65,000 crore investment for 1,100 km of NHs in Kerala
  • Rs. 25,000 crore for 675 km of NHs in West Bengal
  • Over Rs. 34,000 crore to be allocated for 1300 km of NHs to be undertaken in next 3 years in Assam, in addition to Rs. 19,000 crore works of NHs currently in progress in the State
• Flagship Corridors/Expressways:
  • Delhi-Mumbai Expressway – Remaining 260 km to be awarded before 31.3.2021
  • Bengaluru-Chennai Expressway – 278 km to be initiated in the current FY; construction to begin in 2021-22
  • Kanpur-Lucknow Expressway – 63 km expressway providing an alternate route to NH 27 to be initiated in 2021-22
  • Delhi-Dehradun economic corridor – 210 km to be initiated in the current FY; construction to begin in 2021-22
  • Raipur-Vishakhapatnam – 464 km passing through Chhattisgarh, Odisha and North Andhra Pradesh, to be awarded in the current year; construction to start in 2021-22
  • Chennai-Salem corridor – 277 km expressway to be awarded and construction to start in 2021-22
  • Amritsar-Jamnagar – Construction to commence in 2021-22
  • Delhi-Katra – Construction will commence in 2021-22
• Advanced Traffic management system in all new 4 and 6-lane highways:
  • Speed radars
  • Variable message signboards
  • GPS enabled recovery vans will be installed

Railway Infrastructure

• Rs. 1,10,055 crore for Railways of which Rs. 1,07,100 crore is for capital expenditure
• National Rail Plan for India (2030): to create a ‘future ready’ Railway system by 2030
• 100% electrification of Broad-Gauge routes to be completed by December, 2023
• Broad Gauge Route Kilometers (RKM) electrification to reach 46,000 RKM, i.e. 72% by end of 2021
• Western Dedicated Freight Corridor (DFC) and Eastern DFC to be commissioned by June 2022, to bring down the logistic costs – enabling Make in India strategy
• Additional initiatives proposed:
  • The Sonnagar-Gomoh Section (263.7 km) of Eastern DFC to be taken up in PPP mode in 2021-22
  • Future dedicated freight corridor projects –
    • East Coast corridor from Kharagpur to Vijayawada
    • East-West Corridor from Bhusaval to Kharagpur to Dankuni
    • North-South corridor from Itarsi to Vijayawada
• Measures for passenger convenience and safety:
  • Aesthetically designed Vista Dome LHB coach on tourist routes for better travel
  • High density network and highly utilized network routes to have an indigenously developed automatic train protection system, eliminating train collision due to human error

Urban Infrastructure

•  Raising the share of public transport in urban areas by expansion of metro rail network and augmentation of city bus service
• Rs. 18,000 crore for a new scheme, to augment public bus transport:
  • Innovative PPP models to run more than 20,000 buses
  • To boost automobile sector, provide fillip to economic growth, create employment opportunities for our youth
• A total of 702 km of conventional metro is operational and another 1,016 km of metro and RRTS is under construction in 27 cities
• ‘MetroLite’ and ‘MetroNeo’ technologies to provide metro rail systems at much lesser cost with similar experience in Tier-2 cities and peripheral areas of Tier-1 cities. 
• Central counterpart funding to:
  1. Kochi Metro Railway Phase-II of 11.5 km at a cost of Rs. 1957.05 crore
  2. Chennai Metro Railway Phase –II of 118.9 km at a cost of Rs. 63,246 crore
  3. Bengaluru Metro Railway Project Phase 2A and 2B of 58.19 km at a cost of Rs. 14,788 crore
  4. Nagpur Metro Rail Project Phase-II and Nashik Metro at a cost of Rs. 5,976 crore and Rs. 2,092 crore respectively.

Power Infrastructure 

• 139 Giga Watts of installed capacity and 1.41 lakh circuit km of transmission lines added, and additional 2.8 crore households connected in past 6 years
• Consumers to have alternatives to choose the Distribution Company for enhancing competitiveness
• Rs. 3,05,984 crore over 5 years for a revamped, reforms-based and result-linked new power distribution sector scheme
• A comprehensive National Hydrogen Energy Mission 2021-22 to be launched 

Ports, Shipping, Waterways 

• Rs. 2,000 crore worth 7 projects to be offered in PPP-mode in FY21-22 for operation of major ports
• Indian shipping companies to get Rs. 1624 crore worth subsidy support over 5 years in global tenders of Ministries and CPSEs
• To double the recycling capacity of around 4.5 Million Light Displacement Tonne (LDT) by 2024; to generate an additional 1.5 lakh jobs

Petroleum & Natural Gas 

• Extension of Ujjwala Scheme to cover 1 crore more beneficiaries
• To add 100 more districts to the City Gas Distribution network in next 3 years
• A new gas pipeline project in J&K
• An independent Gas Transport System Operator to be set up for facilitation and coordination of booking of common carrier capacity in all-natural gas pipelines on a non-discriminatory open access basis

Financial Capital 

• A single Securities Markets Code to be evolved
• Support for development of a world class Fin-Tech hub at the GIFT-IFSC
• A new permanent institutional framework to help in development of Bond market by purchasing investment grade debt securities both in stressed and normal times
• Setting up a system of Regulated Gold Exchanges: SEBI to be notified as a  regulator and Warehousing Development and Regulatory Authority to be strengthened
• To develop an investor charter as a right of all financial investors
• Capital infusion of Rs. 1,000 crore to Solar Energy Corporation of India and Rs. 1,500 crore to Indian Renewable Energy Development Agency

Increasing FDI in Insurance Sector 

• To increase the permissible FDI limit from 49% to 74% and allow foreign ownership and control with safeguards

Stressed Asset Resolution 

• Asset Reconstruction Company Limited and Asset Management Company to be set up

Recapitalization of PSBs 

• Rs.  20,000 crore in 2021-22 to further consolidate the financial capacity of PSBs
   

Deposit Insurance 

• Amendments to the DICGC Act, 1961, to help depositors get an easy and time-bound access to their deposits to the extent of the deposit insurance cover
• Minimum loan size eligible for debt recovery under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 proposed to be reduced from Rs. 50 lakh to Rs. 20 lakh for NBFCs with minimum asset size of Rs.  100 crore

Company Matters 

• To decriminalize the Limited Liability Partnership (LLP) Act, 2008
• Easing Compliance requirement of Small companies by revising their definition under Companies Act, 2013 by increasing their thresholds for Paid up capital from “not exceeding Rs. 50 Lakh” to “not exceeding Rs. 2 Crore” and turnover from “not exceeding Rs. 2 Crore” to “not exceeding Rs. 20 Cr”.
• Promoting start-ups and innovators by incentivizing the incorporation of One Person Companies (OPCs):
  • Allowing their growth without any restrictions on paid up capital and turnover
  • Allowing their conversion into any other type of company at any time,
  • Reducing the residency limit for an Indian citizen to set up an OPC from 182 days to 120 days and
  • Allowing Non Resident Indians (NRIs) to incorporate OPCs in India.
• To ensure faster resolution of cases by:
  • Strengthening NCLT framework
  • Implementation of e-Courts system
  • Introduction of alternate methods of debt resolution and special framework for MSMEs
• Launch of data analytics, artificial intelligence, machine learning driven MCA21 Version 3.0 in 2021-22

