The Finance Minister of India, Shrimati. Nirmala Sitharaman presented the Union Budget of India 2021-22 on 1 February 2021. This was her first paperless union budget, announced in the midst of the Covid-hit economy. She announced several measures, especially targeting healthcare and infrastructure, with strong financial and business reforms. The Budget 2021 was based on the vision for – Atmanirbhar Bharat. And the proposals stood on the below-mentioned 6 pillars:
- Health and wellbeing
- Inclusive development
- Infrastructure
- Human capital and development
- Minimum government, maximum governance
Here are the Union Budget 2021-2022 proposals for India:
1) Health and Wellbeing
- The total outlay for healthcare in the Union Budget of India FY21-22 is Rs. 2.23 lakh crores
- This is a sharp increase by 137% compared to last year
- New health infra schemes with a higher outlay of Rs 61,000 crores
- The focus is on preventive and curative care along with wellbeing
- Funds for the use of establishing hospital blocks and critical care units
- Block help units set up in 11 states
- 64,189 crores worth investment over the next 6 years for the improvement of primary, secondary, and tertiary healthcare
- The above is an addition to the National Health Mission
- Integration of public health labs for each district
- Aim to set up 11,000 urban and 17,000 rural health and wellness centers
- India already has two approved Covid-19 vaccines. Two more vaccines are expected soon
- 35,000 crores additional for Covid-19 vaccines
- Announcement of Jal Jeevan Mission with allocation of Rs. 2.87 lakh crores
- 1.41 lakh crores over 5 years for Urban Clean India Mission
2) Infrastructure
Under National Infrastructure Pipeline – Rs. 1 lakh crores worth 217 projects have been completed. Here is more about infrastructure plans as per the Union Budget 2021-2022 announcement:
A) Roads and Highways
- Plan to add economic corridors to level up road infrastructure
- Aim to complete 11,000 kilometer of national highways
- Projects for highways in Assam, West Bengal, Kerala, and Tamil Nadu
- By March 2022, highway infra work proposal of 8,5000 km of highways
- 95,000 crore worth projects for 675 km of highways in West Bengal
- 65,000 crores worth projects for 1,100 km of highways in Kerala
- Construction of 3,500 km corridor in Tamil Nadu
- Construction of 1,300 km in Assam for the next 3 years
- For brownfield projects, launch of National Monetization Pipeline
- PGCIL and NHAI to sponsor on InvIT each
- 5,000 crores for 5 operational roads, transferred to NHAI InvIT
- 7,000 crore worth assets transferred to PGCIL InvIT
B) Transport
- Allocation of Rs. 18,000 crores for public buses
- Investments for metro lines and public bus services especially in Tier 2 cities.
C) Railways and Airports
- National Rail Plan till 2030 for the Indian Railways
- 1.15 lakh crores infrastructure boost for railways and privatization of airports
- 1.07 lakh crores towards CAPEX
- 1.10 lakh crores as total outlay for railways
- Out of the above, Rs. 1.7 lakh crores for capital expenditure
- Privatization of several airports in tier 2 and 3 towns and cities
D) Ports, Shipping, Waterways
- In PPP mode for ports, addition of 7 projects of worth Rs. 2,000 crores
- Efforts to bring more ships from Europe and Japan to India
3) Banking, Finance, Insurance
- Facilitation of world-class fintech hub at the Gift city
- FDI in insurance sees a hike from 49% to 74%
- Permission granted for foreign ownership in insurance with safeguards
- Consolidation of provisions for Depositories Act, SEBI Act, Government Securities Act, and Securities Contracts Regulation Act
- To help tackle bad loans, establishment of Asset Reconstruction Company and Asset Management Company
- Addition of Rs. 20,000 crores for the recapitalization of public sector banks
4) Business and Finance Reforms
- The government will develop a separate administration structure for the promotion of ease of doing business
- Announcement of multi-state co-operative for ease of doing business
- 15,700 crores set aside in FY22 for MSME
- For start-ups a reduction in margin money requirement to 15% from 25%
- The government will revise the Company Act, 2013 for small companies
- There is an increase in the capitalization threshold to not exceed Rs. 2 crores and turnover not more than Rs. 20 crores, which were earlier not exceeding to Rs. 50 lakhs and Rs. 2 crores, respectively
- Now one-person companies are allowed
- Reduction in residency limit to 120 days from 182 days for the conversion of one-person company to any other type
- NRIs can now incorporate a one-person company in India
- Setup of DFI (Development Finance Institution) with Rs. 20,000 crore capitalization
- Aim for the lending portfolio of DFI is Rs. 5 lakh crores in 3 years
5) Disinvestment and Strategic Sale
- The target for disinvestment revenue for FY22 is Rs. 1.75 lakh crores
- New public sector enterprises policy intends to drive privatization
- Disinvestment proposal for taking up a Public Sector insurance company and 2 Public Sector Unit banks
- Stake sale in LIC planned in last financial year may conclude this year
- Plan to bring LIC IPO in 2022
- In FY21-22, completion of disinvestment of CONCOR, BPCL, SCI, Air India
6) Migrant Workers and Laborers
- Minimum wages for all categories of workers
- 86% or 69 crore beneficiaries covered under the one-nation, one-ration scheme
- Women to work in all categories and will receive sufficient protection
- Extension of social security benefits to gig and platform workers
7) Farmers, Agriculture, Fishery
- Commitment to welfare of farmers, over Rs. 75,000 crores paid in FY21 to wheat farmers
- Around 43.36 lakh farmers benefitted from the above remuneration
- Total amount given to paddy farmers increases in FY21 to Rs. 1.72 lakh crores
- Total amount paid for pulses to farmers in FY21 increased to Rs. 10,530 crores
- Increase in the target for agriculture credit, Rs. 16.5 lakh crores
- MSP procurement will continue at a gradual pace
- Doubling of micro irrigation corpus to Rs. 10,000 crores
- This above is available to APMCs from the agriculture infra funds
- Increase in rural development funding from Rs. 30,000 crores to Rs. 40,000 crores
- For economic activity, 5 major fishing harbours will be developed as hubs
8) Tackle Air Pollution
- To control air pollution, the centre has an outlay of Rs. 2,217 crores for 42 urban centres
- Announcement of voluntary vehicle scrapping policy
- Private vehicles to undergo for fitness test after every 20 years
- Commercial vehicles to undergo fitness test after every 15 years
9) Energy and Power
- Outlay for power sector in this FY is Rs. 3.05 lakhs
- Setting up of an independent gas transport system operator
- Monetization of HPCL, IOC (Indian Oil Corp), and Pipelines of GAIL (India) Ltd.
