Budget 2021-2022

Union Budget 2021-22

Question : What is the estimated fiscal deficit for 2021-22 budget year?
a)3.5%
b)4.5%
c)6.5%
d) 6.8%
Answer: d)

Budget 2021-2022 summary

Finance Minister Nirmala Sitharaman presented union budget for 2021-22 on 1st of February 2021. This budget was presented amid extraordinary situation of Covid-19 pandemic.
The Indian economy have reduced from 2.24 lakh crore nominal GDP to Rs 1.94 lakh crore since budget 2020 because of various restriction placed to contain covid -19 pandemic.
The fiscal deficit for 2021-2022 was estimated to be 6.8% of the GDP.

Six Pillars of Budget 2021-2022


This year Budget was presented with following 6 pillars as its base :-

  • Health and Wellbeing
  • Physical & Financial Capital, and Infrastructure
  • Inclusive Development for Aspirational India
  • Reinvigorating Human Capital
  • Innovation and R&D
  • Minimum Government and Maximum Governance

EXPENDTIURE, REVENUE & DEFICIT

  • Estimates of Rs. 34.83 lakh crore budget estimates (BE) for expenditure in 2021-2022 including Rs. 5.54 lakh crore as capital expenditure, rest is revenue expenditure.
  • To boost economy, provision for increase in capital expenditure is by 34.5% (Rs 1,42,151 crore) over BE 2020-21.
  • Total Revenue is estimated to be 17.88 lakh crore for 2021-22.
  • The fiscal deficit in BE 2021-2022 is estimated to be 6.8% of GDP. For previous financial year it is pegged at 9.55% of GDP. Revenue deficit has been revised for FY21 to 7.5% and for FY22 to 5.1%.

Health and well being

  • Health expenditure has been more than doubled by 137% over previous budget .
  • The allocation has been increased form ₹ 94452 Cr to ₹ 2.23 lakh Cr (137% increase).
  • PM Aatma Nirbhar Swasth Bharat Yojana
  • It is a centrally sponsored scheme and it will be launched with an outlay of about Rs 64,180 crore over 6 years.
  • Objective of the Scheme is to develop capacities of primary, secondary, and tertiary care Health Systems.
  • Poshan 2.0
  • It will merge the Supplementary Nutrition Programme and the Poshan Abhiyan.
  • Objective of the Poshan 2.0 is, improving the nutritional content, delivery, outreach, and outcome across 112 Aspirational Districts.
  • Water supply
  • Jal Jeevan Mission (Urban) will be launched to provide water supply to all the 4378 Urban Local Bodies and 500 AMRUT cities.
  • Will be implemented over 5 years with an outlay of ₹ 287000 Cr.
  • Swachh Bharat, Swasth Bharat
  • Urban Swachh Bharat Mission 2.0 will be launched for a period of 5 years from 2021-2026.
  • Scrappage policy
  • Voluntary scrappage policy has been announced.
  • Vehicles older than 15 years and 20 years in case of commercial and personal vehicles respectively will be covered under this.
  • It will promote the usage of fuel-efficient, environment-friendly vehicles.

Budget proposes spending ₹ 35000 Cr for covid vaccines in FY22.Rollout of pneumococcal vaccines for pan India usage (available only in 5 states now) has been announced (it will avoid deaths of 50000 children).
Physical & Financial Capital, and Infrastructure