Disinvestment and Strategic Sale 

• Rs.  1,75,000 crore estimated receipts from disinvestment in BE 2020-21
• Strategic disinvestment of BPCL, Air India, Shipping Corporation of India, Container Corporation of India, IDBI Bank, BEML, Pawan Hans, Neelachal Ispat Nigam limited etc. to be completed in 2021-22.
• Other than IDBI Bank, two Public Sector Banks and one General Insurance company to be privatized
• IPO of LIC in 2021-22
• New policy for Strategic Disinvestment approved;  CPSEs except in four strategic areas to be privatized
• NITI Aayog to work out on the next list of CPSEs to be taken up for strategic disinvestment
• Incentivizing States for disinvestment of their Public Sector Companies, using central funds
• Special Purpose Vehicle in the form of a company to monetize idle land
• Introducing a revised mechanism for ensuring timely closure of sick or loss making CPSEs

Government Financial Reforms 

• Treasury Single Account (TSA) System for Autonomous Bodies to be extended for universal application
• Separate Administrative Structure to streamline the ‘Ease of Doing Business’ for Cooperatives

Inclusive Development for Aspirational India

 Agriculture 

• Ensured MSP at minimum 1.5 times the cost of production across all commodities.
• With steady increase in the procurement, payment to farmers increased as under:

                                                                                                     (in Rs. crore)

• SWAMITVA Scheme to be extended to all States/UTs,  1.80 lakh property-owners in 1,241 villages have already been provided cards
• Agricultural credit target enhanced to Rs. 16.5 lakh crore in FY22 - animal husbandry, dairy, and fisheries to be the focus areas
• Rural Infrastructure Development Fund to be enhanced to Rs. 40,000 crore from Rs. 30,000 crore
• To double the Micro Irrigation Fund to Rs. 10,000 crore
• ‘Operation Green Scheme’ to be extended to 22 perishable products, to boost value addition in agriculture and allied products
• Around 1.68 crore farmers registered and Rs. 1.14 lakh crore of trade value carried out through e-NAMs; 1,000 more mandis to be integrated with e-NAM to bring transparency and competitiveness.
• APMCs to get access to the Agriculture Infrastructure Funds for augmenting infrastructure facilities

Fisheries 

• Investments to develop modern fishing harbours and fish landing centres – both marine and inland
• 5 major fishing harbours – Kochi, Chennai, Visakhapatnam, Paradip, and Petuaghat to be developed as hubs of economic activity
• Multipurpose Seaweed Park in Tamil Nadu to promote seaweed cultivation 

Migrant Workers and Labourers 

• One Nation One Ration Card scheme for beneficiaries to claim rations anywhere in the country - migrant workers to benefit the most
  • Scheme implementation so far covered 86% of beneficiaries across 32 States and UTs
  • Remaining 4 states to be integrated in next few months
• Portal to collect information on unorganized labour force, migrant workers especially, to help formulate schemes for them
• Implementation of 4 labour codes underway
  • Social security benefits for gig and platform workers too
  • minimum wages and coverage under the Employees State Insurance Corporation applicable for all categories of workers
  • Women workers allowed in all categories, including night-shifts with adequate protection
  • Compliance burden on employers reduced with single registration and licensing, and online returns 

Financial Inclusion 

• Under Stand Up India Scheme for SCs, STs and women,
  • Margin money requirement reduced to 15%
  • To also include loans for allied agricultural activities
• Rs. 15,700 crore budget allocation to MSME Sector, more than double of this year’s BE

Reinvigorating Human Capital

School Education 

• 15,000 schools to be strengthened by implementing all NEP components. Shall act as exemplar schools in their regions for mentoring others
• 100 new Sainik Schools to be set up in partnership with NGOs/private schools/states

Higher Education 

• Legislation to be introduced to setup Higher Education Commission of India as an umbrella body with 4 separate vehicles for standard-setting, accreditation, regulation, and funding
• Creation of formal umbrella structure to cover all Govt. colleges, universities, research institutions in a city for greater synergy.
  • Glue grant to implement the same across 9 cities
• Central University to come up in Leh for accessibility of higher education in Ladakh

Scheduled Castes and Scheduled Tribes Welfare 

• 750 Eklavya model residential schools in tribal areas:
  • Unit cost of each school to be increased to Rs. 38 crore
  • For hilly and difficult areas, to Rs. 48 crore
  • Focus on creation of robust infrastructure facilities for tribal students
• Revamped Post Matric Scholarship Scheme for welfare of SCs
  • Rs. 35,219 crore enhanced Central Assistance for 6 years till 2025-2026
  • 4 crore SC students to benefit

Skilling 

• Proposed amendment to Apprenticeship Act to enhance opportunities for youth
• Rs. 3000 crore for realignment of existing National Apprenticeship Training Scheme (NATS) towards post-education apprenticeship, training of graduates and diploma holders in Engineering
• Initiatives for partnership with other countries in skilling to be taken forward, similar to partnership:
  • With UAE to benchmark skill qualifications, assessment, certification, and deployment of certified workforce
  • With Japan for a collaborative Training Inter Training Programme (TITP) to transfer of skills, technique and knowledge.

Innovation and R&D

• Modalities of National Research Foundation announced in July 2019 –
  • Rs. 50,000 crore outlay over 5 years
  • To strengthen overall research ecosystem with focus on national-priority thrust areas
• Rs. 1,500 crore for proposed scheme to promote digital modes of payment
• National Language Translation Mission (NTLM) to make governance-and-policy related knowledge available in major Indian languages
• PSLV-CS51 to be launched by New Space India Limited (NSIL) carrying Brazil’s Amazonia Satellite and some Indian satellites
• As part of the Gaganyaan mission activities:
  • 4 Indian astronauts being trained on Generic Space Flight aspects, in Russia
  • First unmanned launch is slated for December 2021
• Rs. 4,000 crore over five years for Deep Ocean Mission survey exploration and conservation of deep sea biodiversity

Minimum Government, Maximum Governance 

• Measures being undertaken to bring reforms in Tribunals to ensure speedy justice
• National Commission for Allied Healthcare Professionals already introduced to ensure transparent and efficient regulation of the 56 allied healthcare professions
• The National Nursing and Midwifery Commission Bill introduced for the same in nursing profession
• Proposed Conciliation Mechanism with mandate for quick resolution of contractual disputes with CPSEs
• Rs. 3,768 crore allocated for first digital census in the history of India
• Rs. 300 crore grant to the Government of Goa for the diamond jubilee celebrations of the state’s liberation from Portuguese
• Rs. 1,000 crore for the welfare of Tea workers especially women and their children in Assam and West Bengal through a special scheme

