BUDGET ANNOUNCEMENT – 2021: BOON OR BANE
Finance Minister, Mrs. Nirmala Sitharaman, had
presented the budget, in what is considered by many to be a tough budget, given
the significant jump in the capital expenditure, increased spending on infrastructure,
and even more on health related aspects.
The Budget proposals for 2021-2022, was settled
over six pillars, which were-
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
In these six pillars, many proposals were made and the works that have
been done and are currently in progress were also presented. Let’s look at some
the important takeaways from what was presented under these heads-
Pillar- 1
(Health and Well-being)
1. A new
scheme which would be centrally sponsored called, PM AtmaNirbhar Swasth Bharat
Yojana would be launched with an outlay of 64,180 crores with the aim of
improving primary, secondary, and tertiary care in health system, strengthening
existing national institutions, and creating new institutions, to cater to
detection and cure of new and emerging diseases. In this, the setting up of nine
Bio-Safety Level III laboratories and four regional National Institutes for
Virology were also discussed.
2. Merging
of the Supplementary Nutrition Programme and the Poshan Abhiyan to launch the
Mission Poshan 2.0 was also discussed, through which the budget proposes to
strengthen the nutritional content, delivery, outreach, and therefore outcome.
3. Launching
of the Jal Jeevan Mission (Urban) with an outlay of 2,87,000 crores, was presented which aims at universal water supply in all 4,378 urban local bodies with 2.86
crores household tap connections, as well as liquid waste management in 500
AMRUT cities.
4. For the
Urban Swachh Bharat Mission 2.0, a total financial allocation of 1,41,678
crores over a period of 5 years from 2021-2026 was proposed.
5. To tackle
the problem of air pollution, a proposal to provide an amount of 2,217 crores
for 42 urban centres with a million-plus population was presented in the
budget.
6. A voluntary
vehicle scrapping policy, to phase out old and unfit vehicles was also
presented as per which, vehicles will have to undergo fitness tests in automated
fitness centres after twenty years in case of personal vehicles, and after
fifteen years in case of commercial vehicles. This proposal was made with the
aim to encourage fuel-efficient, environment-friendly vehicles, thereby reducing
vehicular pollution. It is also speculated by automobile honchos, that this the move will significantly boost the auto-industry, as old vehicles would be taken
off the street.
7. The
Budget outlay for Health and Wellbeing was estimated at 2,23,846 crores in
2021-22 as against this year’s estimate of 94,452 crores, which is an increase
of 137 percentage.
Pillar- 2
(Physical and Financial Capital
and Infrastructure)
1. The
minister stated that the government had committed nearly 1.97 lakh crores for Public
Linked Incentive (PLI) schemes to create manufacturing global champions.
2. It was
stated that to make the textile industry globally competitive and attract large
investments, a scheme of Mega Investment Textiles Parks (MITRA) will be
launched in addition to the PLI scheme. It was also stated that seven Textile
Parks will be established within a period of three years.
3. The
finance minister proposed to take concrete steps towards the fulfilment of the National
Infrastructure Pipeline (NIP) project, by approaching the same in three ways-
i.
by creating institutional structures,
ii.
by putting thrust on monetizing assets,
iii.
by enhancing the share of capital expenditure in
central and state budgets.
4. Introduction
of a bill to set up a Development Finance Institution (DFI) was also presented
in the budget and to that effect, a sum of 20,000 crores was also declared to
have been allocated to capitalise this institution.
5. It was
stated that a, “National Monetization Pipeline” of potential brownfield infrastructure
assets will be launched and to that effect, an Asset Monetization dashboard
will also be created, to track the progress and to provide visibility to
investors. These were some important measures in the direction of monetization:
- National Highways Authority of India (NHAI) and Power
Grid Corporation of India (PGCIL) have sponsored one Infrastructure Investment
Trust (InvIT) each, which will attract international and domestic institutional
investors. Five operational roads with an estimated enterprise value of 5,000
crores are being transferred to the NHAI InvIT and similarly, assets of a value
of 7,000 crores are being transferred to the PGCIL InvIT.
- Indian Railways will be monetising Dedicated
Freight Corridor assets for operations and maintenance, after commissioning.