  • PLI (Production Linked Incentives)
  • Rs 1.97 lakh Cr for five years from FY22.
  • It already exist for 13 sectors.
  • This scheme provides 4% to 6% incentive on incremental production to the eligible companies who are manufacturing goods for 5 years period.
  • Textiles
  • Mega Investment Textile Parks (MITRA) will be launched.
  • Scheme aims to create world class infrastructure with plug and play facilities to enable create global champions in exports.
  • MITRA will be launched in addition to the Production Linked Incentive Scheme(PLI).
  • Infrastructure
  • National Infrastructure Pipeline (NIP):
  • NIP was announced in the last year budget to provide funding for various infrastructure project in the country.
  • The total value of projects proposed under NIP is ₹ 111 lakh Cr ($1.5 tn).
  • Government has expanded projects under NIP to cover 7400 projects from earlier 6835 projects.
  • In order to increase the spending, the govt proposed three steps:-
  • 1.Creating an institutional structure- National Bank for Financing Infrastructure and Development (NBFID).It will be set up with a capital base of ₹ 20000 Cr and will have a lending target of ₹ 5 lakh Cr in three years
  • 2.Asset monetization
  • A National Monetization Pipeline (NMP) of potential brownfield infrastructure assets will be launched.
  • asset monetization dashboard
  • NHAI and PGCIL to set up infrastructure investment trust to attract global funds.
  • Railway to monetize DFC assets after their completion.
  • 3.A sharp increase in capital expenditure – ₹ 5.54 lakh crore for the FY22 (34.5% more than the budget estimate of FY21).
  • Railways:
  • Indian Railways has prepared a National Rail Plan 2030.
  • Reducing logistics cost is at the core of policy-Dedicated Freight corridor – DFC (Western and Eastern) will be commissioned by 2022.
  • Future DFC will also be undertaken.
  • 100% electrification of Broad-Gauge routes will be completed by December, 2023.
  • For passenger safety and convenience aesthetically designed Vista Dome LHB coach on tourist routes and indigenously developed automatic train protection system on the high density network of railway.
  • Urban Infrastructure:
  • A new scheme will be launched at a cost of 18,000 crores to support augmentation of public bus transport services.
  • PPP models to promote private bus operators to operate and maintain 20000 buses in urban areas.
  • Two new technologies – MetroLite and MetroNeo will be deployed to provide rail metro services at a much lower cost.
  • Power infrastructure:
  • Framework will be put in place to give consumers alternatives to choose from among more than one Distribution Company.
  • Reforms-based result-linked power distribution sector scheme will be launched with an outlay of3,05,984 crores over 5 years to help discoms.
  • Hydro energy Mission 2021-22 for generating hydrogen from green power sources.
  • Ports, Shipping and Waterways:
  • 7 ports worth more than 2,000 crores will be offered to the private sector under PPP.
  • Scheme to promote flagging of merchant ships in India with an amount of Rs 1624 crores will be provided over 5 years.
  • India has implemented the Recycling of Ships Act 2019 and has acceded to Hong Kong International Convention. Read more on this convention in the article International Maritime Organization.
  • Petroleum and Natural Gas:
  • The number of beneficiaries under the UJJWALA Scheme has been increased from 8 Cr to 9 Cr (increased by 1 Cr).
  • Will add 100 more districts under City Gas Distribution Network in the next 3 years.
  • Financial capital:
  • Proposed consolidation of SEBI Act, Depositories Act, Securities Contraction Act and Govt securities Act into a single rationalized Securities Markets Code.
  • World class Fin-Tech hub at the GIFT-IFSC.
  • RBI will have to give up its powers of regulating the G-securities.
  • Gold exchanges were announced in the budget of 2018-19. In this regard SEBI was notified as the regulator and Warehousing Development and Regulatory Authority will be strengthened.
  • FDI in the insurance sector has been increased from 49% to 74%.
  • Banking:
  • To further consolidate the financial capacity of PSBs, further recapitalization of20,000 crores is proposed in 2021-22.
  • Stressed Asset Resolution by setting up a New Structure
  • An Asset Reconstruction Company Limited and Asset Management Company would be set up to consolidate and take over the existing stressed debt and then manage and dispose of the assets to Alternate Investment Funds and other potential investors for eventual value realization.
  • Deposit Insurance
  • Deposit insurance cover has been increased from ₹ 1 lakh to ₹ 5 lakh per individual
  • Govt to allow withdrawal of deposits to the extent of deposit insurance cover in the troubled banks
  • Disinvestment
  • Policy features:
  • Will cover CPSEs, PSBs and insurance companies.
  • Sectors will be classified into strategic and non-strategic
  • In the case of strategic sectors, the govt would be having a minimum presence. Remaining CPSEs will be privatized, merged, subsidized with other CPSEs or closed.
  • In non-strategic sectors, these CPSEs will be privatized or shall be closed.
  • Disinvestment of 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.The proceeds from the disinvestments would be to finance social and developmental programmes of the govt.
  • Other than IDBI Bank, we propose to take up the privatization of two Public Sector Banks and one General Insurance company in the year 2021-22.
  • The govt has set a disinvestment target of ₹ 1.75 lakh Cr (against ₹ 2.1 lakh Cr in the last fiscal, against this the govt has raised ₹ 19499 Cr so far).

Inclusive Development for Aspirational India

  • Agriculture
  • SWAMITVA Scheme:
  • So far about 1.8 lakh property owners from 1241 villages have been issued with property cards. Scheme has been extended to cover all states/UTs.
  • Farm loans allocation has been increased to ₹ 16.5 tn from ₹ 15 tn in the last fiscal.
  • Proposed doubling of Micro Irrigation Fund, (corpus of Rs 5,000 crores) which has been created under NABARD.
  • ‘Operation Green Scheme’ that is presently applicable to tomatoes, onions, and potatoes, will be enlarged to include 22 perishable products.
  • 10% import tax on the import of this cotton to help farmers.
  • Govt has also raised the levy on raw silk and silk yarn from 10% to 15%.
  • 1000 more mandis will be integrated under e-NAM.
  • The Agriculture Infrastructure Development cess:
  • Govt has proposed cess on 25 products and basic customs duty has been reduced on these items so that the consumers do not end up paying a higher price. This has been done to improve farm infrastructure.
  • Govt has imposed this cess on petrol, diesel, gold. AIDC of ₹ 2.5 per litre has been imposed on petrol and ₹ 4 on diesel.

Migrant workers and labour

  • One Nation One Ration Card:-
  • So far being implemented by 32 states and UTs, reaching about 69 crores beneficiaries –total of 86% beneficiaries covered. The remaining 4 states and UTs will be integrated in the next few months.
  • Proposal to launch a new portal that will collect relevant information on gig, building and construction workers among others. This is expected to help in formulating schemes for the migrant workers.
  • The 4 labour codes will be implemented.

Reinvigorating Human Capital

  • More than 15,000 schools will be qualitatively strengthened to include all components of the National Education Policy.
  • 100 new Sainik Schools will be opened in partnership with NGOs/private schools/states.
  • An umbrella body called the Higher Education Commission of India to be set up.
  • Govt has set up a target of setting up 750 Ekalavya model residential schools.

Innovation and R&D

  • To boost overall research ecosystem of the country with focus on identified national-priority thrust areas National Research Foundation (NRF) has been allocated Rs 50,000 crores, for next 5 years.
  • Rs 1500 Cr allocated for a scheme to promote digital transactions.
  • Deep Ocean Mission with an outlay of ₹ 4000 Cr over 5 years has been proposed.

Minimum Government, Maximum Governance

  • Proposal to set up a Conciliation Mechanism and mandate its use for quick resolution of contractual disputes.

Taxation in Budget

  • Senior citizens over 75 years of age with only pension and interest income are exempted from filing income tax returns.
  • Presently, the tax assessments can be reopened up to 6 years and in serious tax frauds up to 10 years. This has been reduced to 3 years and in the case of serious tax frauds, up to 10 years but with approval from the Principal Chief Commissioner

By kameshwar shukla

Reference: https://www.indiabudget.gov.in/doc/Budget_Speech.pdf