Fiscal Position

• RE for Expenditure is  Rs. 34.50 lakh crore as against original BE expenditure of  Rs. 30.42 lakh crore
  • Quality of expenditure has been maintained as Capital Expenditure estimated as per RE is Rs. 4.39 lakh crore in 2020-2021 as against Rs. 4.12 lakh crore in BE 2020-21
• Estimates of Rs. 34.83 lakh crore BE for expenditure in 2021-2022 including Rs. 5.5 lakh crore as capital expenditure, an increase of 34.5% to give required push to economy 
• The fiscal deficit in BE 2021-2022 is estimated to be 6.8% of GDP. The fiscal deficit in RE 2020-21 is pegged at 9.5% of GDP - funded through Government borrowings, multilateral borrowings, Small Saving Funds and short term borrowings
  • Gross borrowing from the market for the next year to be around 12 lakh crore.
  • Plan to continue on the path of fiscal consolidation, achieving a fiscal deficit level below 4.5% of GDP by 2025-2026 with a fairly steady decline over the period
  • It will be achieved by increasing the buoyancy of tax revenue through improved compliance, and secondly, by increased receipts from monetisation of assets, including Public Sector Enterprises and land
  • Deviation Statement under Sections 4(5) and 7(3) (b) of the FRBM Act tabled necessitated by this year’s unforeseen and unprecedented circumstances
  • Amendment to FRBM Act proposed to achieve targeted Fiscal Deficit levels
• The Contingency Fund of India is to be augmented from Rs. 500 crore to Rs. 30,000 crore through Finance Bill

Net borrowing of the States: 

• Net borrowing for the states allowed at 4% of GSDP for the year 2021-2022 as per recommendation of 15th FC
  • Part of this earmarked for incremental capital expenditure
  • Additional borrowing ceiling of 0.5% of GSDP will be provided subject to conditions
• States expected to reach a fiscal deficit of 3% of GSDP by 2023-24, as recommended by the 15th Finance Commission

Fifteenth Finance Commission:

• The final report covering 2021-26 was submitted to the President, retaining vertical shares of states at 41%
• Funds to UTs of Jammu and Kashmir and Ladakh would be provided by Centre
• On the Commission’s recommendation, Rs. 1,18,452 crore have been provided as Revenue Deficit Grant to 17 states in 2021-22, as against  Rs. 74,340 crore to 14 states in 2020-21

Tax Proposals

Vision of a transparent, efficient tax system to promote investments and employment in the country with minimum burden on tax payers

Direct Taxes

Achievements: 

• Corporate tax rate slashed to make it among the lowest in the world
• Burden of taxation on small taxpayers eased by increasing rebates
• Return filers almost doubled to 6.48 crore in 2020 from 3.31 crore in 2014
• Faceless Assessment and Faceless Appeal introduced

Relief to Senior Citizens: 

• Exemption from filing tax returns for senior citizens over 75 years of age and having only pension and interest income; tax to be deducted by paying bank

Reducing Disputes, Simplifying Settlement: 

• Time limit for re-opening cases reduced to 3 years from 6 years
• Serious tax evasion cases, with evidence of concealment of income of Rs. 50 lakh or more in a year, to be re-opened only up to 10 years, with approval of the Principal Chief Commissioner
• Dispute Resolution Committee to be set up for taxpayers with taxable income up to Rs. 50 lakh and disputed income up to Rs. 10 lakh
• National Faceless Income Tax Appellate Tribunal Centre to be established
• Over 1 lakh taxpayers opted to settle tax disputes of over Rs. 85,000 crore through Vivad Se Vishwas Scheme until 30th January 2021

Relaxation to NRIs:

• Rules to be notified for removing hardships faced by NRIs regarding their foreign retirement accounts

Incentivising Digital Economy:

• Limit of turnover for tax audit increased to Rs. 10 crore from Rs. 5 crore for entities carrying out 95% transactions digitally

Relief for Dividend:

• Dividend payment to REIT/ InvIT exempt from TDS
• Advance tax liability on dividend income only after declaration/ payment of dividend
• Deduction of tax on dividend income at lower treaty rate for Foreign Portfolio Investors

Attracting Foreign Investment for Infrastructure: 

• Infrastructure Debt Funds made eligible to raise funds by issuing Zero Coupon Bonds
• Relaxation of some conditions relating to prohibition on private funding, restriction on commercial activities, and direct investment

Supporting ‘Housing for All’: 

• Additional deduction of interest, up to Rs. 1.5 lakh, for loan taken to buy an affordable house extended for loans taken till March 2022
• Tax holiday for Affordable Housing projects extended till March 2022
• Tax exemption allowed for notified Affordable Rental Housing Projects

Tax incentives to IFSC in GIFT City: 

• Tax holiday for capital gains from incomes of aircraft leasing companies
• Tax exemptions for aircraft lease rentals paid to foreign lessors
• Tax incentive for relocating foreign funds in the IFSC
• Tax exemption to investment division of foreign banks located in IFSC

Ease of Filing Taxes: 

• Details of capital gains from listed securities, dividend income, interest from banks, etc. to be pre-filled in returns

Relief to Small Trusts: 

• Exemption limit of annual receipt revised from ₹1 crore to ₹5 crore for small  charitable trusts running schools and hospitals

Labour Welfare: 

• Late deposit of employee’s contribution by the employer not to be allowed as deduction to the employer
• Eligibility for tax holiday claim for start-ups extended by one more year
• Capital gains exemption for investment in start-ups extended till 31st March, 2022

Indirect Taxes

GST: 

• Measures taken till date:
  • Nil return through SMS
  • Quarterly return and monthly payment for small taxpayers
  • Electronic invoice system
  • Validated input tax statement
  • Pre-filled editable GST return
  • Staggering of returns filing
  • Enhancement of capacity of GSTN system
  • Use of deep analytics and AI to identify tax evaders

Custom Duty Rationalization: 

• Twin objectives: Promoting domestic manufacturing and helping India get onto global value chain and export better
• 80 outdated exemptions already eliminated
• Revised, distortion-free customs duty structure to be put in place from 1st October 2021 by reviewing more than 400 old exemptions
• New customs duty exemptions to have validity up to the 31st March following two years from its issue date

Electronic and Mobile Phone Industry: 

• Some exemptions on parts of chargers and sub-parts of mobiles withdrawn
• Duty on some parts of mobiles revised to 2.5% from ‘nil’ rate

Iron and Steel: 

• Customs duty reduced uniformly to 7.5% on semis, flat, and long products of non-alloy, alloy, and stainless steels
• Duty on steel scrap exempted up to 31st March, 2022
• Anti-Dumping Duty (ADD) and Counter-Veiling Duty (CVD) revoked on certain steel products
• Duty on copper scrap reduced from 5% to 2.5%

Textiles: 

• Basic Customs Duty (BCD) on caprolactam, nylon chips and nylon fiber & yarn reduced to 5%

Chemicals: 

• Calibrated customs duty rates on chemicals to encourage domestic value addition and to remove inversions
• Duty on Naphtha reduced to 2.5%

Gold and Silver: 

• Custom duty on gold and silver to be rationalized

Renewable Energy: 

• Phased manufacturing plan for solar cells and solar panels to be notified
• Duty on solar invertors raised from 5% to 20%, and on solar lanterns from 5% to 15% to encourage domestic production

Capital Equipment: 

• Tunnel boring machine to now attract a customs duty of 7.5%; and its parts a duty of 2.5%
• Duty on certain auto parts increased to general rate of 15%

MSME Products: 

• Duty on steel screws and plastic builder wares increased to 15%
• Prawn feed to attract customs duty of 15% from earlier rate of 5%
• Exemption on import of duty-free items rationalized to incentivize exporters of garments, leather, and handicraft items
• Exemption on imports of certain kind of leathers withdrawn
• Customs duty on finished synthetic gem stones raised to encourage domestic processing