- An upcoming lot of Airports will be monetised for
operations and management concession.
- Other core infrastructure assets that will be
rolled out under the Asset Monetization Programme are:
a) NHAI
Operational Toll Roads
b) Transmission
Assets of PGCIL
c) Oil and
Gas Pipelines of GAIL, IOCL and HPCL
d) Airports
in Tier II and III cities,
e) Other
Railway Infrastructure Assets
f) Warehousing
Assets of Central Public Sector Enterprises (CPSE) such as Central Warehousing
Corporation and National Agricultural Cooperative Marketing Federation of India (NAFED) and
g) Sports
Stadiums
6. It was
stated that by March 2022, the government would be awarding 8,500 Kms and work
on additional 11,000 Kms of national highway corridors would begin.
7. A sharp
increase in capital expenditure was proposed and thus, for that purpose an
amount of 5.54 lakh crores which is 34.5% more than the last year was stated
out. Over and above this expenditure, it is also proposed that the ministry
will be providing more than 2 lakh crores to States and Autonomous Bodies for
their Capital Expenditure.Mechanisms to nudge States to spend more of their budget
on creation of infrastructure will also be a priority.
8. It was
promised that100% electrification of Broad-Gauge routes will be completed by
December, 2023.
9. An
enhanced outlay of 1,18,101 crores for Ministry of Road Transport and Highways,
was also provided.
10. It was
stated that the Indian Railways have prepared a ‘National Rail Plan for India –
2030’, according to which a ‘future ready’ Railway system will be created by
2030.
11. For passenger
convenience and safety in the Indian Railway, the following measures were
proposed:
- Introduction of the aesthetically designed Vista Dome LHB coach on tourist routes to give a better travel experience to passengers.
- Indigenously developed automatic train protection a system that eliminates train collision due to human error.
- Allocation of a record sum of 1,10,055 crores, for Railways
12. It was
stated that a revamped, reforms-based, result-linked, power distribution sector
scheme will be launched with an outlay of 3,05,984 crores. The scheme will
provide assistance to DISCOMS for Infrastructure creation.
13. It was
proposed that a framework to give consumers alternatives to choose from more
than one Distribution Company will be put in place.
14. It was
proposed that two new technologies i.e.; ‘MetroLite’ and ‘MetroNeo’ will be
deployed to provide metro rail systems at a much lesser cost with same
experience, convenience and safety in Tier-2 cities and peripheral areas of
Tier-1 cities
15. It was
also stated that a new scheme will be launched at a cost of 18,000 crores to
support augmentation of public bus transport services. The scheme seeks to
boost the automobile sector, create employment opportunities for the youth and
enhance ease of mobility for urban residents.
16. It was proposed
that a Hydrogen Energy Mission will be launched in 2021-22 for generating hydrogen
from green power sources.
17. A
consolidation of 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’ was also proposed.
18. Creation
of a permanent institutional framework was proposed, which would purchase
investment-grade debt securities both in stressed and normal times and help in
the development of the Bond market.
19. A
proposal to introduce an investor charter as a right of all financial investors
across all financial products was also made.
20. An additional
capital infusion of `1,000 crores to Solar Energy Corporation of India and 1,500
crores to Indian Renewable Energy Development Agency was made to give a further
boost to the non-conventional energy sector.
21. A proposal was made to amend the Insurance Act, 1938, to increase the permissible
FDI limit from 49% to 74% in Insurance Companies 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.
22. To
further consolidate the financial capacity of Public Sector Banks (PSBs),
further recapitalization of 20,000 crores is proposed in 2021-22.
23. A
proposal was made to decriminalize certain laws of the Limited Liability
Partnership (LLP) Act, 2008.
24. A
revision to the definitions under the Companies Act, 2013 for Small Companies
by increasing their thresholds for Paid up capital from “not exceeding 50 Lakh”
to “not exceeding 2 Crore” and turnover from “not exceeding 2 Crore” to “not
exceeding 20 Crore” was proposed as it is expected to benefit more than two
lakh companies in easing their compliance requirements.