- Boost for non-conventional energy sector with Rs. 1,000 crores for solar energy corporation
- Allocation of Rs. 1,500 for renewable energy development agency
- Extension of Ujjwala scheme to cover 1 crore more beneficiaries
- Addition of 100 more districts to the gas distribution network in the next 3 years
- Gas pipeline project also in Jammu and Kashmir
- Under Hydrogen Energy Mission, green-powered sources for generation hydrogen
10) Fiscal Deficit
- Fiscal deficit for FY2020-2021 is marked at 9.5% and 6.8% for FY22, of the Gross Domestic Product
- By 2025-26 the government aims to bring down the fiscal deficit below 5% or 4.5% of the GDP
- The fiscal deficit target is almost 3 times
- FY21 capital expenditure is Rs. 4.39 lakh crores and Rs 34.5 lakh crores as gross expenditure
- FY22 capital expenditure is Rs. 5.54 lakh crores and Rs 34.83 lakh crores as gross expenditure
- The government is set to borrow Rs. 80,000 crores in the next two months for the FY22 expenditure
- 12 lakhs crores required for market borrowing in FY22
11) Tax
- There are no changes in I-T slabs and direct taxes. But steps have been taken to ease tax compliance
- Extension for additional Rs. 1.5 lakhs deduction
- To ease the filing of IT returns further – details of interest and capital gains from post offices, listed securities, banks, dividend income, etc will now be pre-filled in tax forms
- Late deposit of employer’s contribution to PF by employers will not be counted as deduction to employer
- Tax exemption for relocating funds to IFSC
- Dividend payment for InVIT (infrastructure investment funds) and REIT (estate investment trusts) are exempted from tax
- Advance tax liability on dividend only after declaration
- Pensioners and senior citizens over 75 years with pension and interest income are exempt from filing IT returns
- Reduction in time limit for reopening assessments from 6 years to 3 years
- For small taxpayers, facility for faceless dispute resolution mechanism
- Rules for NRIs to eliminate double tax on foreign retirement funds soon to come by
- Increase in tax audit limit from Rs. 5 crores to Rs. 10 crores for those carrying out 95% digital transactions
- FPI will receive tax deduction on dividend at a lower treaty rate
12) Affordable Housing
- Tax holiday in home loan is available for another year
- This is valid till 31 March, 2022
- It is in context of purchasing affordable houses
- The same is applicable on tax exemption for affordable rental housing projects
13) Customs Duty
- The FM proposes to add a new customs duty structure in 2021 by 1 October
- Also, she proposes to review more than 400 old exemptions
- Customs Duty cut to 2.5% from 5% on copper scrap
- Raised to 15% on some auto parts
- Raised to 15% on silk and 10% on cotton
- Exemption on steel scrap
- Cut to 5% on solar lanterns
- 5% from earlier NIL will apply on some parts of mobile
- Revoking CVD and ADD on certain steel products
14) Education, Science, Space, Aviation
- Under the National Education Policy, over 15,000 schools to be strengthened qualitatively
- Starting off the Deep Ocean Mission with Rs. 4,000 crores funding over 4 years
- Tax holiday for aircraft leasing business in Gift city
- More number of schemes to monetize airports and ease airport management
15) Others
- 7 textile parks to come up over the next 3 years
- Allocation of Rs. 1,000 crores for tea workers in West Bengal and Assam
- Special scheme for welfare of children and women in West Bengal and Assam
- Extension of contingency fund to Rs. 30,000 crores
- Health infra scheme sees a higher outlay of Rs. 61,000 crores
- Integration of 1,000 more mandis with electronic national market
- Allocation of Rs. 3,726 crores for the forthcoming first digital census
- Farm cess of Rs. 2.5 and Rs. 4 per litre on petrol and diesel, respectively
To Conclude
With concrete steps to strengthen healthcare, infrastructure, finance, tax relief for senior citizens, and more, the Budget 2021 to 2022 may be just the right foot towards combating the Covid-19 distress. It is unsure if like the last year, any mini-budgets will be announced in the upcoming Financial Year. However, the Finance Ministry has done the undoable the previous year to manage the pandemic situation. So, we can expect a slew of reforms to follow in between the FY21-22.