Agriculture Products: 

• Customs duty on cotton increased from nil to 10% and on raw silk and silk yarn from 10% to 15%.
• Withdrawal of end-use based concession on denatured ethyl alcohol
• Agriculture Infrastructure and Development Cess (AIDC) on a small number of items

Rationalization of Procedures and Easing of Compliance: 

• Turant Customs initiative, a Faceless, Paperless, and Contactless Customs measures
• New procedure for administration of Rules of Origin

Achievements and Milestones during the COVID-19 pandemic 

• Pradhan Mantri Garib Kalyan Yojana (PMGKY):
  • Valued at Rs. 2.76 lakh crore
  • Free food grain to 80 crore people
  • Free cooking gas for 8 crore families
  • Direct cash to over 40 crore farmers, women, elderly, the poor and the needy
• AatmaNirbhar Bharat package (ANB 1.0):
  • Estimated at Rs. 23 lakh crore – more than 10% of GDP
• PMGKY, three ANB packages (ANB 1.0, 2.0, and 3.0), and announcements made later were like 5 mini-budgets in themselves
• Rs. 27.1 lakh crore worth of financial impact of all three ANB packages including RBI’s measures – amounting to more than 13% of GDP
• Structural reforms:
  • One Nation One Ration Card
  • Agriculture and Labour Reforms
  • Redefinition of MSMEs
  • Commercialisation of the Mineral Sector
  • Privatisation of Public Sector Undertakings
  • Production Linked Incentive Schemes
• Status of India’s fight against COVID-19:
  • 2 Made-in-India vaccines – medically safeguarding citizens of India and those of 100-plus countries against COVID-19
  • 2 or more new vaccines expected soon
  • Lowest death rate per million and the lowest active cases

2021 - Year of milestones for Indian history 

• 75th year of India’s independence
• 60 years of Goa’s accession to India
• 50 years of the 1971 India-Pakistan War
• Year of the 8th Census of Independent India
•  India’s turn at the BRICS Presidency
• Year for Chandrayaan-3 Mission
• Haridwar Maha Kumbh

Vision for AatmaNirbhar Bharat 

• Aatmanirbharta – not a new idea – ancient India was self-reliant and a business epicentre of the world
• Atmanirbhar Bharat – an expression of 130 crore Indians who have full confidence in their capabilities and skills
• Strengthening the Sankalp of:
  • Nation First
  • Doubling Farmer’s Income
  • Strong Infrastructure
  • Healthy India
  • Good Governance
  • Opportunities for Youth
  • Education for All
  • Women Empowerment
  • Inclusive Development
• 13 promises made in the Union Budget 2015-16, and resonating with the vision of Aatmanirbharta, to materialise during the Amrut Mahotsav of 2022 – on the 75th year of our independence

“Faith is the bird that feels the light and sings when the dawn is still dark.”

– Rabindranath Tagore

1-Feb-2021: Summary of the Budget 2021-22

The Union Minister for Finance & Corporate Affairs, Smt Nirmala Sitharaman presented the Union Budget 2021-22 in Parliament today, which is the first budget of this new decade and also a digital one in the backdrop of unprecedented COVID-19 crisis. Laying a vision for AatmaNirbhar Bharat, she said this is an expression of 130 crore Indians who have full confidence in their capabilities and skills. She said that Budget proposals will further strengthen the Sankalp of Nation First, Doubling Farmer’s Income, Strong Infrastructure, Healthy India, Good Governance, Opportunities for youth, Education for All, Women Empowerment, and Inclusive Development among others. Additionally, also on the path to fast-implementation are the 13 promises of Budget 2015-16-which were to materialize during the Amrut Mahotsav of 2022, on the 75th year of our Independence. They too resonate with this vision of Aatmanirbharta, she added.

The Budget proposals for 2021-22 rest on 6 pillars.

1. Health and Wellbeing
2. Physical & Financial Capital, and Infrastructure
3. Inclusive Development for Aspirational India
4. Reinvigorating Human Capital
5. Innovation and R&D
6. Minimum Government and Maximum Governance

Health and Wellbeing

There is substantial increase in investment in Health Infrastructure and the Budget outlay for Health and Wellbeing is Rs 2,23,846 crore in BE 2021-22 as against this year’s BE of Rs 94,452 crore, an increase of 137 percentage.

The Finance Minister announced that a new centrally sponsored scheme, PM AatmaNirbhar Swasth Bharat Yojana, will be launched with an outlay of about Rs 64, 180 crore over 6 years. This will develop capacities of primary, secondary, and tertiary care Health Systems, strengthen existing national institutions, and create new institutions, to cater to detection and cure of new and emerging diseases. This will be in addition to the National Health Mission. The main interventions under the scheme are:

1. Support for 17,788 rural and 11,024 urban Health and Wellness Centers
2. Setting up integrated public health labs in all districts and 3382 block public health units in 11 states;
3. Establishing critical care hospital blocks in 602 districts and 12 central institutions;
4. Strengthening of the National Centre for Disease Control (NCDC), its 5 regional branches and 20 metropolitan health surveillance units;
5. Expansion of the Integrated Health Information Portal to all States/UTs to connect all public health labs;
6. Operationalisation of 17 new Public Health Units and strengthening of 33 existing Public Health Units at Points of Entry, that is at 32 Airports, 11 Seaports and 7 land crossings;
7. Setting up of 15 Health Emergency Operation Centers and 2 mobile hospitals; and
8. Setting up of a national institution for One Health, a Regional Research Platform for WHO South East Asia Region, 9 Bio-Safety Level III laboratories and 4 regional National Institutes for Virology.

Vaccines: Provision of  Rs 35,000 crore made for Covid-19 vaccine in BE 2021-22. The Pneumococcal Vaccine, a Made in India product, presently limited to only 5 states, will be rolled out across the country aimed at averting 50,000 child deaths annually.

Nutrition: To strengthen nutritional content, delivery, outreach, and outcome, Government will merge the Supplementary Nutrition Programme and the Poshan Abhiyan and launch the Mission Poshan 2.0. Government will adopt an intensified strategy to improve nutritional outcomes across 112 Aspirational Districts.

Universal Coverage of Water Supply and Swachch Bharat Mission: The Finance Minister announced that the Jal Jeevan Mission (Urban), will be launched for universal water supply in all 4,378 Urban Local Bodies with 2.86 crore household tap connections, as well as liquid waste management in 500 AMRUT cities. It will be implemented over 5 years, with an outlay of Rs. 2,87,000 crore. Moreover, the  Urban Swachh Bharat Mission will be implemented with a total financial allocation of  Rs 1,41,678 crore over a period of 5 years from 2021-2026. Also to tackle the burgeoning problem of air pollution, government proposed to provide an amount of Rs. 2,217 crore for 42 urban centres with a million-plus population in this budget. A voluntary vehicle scrapping policy to phase out old and unfit vehicles was also announced. Fitness tests have been proposed in automated fitness centres after 20 years in case of personal vehicles, and after 15 years in case of commercial vehicles.