25. A
proposal was made to incentivize the incorporation of One Person Companies
(OPCs), and in that:
i. OPCs can grow without any restrictions on paid up
capital and turnover
ii. They can be converted into any other type of
company at any time
iii. Residency limit for an Indian citizen has been
reduced from 182 days to 120 days for the purposes of setting up of the OPC
iv. Non Resident Indians (NRIs) are also proposed to be
eligible to incorporate OPCs in India.
26. A new
data an alytics, artificial intelligence, machine learning driven MCA21 Version
3.0 is proposed to be launched. This Version 3.0 will have additional modules
for e-scrutiny, e-Adjudication, e-Consultation and Compliance Management.
27. Two
Public Sector Banks other than IDBI Bank and one General Insurance company are
planned to be privatised.
28. A separate
Administrative Structure for Cooperatives, is proposedin order to
furtherstreamline the ‘Ease of Doing Business’.
Pillar- 3 (Inclusive Development for Aspirational India)
1. Allocation
to the Rural Infrastructure Development Fund was enhanced from 30,000 crores to
40,000 crores. The Micro Irrigation Fund, with a capital of 5,000 crores has
been proposed to be doubled by augmenting it by another 5,000 crores.
2. ‘Operation
Green Scheme’ that is presently applicable to tomatoes, onions, and potatoes,
will be enlarged to include 22 other perishable products.
3. To
promote seaweed cultivation, a proposal of a Multipurpose Seaweed Park was made.
4. A
proposal was made to launch a portal that will collect relevant information on
gig, building, and construction-workers among others. This is expected to help
formulate Health, Housing, Skill, Insurance, Credit, and food schemes for
migrant workers.
5. A the proposal was made to reduce the margin money requirement from 25% to 15%, and also
to include loans for activities allied to agriculture.
Pillar- 4
(Reinvigorating Human Capital)
1. More than
15,000 schools will be qualitatively strengthened to include all components of
the National Education Policy. They shall emerge as exemplar schools in their
regions, and will take the responsibility of handholding and mentoring other
schools to achieve the ideals of the Policy.
2. It was
proposed that 100 new Sainik Schools will be set up in partnership with NGOs/
private schools/states.
3. Establishment
of a Higher Education Commission of India was proposed which would be an
umbrella body having four separate vehicles for- standard-setting,
accreditation, regulation, and funding.
4. Establishment
of a Central University in Leh was proposed.
5. A proposal was made for the establishment of 750 Eklavya model residential
schools in the tribal areas. The unit cost of each such school was increased
from 20 crores to 38 crores, and for hilly and difficult areas, to 48 crores.
6. To
further enhance apprenticeship opportunities for the youth, an amendment to the
Apprenticeship Act was also proposed.
Pillar- 5
(Innovation and R&D)
1. 1,500
crores have been allocated for a proposed scheme that will provide financially an incentive to promote digital modes of payment.
2. National
Language Translation Mission (NTLM) has been planned which will enable the a wealth of governance-and-policy related knowledge on the Internet is made
available in major Indian languages.
3. A Deep Ocean Mission with a budget outlay of more
than 4,000 crores is planned which will cover deep ocean survey exploration and
projects.
Pillar- 6
(Minimum Government, Maximum
Governance)
1. To bring
about transparency, efficiency, governance and reforms in the nursing
profession, ‘The National Nursing and Midwifery Commission’ Bill will be
introduced.
2. To have
ease of doing business for those who deal with Government or CPSEs, and carry
out contracts, a proposal was made to set up a Conciliation Mechanism for quick
resolution of contractual disputes.
3. 1,000
crores was proposed to be allocated for the welfare of Tea workers especially
women and their children in Assam and West Bengal.
4. The
fiscal deficit in 2020 was pegged at 9.5% of GDP. It was stated that there was
a need of 80,000 crores for which the relevant markets would be approached. It
was estimated that the fiscal deficit in 2021 would be 6.8% of GDP, with a continued reduction over the period. It is planned and intended to reach a
fiscal deficit level below 4.5% of GDP by 2025-2026. The approach to realize
this is by-
a)
Increasing the buoyancy of tax revenue through
improved compliance, and
b)
Increasing receipts from monetisation of assets,
including Public Sector Enterprises and land.
c)
Augmenting the Contingency Fund of India from 500
crores to 30,000 crores through the Finance Bill.
