What is Budget?
- Budget is an Annual Financial Statement of yearly estimated receipts and expenditures of the government in respect of every financial year.
- It acts as instruments of control and acts as a benchmark to evaluate the progress of various departments.
- Budgeting is the process of estimating the availability of resources and then allocating them to various activities according to a predetermined priority.
PDF file for the detailed budget summary can be downloaded by CLICKING HERE.
Underneath is the summary of budget speech as shared previously.
Part A:
- Pradhan Mantri Garib Kalyan Yojana, valued at INR 2.76 lakh crores – this provided free food grain to 800 million people, free cooking gas for 80 million families for months, and cash directly to over 400 million farmers, women, elderly, the poor and the needy.
- Total financial impact of all Atma Nirbhar Bharat packages including measures taken by RBI was estimated to be about INR 27.1 lakh crores which amounts to more than 13% of GDP.
- ”Faith is the bird that feels the light and sings when the dawn is still dark”. – Rabindranath Tagore (Fireflies – A Collection of Aphorisms)
- This Budget will be the first of this new decade. This Budget will also be a digital Budget. So far, only three times has a Budget followed a contraction in the economy.
- 2021 is the year of many important milestones for our history. I mention a few of these: It is the 75th year of Independence; 60 years of Goa’s accession to India; 50 years of the 1971 India-Pakistan War; it will be the year of the 8th Census of Independent India; it will also be India’s turn at the BRICS Presidency; the year for our Chandrayaan-3 Mission; and the Haridwar Maha Kumbh.
- Amrut Mahotsav of 2022, on the 75th year of our Independence.
- The Budget proposals for 2021-2022 rest on 6 pillars.
- 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
Health and Wellbeing
- We focus on strengthening three areas:
- Preventive,
- Curative, and
- Wellbeing.
- PM AtmaNirbhar Swasth Bharat Yojana, will be launched with an outlay of about INR 64,180 crores 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 disease.
- It will help in setting up integrated public health labs in all districts and 3382 block public health units in 11 states.
- It will also help in Setting up of a national institution for One Health, a Regional Research Platform for WHO South East Asia Region, 9 Biosafety Level III laboratories and 4 regional National Institutes for Virology.
- Merging of the Supplementary Nutrition Programme and the Poshan Abhiyan and launching the Mission Poshan 2.0.
- The Jal Jeevan Mission (Urban), will be launched. It 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. It will be implemented over 5 years, with an outlay of INR 2,87,000 crores.
- Focus on 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 and bio- remediation of all legacy dump sites under Urban Swaccha Bharat Mission 2.0.
- A voluntary vehicle scrapping policy, to phase out old and unfit vehicles. Vehicles would undergo fitness tests in automated fitness centres after 20 years in case of personal vehicles, and after 15 years in case of commercial vehicles.
- The Budget outlay for Health and Wellbeing is 2,23,846 crores in BE 2021-22 as against this year’s BE of 94,452 crores an increase of 137 percent.
Physical and Financial Capital and Infrastructure
- AtmaNirbhar Bharat – more Production Linked Incentive scheme (PLI) to be announced.
- 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
- The National Infrastructure Pipeline NIP is a specific target for which the government will try getting more funding.
- To do this, there are three ways:
- Firstly, by creating the institutional structures;
- Secondly, by a big thrust on monetizing assets, and
- Thirdly, by enhancing the share of capital expenditure in central and state budgets.
- Infrastructure financing – Development Financial Institution (DFI) – A professionally managed Development Financial Institution is necessary to act as a provider, enabler and catalyst for infrastructure financing. A sum of 20,000 crores will be provided to capitalise this institution. The ambition is to have a lending portfolio of at least 5 lakh crores for this DFI in three years time.
- 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.
- Government aims to increase the capital expenditure and thus have provided INR 5.54 lakh crores which is 34.5% more than the BE of 2020-21.
- Over and above this expenditure, more than INR 2 lakh crores will be provided to States and Autonomous Bodies for their Capital Expenditure.
- Indian Railways have prepared a National Rail Plan for India – 2030. The Plan is to create a ‘future ready’ Railway system by 2030.
- Government will undertake future dedicated freight corridor projects namely East Coast corridor from Kharagpur to Vijayawada, East-West Corridor from Bhusaval to Kharagpur to Dankuni and North-South corridor from Itarsi to Vijayawada
- 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
- A new scheme will be launched at a cost of INR 18,000 crores to support augmentation of public bus transport services. The scheme will facilitate deployment of innovative PPP models to enable private sector players to finance, acquire, operate and maintain over 20,000 buses.
- 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.
- The power distribution companies across the country are monopolies, either government or private. There is a need to provide choice to consumers by promoting competition. A framework will be put in place to give consumers alternatives to choose from among more than one Distribution Company.
- Prime Minister, while speaking at the 3rd Re-inVest Conference in November 2020, had announced plans to launch a comprehensive National Hydrogen Energy Mission. It is now proposed to launch a Hydrogen Energy Mission in 2021-22 for generating hydrogen from green power sources.
- 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.
- 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.
- India has enacted the Recycling of Ships Act, 2019 and acceded to the Hong Kong International Convention.
- Around 90 ship recycling yards at Alang in Gujarat have already achieved HKC-compliant certificates. Efforts will be made to bring more ships to India from Europe and Japan. Recycling capacity of around 4.5 Million Light Displacement Tonne (LDT) will be doubled by 2024. This is expected to generate an additional 1.5 lakh jobs for our youth.