Physical and Financial Capital and Infrastructure

AatmaNirbhar Bharat-Production Linked Incentive Scheme: Finance Minister said that for a USD 5 trillion economy, our manufacturing sector has to grow in double digits on a sustained basis. Our manufacturing companies need to become an integral part of global supply chains, possess core competence and cutting-edge technology. To achieve all of the above, PLI schemes to create manufacturing global champions for an AatmaNirbhar Bharat have been announced for 13 sectors.  For this, the government has committed nearly Rs.1.97 lakh crore in the next 5 years starting FY 2021-22. This initiative will help bring scale and size in key sectors, create and nurture global champions and provide jobs to our youth.

Textiles: Similarly, to enable the textile industry to become globally competitive, attract large investments and boost employment generation, a scheme of Mega Investment Textiles Parks (MITRA) will be launched in addition to the PLI scheme. This will create world class infrastructure with plug and play facilities to enable create global champions in exports. 7 Textile Parks will be established over 3 years.

Infrastructure: The National Infrastructure Pipeline (NIP) which the Finance Minister announced in December 2019 is the first-of-its-kind, whole-of-government exercise ever undertaken. The NIP was launched with 6835 projects; the project pipeline has now expanded to 7,400 projects. Around 217 projects worth Rs 1.10 lakh crore under some key infrastructure Ministries have been completed.

Infrastructure financing - Development Financial Institution (DFI): Dwelling on the infrastructure sector, Smt Sitharaman said that infrastructure needs long term debt financing. A professionally managed Development Financial Institution is necessary to act as a provider, enabler and catalyst for infrastructure financing. Accordingly, a Bill to set up a DFI will be introduced. Government has provided a sum of Rs 20,000 crore to capitalise this institution and the ambition is to have a lending portfolio of at least Rs 5 lakh crore for this DFI in three years' time.

Asset Monetisation: Monetizing operating public infrastructure assets is a very important financing option for new infrastructure construction. A “National Monetization Pipeline” of potential Brownfield infrastructure assets will be launched.  An Asset Monetization dashboard will also be created for tracking the progress and to provide visibility to investors. Some important measures in the direction of monetisation are:

1. National Highways Authority of India and PGCIL each have sponsored one InvIT that will attract international and domestic institutional investors. Five operational roads with an estimated enterprise value of Rs 5,000 crore are being transferred to the NHAI InvIT. Similarly, transmission assets of a value of Rs 7,000 crore will be transferred to the PGCIL InvIT.
2. Railways will monetize Dedicated Freight Corridor assets for operations and maintenance, after commissioning.
3. The next lot of Airports will be monetised for operations and management concession.
4. Other core infrastructure assets that will be rolled out under the Asset Monetization Programme are: (i) NHAI Operational Toll Roads (ii) Transmission Assets of PGCIL (iii) Oil and Gas Pipelines of GAIL, IOCL and HPCL (iv) AAI Airports in Tier II and III cities, (v) Other Railway Infrastructure Assets (vi) Warehousing Assets of CPSEs such as Central Warehousing Corporation and NAFED among others and (vii) Sports Stadiums.

Roads and Highways Infrastructure: Finance Minister announced that more than 13,000 km length of roads, at a cost of Rs 3.3 lakh crore, has already been awarded under the Rs. 5.35 lakh crore Bharatmala Pariyojana project of which 3,800 kms have been constructed. By March 2022, Government would be awarding another 8,500 kms and complete an additional 11,000 kms of national highway corridors. To further augment road infrastructure, more economic corridors are also being planned.  She also provided an enhanced outlay of Rs. 1,18,101 lakh crore for Ministry of Road Transport and Highways, of which Rs.1,08,230 crore is for capital, the highest ever.

Railway Infrastructure: Indian Railways have prepared a National Rail Plan for India – 2030. The Plan is to create a ‘future ready’ Railway system by 2030. Bringing down the logistic costs for our industry is at the core of our strategy to enable ‘Make in India’. It is expected that Western Dedicated Freight Corridor (DFC) and Eastern DFC will be commissioned by June 2022.

For Passenger convenience and safety the following measures are proposed:

1. Introduction of aesthetically designed Vista Dome LHB coach on tourist routes to give a better travel experience to passengers.
2. The safety measures undertaken in the past few years have borne results. To further strengthen this effort, high density network and highly utilized network routes of Indian railways will be provided with an indigenously developed automatic train protection system that eliminates train collision due to human error.
3. Budget also provided a record sum of Rs. 1,10,055 crore, for Railways of which Rs. 1,07,100 crore is for capital expenditure.
4. railway

Urban Infrastructure

Government will work towards raising the share of public transport in urban areas through expansion of metro rail network and augmentation of city bus service. A new scheme will be launched at a cost of Rs. 18,000 crore to support augmentation of public bus transport services.

A total of 702 km of conventional metro is operational and another 1,016 km of metro and RRTS is under construction in 27 cities. Two new technologies i.e., ‘MetroLite’ and ‘MetroNeo’ will be deployed to provide metro rail systems at much lesser cost with same experience, convenience and safety in Tier-2 cities and peripheral areas of Tier-1 cities.

Power Infrastructure

The past 6 years have seen a number of reforms and achievements in the power sector with the addition of 139 Giga Watts of installed capacity, connecting an additional 2.8 crore households and addition of  1.41 lakh circuit km of transmission lines.

Expressing a serious concern over the viability of Distribution Companies, the Finance Minister proposed to launch a revamped reforms-based result-linked power distribution sector scheme with an outlay of Rs. 3,05,984 crore  over 5 years. The scheme will provide assistance to DISCOMS for Infrastructure creation including pre-paid smart metering and feeder separation, upgradation of systems, etc., tied to financial improvements.

Ports, Shipping, Waterways

Major Ports will be moving from managing their operational services on their own to a model where a private partner will manage it for them.  For the purpose the budget proposes to offer  more than Rs. 2,000 crore by Major Ports on Public Private Partnership mode in FY21-22.

A scheme to promote flagging of merchant ships in India will be launched by providing subsidy support to Indian shipping companies in global tenders floated by Ministries and CPSEs. An amount of Rs. 1624 crore will be provided over 5 years. This initiative will enable greater training and employment opportunities for Indian seafarers besides enhancing Indian companies share in global shipping.

Petroleum & Natural Gas

Smt Sitharaman said that the government has kept fuel supplies running across the country without interruption during the COVID-19 lockdown period. Taking note of the crucial nature of this sector in people’s lives, the following key initiatives are being announced:

1. Ujjwala Scheme which has benefited 8 crore households will be extended to cover 1 crore more beneficiaries.
2. Government will add 100 more districts in next 3 years to the City Gas Distribution network.
3. A gas pipeline project will be taken up in Union Territory of Jammu & Kashmir.
4. An independent Gas Transport System Operator will be set up for facilitation and coordination of booking of common carrier capacity in all-natural gas pipelines on a non-discriminatory open access basis.

Financial Capital

The Finance Minister proposed to consolidate the provisions of SEBI Act, 1992, Depositories Act, 1996, Securities Contracts (Regulation) Act, 1956 and Government Securities Act, 2007 into a rationalized single Securities Markets Code.  The Government would support the development of a world class Fin-Tech hub at the GIFT-IFSC.