5. It was
proposed to discontinue the national Small Savings Fund (NSSF) Loan to Food
Corporation of India (FCI) for Food Subsidy and accordingly budget provisions
have been made.
6. An
amendment to the Fiscal Responsibility and Budget Management(FRBM)Act, was also
stated.
7. A
proposal for reduced compliance burden on the senior citizens who are 75 years
of age and above was made. Exemption from filing income tax returns for senior
citizens who only have pension and interest income was proposed.
8. A
proposal was made to constitute a Dispute Resolution Committee which will be
faceless to ensure efficiency, transparency and accountability and anyone with
a taxable income up to 50 lakh and disputed income up to 10 lakh shall be
eligible to approach the Committee.
9. Income Tax
Appellate Tribunal was proposed to be made faceless. It is proposed that all
communication between the Tribunal and the appellant shall be electronic and where
personal hearing is needed, it shall be done through video-conferencing.
10. A
proposal was made to notify rules for removing the hardship of double taxation
on Non-Resident Indians returning to India.
11. Digital
transactions was further incentivised by reducing compliance burden. Limit of
tax audit for such persons was proposed to be increased from 5 crore to 10
crore.
12. A proposal was made to make notified Infrastructure Debt Funds, to raise funds by
issuing tax efficient Zero Coupon Bonds.
13. A lot of
proposals were made for the promotion of housing development
14. Reduced
compliance burden on small charitable trusts running educational institutions
and hospitals was also proposed.
15. In order
to ensure that employees’ contributions are deposited on time, it was stated
that the late deposit of employee’s contribution by the employer will not be
allowed as deduction to the employer.
16. GST compliances
have been made considerably easy with the proposals made in the budget.
17. From 1st
October 2021, a revised customs duty structure, free of distortions have been
proposed.
18. Customs
duty is being uniformly reduced to 7.5% on semis, flat, and long products of
non-alloy, alloy, and stainless steels. To provide relief to metal re-cyclers,
mostly MSMEs, an exemption of duty on steel scrap for a period up to 31st
March, 2022 has been allowed. Further, Anti-dumping duty (ADD) and
Countervailing duty(CVD) on certain steel products has also been revoked. Also,
to provide relief to copper recyclers, duty on copper scrap has been reduced
from 5% to 2.5%.
19. A phased
manufacturing plan for solar cells and solar panels shall also be notified. To
encourage domestic production, duty on solar invertors has been increased from
5% to 20%, and on solar lanterns it has been increased from 5% to 15%.
20. Duty on
steel screws and plastic builder wares are being increased from 10% to 15%. On
prawn feed, the duty is being planned to be increased from 5% to 15%.
21. Exemption
on imports of certain kind of leathers are being withdrawn as they are domestically
produced in good quantity and quality. Customs duty on finished synthetic gem
stones are being raised to encourage their domestic processing.
22. Customs
duty on cotton has been increased from nil to 10% and on raw silk and silk yarn
from 10% to 15%. End-use based concession on denatured ethyl alcohol is also
being withdrawn.
23. An
Agriculture Infrastructure and Development Cess (AIDC) has been proposed on some
items.
The
budget presented by the Finance Minister had covered the needs of some of the
crying issues of the country, and the method of tackling the main problem of
GDP deficit was well addressed, with a promise to reduce it to 4.5% by 2025,
with no indirect taxes to mitigate the same. Many automobiles and health
related industries were happy about the new budget that was announced and it
also came out to be a boon to the real estate industry.
While
many people are welcoming the budget that was announced there are also
increased speculation about the implementation and execution of what was
announced.
There are
also concerns about the idea of generating revenue by selling assets such as
roads, railways, ports, etc. as it can make the country vulnerable and
therefore insecure. There were also much speculation from the public about
changes in the tax slabs which would benefit the middle income group, but no
changes were made, and there was no respite on the prices of fuels.
So, while
the budget seems to be quite well built for the future ahead, the
implementation of these proposals remains to be seen and hopefully the proper
execution of these proposals will bolster the positive growth and development
of the country.
Written by :
Danny Louis David
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