- The provisions of SEBI Act, 1992, Depositories Act, 1996, Securities Contracts (Regulation) Act, 1956 and Government Securities Act, 2007 shall be consolidated into a rationalized single Securities Markets Code.
- The Government would support the development of a world class Fin-Tech hub at the GIFT-IFSC.
- Towards investor protection, an investor charter as a right of all financial investors across all financial products shall be introduced.
- To give a further boost to the non-conventional energy sector, an additional capital infusion of 1,000 crores to Solar Energy Corporation of India and 1,500 crores to Indian Renewable Energy Development Agency shall be made.
- The Insurance Act, 1938 is to be amended 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 of Insurance companies, 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.
- 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.
- The government will bring amendments to the DICGC Act, 1961 to streamline its provisions, so that if a bank is temporarily unable to fulfil its obligations, the depositors of such a bank can get easy and time-bound access to their deposits to the extent of the deposit insurance cover. Such cover has been increased from INR 1 Lakhs to INR 5 Lakhs in the past.
- The decriminalizing of the procedural and technical compoundable offences under the Companies Act, 2013, is now complete. Now, the decriminalization of the Limited Liability Partnership (LLP) Act, 2008 shall take place.
- New definition of Small Companies: Paid up capital maxima increased from “not exceeding 50 Lakh” to “not exceeding 2 Crore” and turnover from “not exceeding 2 Crore” to “not exceeding 20 Crore”.
- To promote start-ups and innovators, the government will incentivize the incorporation of One Person Companies (OPCs) by allowing OPCs to grow 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 also allow Non Resident Indians (NRIs) to incorporate OPCs in India.
- Disinvestment shall continue in all sectors. However, We have kept four areas that are strategic where bare minimum CPSEs will be maintained and rest privatized. In the remaining sectors all CPSEs will be privatized.
- The strategic sectors classified are:
- Atomic energy, Space and Defence
- Transport and Telecommunications
- Power, Petroleum, Coal and other minerals
- Banking, Insurance and financial services.
- Under the Treasury Single Account (TSA) System autonomous bodies directly draw funds from the Government’s account at the time of actual expenditure, saving interest costs. The TSA System shall be extended for universal application from 2021-22.
Inclusive Development for Aspirational India
- 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. During FY21-22 the scheme is to be extended to cover all states/UTs.
- 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.
- Modern fishing harbours and fish landing centres shall be developed. To start with, 5 major fishing harbours – Kochi, Chennai, Visakhapatnam, Paradip, and Petuaghat – will be developed as hubs of economic activity fishing harbours and fish-landing centres along the banks of rivers and waterways.
- To promote seaweed cultivation, I propose a Multipurpose Seaweed Park to be established in Tamil Nadu.
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 set up in partnership with NGOs/ private schools/states.
- In Budget 2019-20, I had mentioned about the setting-up of Higher Education Commission of India. We would be introducing Legislation this year to implement the same. It will be an umbrella body having 4 separate vehicles for standard-setting, accreditation, regulation, and funding.
- In 9 mega cities, formal umbrella structures will be created so that these institutions can have better synergy, while also retaining their internal autonomy. A Glue Grant will be set aside for this purpose.
- In 2016, we had launched the National Apprenticeship Promotion Scheme. We will now realign the existing scheme of National Apprenticeship Training Scheme (NATS) for providing post-education apprenticeship, training of graduates and diploma holders in Engineering.
- 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.
- To better understand the oceans, we will launch a Deep Ocean Mission with a budget outlay of more than 4,000 crores, over five years. This Mission will cover deep ocean survey exploration and projects for the conservation of deep sea biodiversity.
- To have ease of doing business for those who deal with Government or CPSEs, and carry out contracts, A Conciliation Mechanism is being set up with a mandate for quick resolution of contractual disputes. This will instil confidence in private investors and contractors.
- The fiscal deficit in RE 2020-21 is pegged at 9.5% of GDP.
- We plan to continue with our 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.
- The Contingency Fund of India is being proposed to be augmented from 500 crores to 30,000 crores through Finance Bill.
- In accordance with the views of the 15th Finance Commission, we are allowing a normal ceiling of net borrowing for the states at 4% of GSDP for the year 2021-2022.
- States will be expected to reach a fiscal deficit of 3% of GSDP by 2023-24, as recommended by the 15th Finance Commission.
- The FRBM Act mandates a fiscal deficit of 3% of GDP to be achieved by 31st March 2020-2021.
Part B
- In this scenario, our tax system has to be transparent, efficient, and should promote investments and employment in our country.
- A King/Ruler is the one who creates and acquires wealth, protects and distributes it for common good. – Thirukkural.
- To further reduce litigation for small taxpayers, I propose to constitute a Dispute Resolution Committee for them, which will be faceless to ensure efficiency, transparency and accountability. Anyone with a taxable income up to 50 lakh and disputed income up to 10 lakh shall be eligible to approach the Committee. So a National Faceless Income Tax Appellate Tribunal Centre will be created.
- In order to ease compliance for the taxpayer, details of salary income, tax payments, TDS, etc. already come pre-filled in income tax returns. To further ease filing of returns, details of capital gains from listed securities, dividend income, and interest from banks, post offices, etc. will also be pre-filled.
- In 2020, we rolled out the Turant Customs initiative, which brought in Faceless, Paperless, and Contactless Customs measures. With effect from September 2020, we have implemented a new procedure for administration of Rules of Origin. This has helped in putting a check on misuse of FTAs.
- In 2021-22, we will enable the training of 56 lakh school teachers through the National Initiative for School Heads and Teachers for Holistic Advancement (NISTHA).