Increasing FDI in Insurance Sector

She also proposed to amend the Insurance Act, 1938 to increase the permissible FDI limit from 49% to 74% and allow foreign ownership and control with safeguards. Under the new structure, the majority of Directors on the Board and key management persons would be resident Indians, with at least 50% of Directors being Independent Directors, and specified percentage of profits being retained as general reserve.

Disinvestment and Strategic Sale

In spite of COVID-19, Government has kept working towards strategic disinvestment.  The Finance Minister said a number of transactions namely BPCL, Air India, Shipping Corporation of India, Container Corporation of India, IDBI Bank, BEML, Pawan Hans, Neelachal Ispat Nigam limited among others would be completed in 2021-22. Other than IDBI Bank, Government propose to take up the privatization of two Public Sector Banks and one General Insurance company in the year 2021-22.

In 2021-22, Government would also bring the IPO of LIC for which the requisite amendments will be made in this Session itself.

In a very important announcement, the Finance Minister said that in the Atmanirbhar Package, she had announced to come out with a policy of strategic disinvestment of public sector enterprises and said that the Government has approved the said policy.  The policy provides a clear roadmap for disinvestment in all non-strategic and strategic sectors.  Government has kept four areas that are strategic where bare minimum CPSEs will be maintained and rest privatized. In the non-strategic sectors, CPSEs will be privatised, otherwise shall be closed. She said that to fast forward the disinvestment policy,  NITI Aayog will work out on the next list of Central Public Sector companies that would be taken up for strategic disinvestment. Government has estimated Rs. 1,75,000 crore as receipts from disinvestment in BE 2020-21 .

Inclusive Development for Aspirational India

Under the pillar of Inclusive Development for Aspirational India, the Finance Minister announced to cover Agriculture and Allied sectors, farmers’ welfare and rural India, migrant workers and labour, and financial inclusion.

Agriculture

Dwelling on agriculture, she said that the Government is committed to the welfare of farmers.  The MSP regime has undergone a sea change to assure price that is at least 1.5 times the cost of production across all commodities. The procurement has also continued to increase at a steady pace.  This has resulted in increase in payment to farmers substantially.

In case of wheat, the total amount paid to farmers in 2013-2014 was Rs. 33,874 crore. In 2019-2020 it was Rs. 62,802 crore, and even better, in 2020-2021, this amount, paid to farmers, was Rs. 75,060 crore.  The number of wheat growing farmers that were benefitted increased in 2020-21 to 43.36 lakhs as compared to 35.57 lakhs in 2019-20.

For paddy, the amount paid in 2013-14 was Rs. 63,928 crore. In 2019-2020, this increased to Rs.1,41,930 crore. Even better, in 2020-2021, this is further estimated to increase to Rs. 172,752 crore.  The farmers benefitted increased from 1.24 crore in 2019-20 to 1.54 crore in 2020-21.

In the same vein, in case of pulses, the amount paid in 2013-2014 was ` 236 crore. In 2019-20 it increased to Rs. 8,285 crore. Now, in 2020-2021, it is at Rs.10,530 crore, a more than 40 times increase from 2013-14.

The receipts to cotton farmers have seen a stupendous increase from Rs. 90 crore in 2013-14 to Rs. 25,974 crore (as on 27th January 2021).

Early this year, Honourable Prime Minister had launched SWAMITVA Scheme. Under this, a record of rights is being given to property owners in villages. Up till now, about 1.80 lakh property-owners in 1,241 villages have been provided cards and the Finance Minister proposed during FY21-22 to extend this to cover all states/UTs.

To provide adequate credit to our farmers, Government has enhanced the agricultural credit target to Rs. 16.5 lakh crore in FY22. Similarly, the allocation to the Rural Infrastructure Development Fund increased from Rs. 30,000 crore to Rs. 40,000 crore. The Micro Irrigation Fund, with a corpus of Rs.5,000 crore has been created under NABARD will be doubled.

In an important announcement to boost value addition in agriculture and allied products and their exports, the scope of ‘Operation Green Scheme’ that is presently applicable to tomatoes, onions, and potatoes, will be enlarged to include 22 perishable products.

Around 1.68 crore farmers are registered and Rs. 1.14 lakh crore of trade value has been carried out through e-NAMs. Keeping in view the transparency and competitiveness that e-NAM has brought into the agricultural market, 1,000 more mandis will be integrated with e-NAM. The Agriculture Infrastructure Funds would be made available to APMCs for augmenting their infrastructure facilities.

Fisheries

Finance Minister proposed substantial investments in the development of modern fishing harbours and fish landing centres. To start with, 5 major fishing harbours – Kochi, Chennai, Visakhapatnam, Paradip, and Petuaghat – will be developed as hubs of economic activity.

Migrant Workers and Labourers

Government has launched the One Nation One Ration Card scheme through which beneficiaries can claim their rations anywhere in the country. One Nation One Ration Card plan is under implementation by 32 states and UTs, reaching about 69 crore beneficiaries – that’s a total of 86% beneficiaries covered. The remaining 4 states and UTs will be integrated in the next few months.

Government proposes to conclude a process that began 20 years ago, with the implementation of the 4 labour codes. For the first time globally, social security benefits will extend to gig and platform workers. Minimum wages will apply to all categories of workers, and they will all be covered by the Employees State Insurance Corporation. Women will be allowed to work in all categories and also in the night-shifts with adequate protection. At the same time, compliance burden on employers will be reduced with single registration and licensing, and online returns.

Financial Inclusion

To further facilitate credit flow under the scheme of Stand Up India for SCs, STs, and women, the  Finance Minister proposed to reduce the margin money requirement from 25% to 15%, and to also include loans for activities allied to agriculture. Moreover, a number of steps were taken to support the MSME sector and in this Budget, Government has provided Rs. 15,700 crore to this sector – more than double of this year’s BE.

Reinvigorating Human Capital

The Finance Minister said that the National Education Policy (NEP) announced recently has had good reception, while adding that more than 15,000 schools will be qualitatively strengthened to include all components of the National Education Policy.  She also announced that 100 new Sainik Schools will be set up in partnership with NGOs/private schools/states. She also proposed to set up a Higher Education Commission of India, as an umbrella body having 4 separate vehicles for standard-setting, accreditation, regulation, and funding. For accessible higher education in Ladakh, Government proposed to set up a Central University in Leh.

Scheduled Castes and Scheduled Tribes Welfare

Government has set a target of establishing 750 Eklavya model residential schools in  tribal areas with increase in unit cost of each such school from Rs. 20 crore to Rs. 38 crore, and for hilly and difficult areas, to Rs. 48 crore. Similarly, under the revamped Post Matric Scholarship Scheme for the welfare of Scheduled Castes, the Central Assistance was enhanced and allocated  Rs. 35,219 crore for 6 years till 2025-2026, to benefit 4 crore SC students.

Skilling

An initiative is underway, in partnership with the United Arab Emirates (UAE), to benchmark skill qualifications, assessment, and certification, accompanied by the deployment of certified workforce. The Government also has a collaborative Training Inter Training Programme (TITP) between India and Japan to facilitate transfer of Japanese industrial and vocational skills, technique, and knowledge and the same would be taken forward with many more countries.

Innovation and R&D

The Finance Minister said that in her Budget Speech of July 2019, She had announced the National Research Foundation and added that the NRF outlay will be of Rs. 50,000 crore, over 5 years. It will ensure that the overall research ecosystem of the country is strengthened with focus on identified national-priority thrust areas.

Government will undertake a new initiative – National Language Translation Mission (NTLM). This will enable the wealth of governance-and-policy related knowledge on the Internet being made available in major Indian languages.

The New Space India Limited (NSIL), a PSU under the Department of Space will execute the PSLV-CS51 launch, carrying the Amazonia Satellite from Brazil, along with a few smaller Indian satellites.

As part of the Gaganyaan mission activities, four Indian astronauts are being trained on Generic Space Flight aspects, in Russia. The first unmanned launch is slated for December 2021.

Minimum Government, Maximum Governance

Dwelling on the last of the six pillars of the Budget, the Finance Minister proposed to take a number of steps to bring reforms in Tribunals in the last few years for speedy delivery of justice and proposes to take further measures to rationalised the functioning of Tribunals. Government has introduced the National Commission for Allied Healthcare Professionals Bill in Parliament, with a view to ensure transparent and efficient regulation of the 56 allied healthcare professions. She also announced that the forthcoming Census could be the first digital census in the history of India and for this monumental and milestone-marking task,  Rs. 3,768 crore allocated  in the year 2021-2022.

On Fiscal position, she underlined that the pandemic’s impact on the economy resulted in a weak revenue inflow. Once the health situation stabilised, and the lockdown was being slowly lifted, Government spending was ramped up so as to revive domestic demand. As a result, against an original BE expenditure of Rs. 30.42 lakh crore for 2020-2021, RE estimates are Rs. 34.50 lakh crore and quality of expenditure was maintained. The capital expenditure, estimated in RE is Rs. 4.39 lakh crore in 2020-2021 as against Rs. 4.12 lakh crore in BE 2020-21.

The Finance Minister said  fiscal deficit in RE 2020-21 is pegged at 9.5% of GDP and it has been funded through Government borrowings, multilateral borrowings, Small Saving Funds and short term borrowings. She added that the Government would need another Rs 80,000 crore for which it would be approaching the markets in these 2 months.  The fiscal deficit in BE 2021-2022 is estimated to be 6.8% of GDP. The gross borrowing from the market for the next year would be around 12 lakh crore.

Smt Sitharaman announced that the Government plan to continue the path of fiscal consolidation, and intend to reach a fiscal deficit level below 4.5% of GDP by 2025-2026 with a fairly steady decline over the period. “We hope to achieve the consolidation by first, increasing the buoyancy of tax revenue through improved compliance, and secondly, by increased receipts from monetisation of assets, including Public Sector Enterprises and land”, she said.

In accordance with the views of the 15th Finance Commission, Government is allowing a normal ceiling of net borrowing for the states at 4% of GSDP for the year 2021-2022.

The FRBM Act mandates fiscal deficit of 3% of GDP to be achieved by 31st March 2020-2021. The effect of this year’s unforeseen and unprecedented circumstances has necessitated the submission of a deviation statement under Sections 4 (5) and 7 (3) (b) of the FRBM Act which the Finance Minister  laid on the Table of the House as part of the FRBM Documents.

On 9th December 2020, the 15th Finance Commission submitted its final report, covering the period 2021-2026 to the Rashtrapati ji. The Government has laid the Commission’s report, along with the explanatory memorandum retaining the vertical shares of the states at 41%.  On the Commission’s recommendation, the Budget provided  Rs. 1,18,452 crore  as revenue deficit grant to 17 states in 2021-22.

PART-B

In Part B of the Budget Speech, the Union Minister Smt. Nirmala Sitharaman seeks to further simplify the Tax Administration, Litigation Management and ease the compliance of Direct Tax Administration. The indirect proposal focuses on custom duty rationalization as well as rationalization of procedures and easing of compliance.

DIRECT TAX PROPOSALS

The Finance Minister provided relief to senior citizens in filing of income tax returns, reduced time limit for income tax proceedings announced setting up of the Dispute Resolution Committee, faceless ITAT, relaxation to NRIs, increase in exemption limit from audit and relief for dividend income.  She also announced steps to attract foreign investment into infrastructure, relief to affordable housing and rental housing, tax incentives to IFSC, relief to small charitable trusts, and steps for incentivizing Start-ups in the country.

Smt. Nirmala Sitharaman, in her Budget speech, said that post-pandemic, a new world order seems to be emerging and India will have a leading role therein.  She said in this scenario, our tax system has to be transparent, efficient and should promote investment and employment in the country.  The Minister said that at the same time, it should put minimum burden on our tax payers.  She said that a series of reforms had been introduced by the Government for the benefit of tax payers and economy, including slashing of corporate tax rate, abolition of dividend distribution tax, and increasing of rebate for small tax payers.  In the year 2020, the income tax return filers saw a dramatic increase to 6.48 crore from 3.31 crore in 2014.

The Budget seeks to reduce compliance burden on senior citizens who are of 75 years of age and above.  Such senior citizens having only pension and interest income will be exempted from filing their income tax return.  The paying Bank will deduct the necessary tax on their income.  The Budget proposes to notify rules for removing the hardship of non-Resident Indians returning to India on the issue of their accrued incomes in their foreign retirement account.  The Budget proposes to make dividend payment to REIT/InvIT exempt from TDS.  For Foreign Portfolio Investors, the Budget proposes deduction of tax on dividend income at lower treaty rate.  The Budget provides that advanced tax liability on dividend income shall arise only after the declaration or payment of dividend.  The Minister said that this was being done as the amount of dividend income cannot be estimated correctly by the shareholders for paying advance tax.

The Finance Minister proposed to extend the eligibility period for claim of additional deduction for interest of Rs. 1.5 lakh paid for loan taken for purchase of an affordable house to 31st March, 2022.  In order to increase the supply of affordable houses, she also announced extension of eligibility period for claiming tax holiday for affordable housing projects by one more year to 31st March, 2022.  For promoting supply of affordable rental housing for the migrant workers, the Minister announced a new tax exemption for the notified affordable rental housing projects.

In order to incentivize startups in the country, Smt. Sitharaman announced extension in the eligibility for claiming tax holiday for startups by one more year till 31st March, 2022.  In order to incentivize funding of startups, she proposed extending the Capital Gains exemption for investment in startups by one more year till 31st March, 2022.

The Finance Minister said that delay in deposit of the contribution of employees towards various welfare funds results in permanent loss of interest/income for the employees.  In order to ensure timely deposit of employee’s contribution to these funds by the employers, she announced that late deposit of employee’s contribution shall never be allowed as deduction to the employer.

In order to reduce compliance burden, the Budget provides reduction in the time-limit for reopening of income tax proceeding for three years from the present six years.  In serious tax evasion cases, where there is evidence of concealment of income of Rs. 50 lakh or more in a year, the assessment can be reopened upto 10 years but only after the approval of the Principal Chief Commissioner.

Stating the resolve of the Government to reduce litigation in the taxation system, the Finance Minister said that the Direct Tax Vivad se Vishwas Scheme announced by the Government has been received well.  Until 30th January, 2021, over one lakh ten thousand tax payers have opted to settle tax dispute of over Rs. 85  thousand crores under the Scheme.  To further reduce litigation of small tax payers, she proposed to constitute a Dispute Resolution Committee.  Anyone with a taxable income upto Rs. 50 lakh and disputed income upto Rs. 10 lakh shall be eligible to approach the Committee.  She also announced setting up of National Faceless Income Tax Appellate Tribunal Centre.

To incentivize digital transaction and to reduce the compliance burden of the person who is carrying almost all of the transactions digitally, the Budget proposes to increase the limit for tax audit for persons who are undertaking 95 per cent of their transaction digitally from Rs. 5 Crore to Rs. 10 Crore.

To attract foreign investment into infrastructure sector, the Budget proposes to relax certain conditions relating to prohibition on private funding, restriction on commercial activities and direct investment in infrastructure.  In order to allow funding of infrastructure by issue of zero coupon bonds, the Budget proposes to make notified infrastructure debt funds eligible to raise funds by issuing tax efficient zero coupon bonds.

In order to promote International Financial Services Centre (IFSC) in GIFT City, the Budget proposes more tax incentives.

The Budget proposes that details of capital gains from listed securities, dividend income and interest from banks, post office etc. will also be pre-filled to ease filing of returns.  Details of salary income, tax payment, TDS etc already come pre-filled in returns.

In order to reduce compliance burden on the small charitable trust running educational institutions and hospitals, the Budget proposes to increase the limit on annual receipts for these trusts from present Rs.1 Crore to Rs. 5 Crore for non-applicability of various compliances.

INDIRECT TAX PROPOSALS

On the issue of Indirect Tax proposals, the Minister said that record GST collections have been made in the last few months.  She said several measures have been taken to further simplify the GST.  The capacity of GSTN system has been announced.  Deep analytics and artificial intelligence have been deployed to identity tax evaders and fake billers, launching special drives against them.  The Finance Minister assured the House that every possible measure shall be taken to smoothen the GST further and remove anomalies such as the inverted duty structure.

With respect to the custom duty policy, the Finance Minister said that it has the twin objectives of promoting domestic manufacturing and helping India get on to global value change and export better. She said that the thrust now has to be on easy access to raw materials and exports of value added products.   In this regard, she proposed to review 400 old exemptions in the custom duty structure this year.  She announced that extensive consultation will be conducted and from 1st October, 2021, a revised custom duty structure free of distortions will be put in place. She also proposed that any new custom duty exemptions henceforth will have validity upto to the 31st March following 2 years of the date of its issue.

The Finance Minister announced withdrawal of a few exemptions on parts of chargers and sub-parts of mobile phones further some parts of mobiles will move from “NIL” rate to a moderate 2.5  per cent. She also announced reducing custom duty uniformly to 7.5 per cent on semis, flat, and long products of non-alloy and stainless steel.  She also announced exempting duty on steel scrap for a period upto 31st March 2022.

Stressing on the need to rationalize duty on raw material inputs to man-made textile, the Finance Minister announced bringing nylon chain on par with polyester and other man-made fibers. Announcing uniform deduction of the BCD rates on Caprolactam, nylon chips and nylon fiber and yarn to 5 per cent, the Minister said this will help the textile industry, MSMEs and exports too.  She also announced calibration of customs duty rate on chemical to encourage domestic value addition and to remove inversions.  The Minister also announced rationalization of custom duty on gold and silver.

The Finance Minister said that a phased manufacturing plan for solar cells and solar panels will be notified to build up domestic capacity.  She announced raising duty on solar inverter from 5 per cent to 20 percent and on solar lanterns from 5 per cent to 15 per cent.

The Finance Minister in her Budget speech said that there is immense potential in manufacturing heavy capital equipment domestically and the rate structure will be comprehensively reviewed in due course.  However, she announced revision in duty rates on certain items immediately including tunnel boring machine and certain auto parts.

The Budget proposes certain changes to benefit MSMEs which include increasing duty on steel screws, plastic builder wares and prawn feed.  It also provide for rationalizing exemption on import of duty free items as an incentives to exporters of garments leather and handicraft items.  It also provides withdrawing exemption on imports of certain kind of leather and raising custom duty on finished synthetic gem stones.

To benefit farmers, the Finance Minister announced raising custom duty on cotton, raw silk and silk yarn.  She also announced withdrawing end-use based concessions on denatured ethyl alcohol.  The Minister also proposed an Agriculture Infrastructure and Development Cess on a small number of items.  She said “while applying the cess, we have taken care not to put additional burden on consumers on most items.

Regarding rationalization of procedures and easing of compliance, the Finance Minister proposed certain changes in the provisions relating to ADD and CVD levies.  She also said that to complete customs investigation, definite time-lines are being prescribed.  The Minister said that the Turant Custom Initiative rolled out in 2020 has helped in putting a check of misuse of FTAs.  

1-Feb-2021: Capital outlay increased by nearly 19 per cent giving defence modernisation historic push

Union Budget for the Financial Year 2021-22, presented by the Finance Minister Smt Nirmala Sitharaman in the Parliament on February 01, 2021 has given historic push to defence modernisation by increasing defence capital outlay by 18.75 per cent. 

Defence allocation in the budget has been increased to Rs 4,78,195.62 crore for the Financial Year 2021-22. Excluding Defence Pension, the total allocations for Defence Services and other organisations/Departments under Ministry of Defence for the FY 2021-22 is Rs 3,62,345.62 crore which is an increase of Rs 24,792.62 crore over the Current FY 2020-21. 

The allocation under capital expenditure which relates to modernisation and infrastructure development of Armed Forces has been significantly increased.  The allocation under Capital of Rs 1,35,060.72 crore for FY 2021-22 represents an increase of 18.75 per cent over FY 2020-21 and 30.62 per cent over FY 2019-20. This is the highest ever increase in capital outlay of Defence in the last 15 years. 

Allocation under Non-Salary Revenue to meet operational requirement has been increased to Rs 54,624.67 crore.  This is 6 per cent growth over FY 2020-21. 

The Capital allocation for DRDO has been increased to Rs 11,375.50 crore. This is an increase of 8 per cent over 2020-21 and 8.5 per cent over 2019-20. The allocation for Border Roads Organisation (BRO) has been increased to Rs 6004.08 crore which is 7.48 per cent increase over FY 2021-22 and 14.49 per cent over FY 2019-20. 

Raksha Mantri Shri Rajnath Singh has thanked Prime Minister Shri Narendra Modi and Finance Minister Smt Nirmala Sitharaman for increasing the defence budget to 4.78 lakh crore for the Financial Year 2021-22 (FY21-22), which includes capital expenditure worth Rs 1.35 lakh crore. It is nearly 19 per cent increase in Defence capital expenditure. This is the highest ever increase in capital outlay for defence in the last 15 years. 

Raksha Mantri said special attention has been paid to economic reforms, employment generation, capital formation and creating infrastructure in India. “Based on 6 pillars of good governance this Budget will usher India into a new era of inclusive growth and prosperity,” he said. 

Shri Rajnath Singh in a series of tweets said, “Several new policies & programmes to support India’s farmers, agriculture, infrastructure and reinvigoration of Human Resource have also been announced. I am glad that the Budget has proposed the opening of 100 new Sainik Schools in the country.” These schools will be set up in partnership with States, Non-Governmental Organisations (NGOs) and private institutions.