Union Budget 2021: Highlights

Ministry Wise Major Allocations Amount (in Rs.)
Ministry of Housing and Urban Affairs 54581 crore
Ministry of Health and Family Welfare 73932 crore
Ministry of Education 93224 crore
Ministry of Railways 110055 crore
Ministry of Road Transport and Highways 118101 crore
Ministry of Agriculture and Farmers’ Welfare 131531 crore
Ministry of Home Affairs 166547 crore
Ministry of Consumer Affairs, Food and Public Distribution 256948 crore
Ministry of Defence 478196 crore
Ministry of Rural Development 133690 crore

Highlights

  1. Union Budget 2021 is India’s first Digital Budget.
  2. Union Finance Minister Nirmala Sitharaman began her Budget 2021-22 speech by saying that preparation of budget was undertaken in an environment like ‘never before’.
  3. “Faith is the bird that feels the light and sings when the dawn is still dark,” FM quoted Rabindranath Tagore just before beginning with the Part A of her Budget presentation.
  4. The global economy, which was slowing down, was pushed into uncertainty due to COVID-19. The risk of not having a lockdown was far more, far too high, says FM.
  5. Through the past year, a plan of Rs 30-lakh-crore was announced, in ‘mini-budgets’ to beat Covid.
  6. The total estimate of all relief measures announced by the government & RBI so far is Rs 27.1 lakh cr (13% of GDP).
  7. “The government stretched its resources to provide for the most vulnerable,” she said.
  8. A vision for Atmanirbhar Bharat in part of Sitharaman’s first part. FY22 budget proposals based on six pillars. Health and wellbeing, Infrastructure, Inclusive development, Development of human capital, Research, and development, Minimum government, maximum governance- are the six pillars of the Union budget
  9. India has two COVID-19 vaccines available and we expect two more vaccines soon, she said.
  10. The PM Atmabirbhar Swasth Bharat Yojana will spend Rs 64,180 crore on primary, secondary, and tertiary healthcare over a period of six years. And this will be in addition to the National Health Mission.
  11. 17,000 rural and 11,000 urban health and wellness centers to be set up Integrated public health labs to be set up in each district, 3,382 block public health units in 11 states.
  12. Rs 1.41 lakh crore for Urban Clean India Mission
  13. Urban Swachh Bharat 2.0 Mission to be launched at an outlay of Rs 1.41 lakh crore over 5 years.
  14. FM announces Rs 35,000 crorefor Covid-19 vaccines.
  15. Jal Jeevan Mission Urban to have an outlay of Rs 2.87 lakh crore.
  16. A voluntary vehicle scrapping policy was introduced. Vehicles to undergo fitness tests after 20 years for Personal Vehicles, 15 years for Commercial Vehicles.
  17. She announced a new health infra scheme with a higher outlay of Rs. 61,000 crore. She added that three areas – Preventive health, curative health, and well-being – needs to be strengthened.
  18. “To strengthen Nutritional content, delivery, outreach & outcome. We will merge the supplement Nutrition Programme & Poshan Abhiyan and will launch the Mission Poshan 2.0,” says FM
  19. The government will set-up a Development Finance Institution (DFI), capitalized with Rs 20,000 crore.
  20. Capital expenditure of Financial Year 2022 to be up by +34.5% (Vs FY21 BE) at Rs 5.54 lakh crore.
  21. Rs44,000 crore under capital expenditure will be given to the Department of Economic Affairs in FY22.
  22. FY21 capital expenditure is seen at Rs39 lakh crore.
  23. National Monetisation Pipeline for brownfield projects to be launched. NHAI and PGCIL have sponsored one InvIT(Infrastructure Investment Trust) each.
  24. Highway infra work proposed include building 8,500-km of highways by March 2022.
  • 3,500 km corridor in Tamil Nadu
  • 1,100 km in Kerala at an investment of Rs 65,000 cr
  • 675 km in West Bengal at a cost of Rs 95,000 cr
  • 1,300 km in Assam in the next 3 years
  1. Providing Rs 1.15 lakh crore for Railways, privatizing airports
  2. Out of the Rs, 1.15 lakh cr for Railways, Rs 1.07 lakh cr is towards CAPEX
  3. Indian Railways national rail plan for India to prepare a future-ready railway system by 2030, says the FM. Indian Railways have a National Rail Plan for 2030.
  4. Next lot of airports to be privatized in tier 2 and 3 towns and cities.
  5. The fiscal deficit for FY22 pegged at 8% of GDP.
  6. Rail stocks at a high as FM increases spending. FY22 allocation for railways at Rs 1,10,055 cr.
  7. Pipelines of GAIL (India) Ltd, Indian Oil Corp (IOC), and HPCL will be monetized.
  8. Ujjwala Scheme will be extended to cover 1 cr more beneficiaries.
  9. Finance Minister proposes to consolidate provisions of SEBI Act, Depositories Act, Securities Contracts Regulation Act, Government Securities Act.
  10. Government will amend Insurance Act to allow higher FDI.
  11. Govt allows foreign ownership in insurance with safeguards.
  12. Government allots Rs. 20,000 crore for bank recapitalization.
  13. The Finance Minister proposed to revise the definition under the Companies Act, 2013 for small companies by increasing their threshold for capitalization to not exceeding Rs 50 lakh to not exceeding Rs 2 crore and turnover not exceeding Rs 2 crore to not exceeding Rs 20 crore.
  14. In case a bank fails or withdrawals from the bank are stopped due to financial pressure on the bank, the depositors will be able to get immediate access to their deposits up to the deposit insurance amount of Rs 5 lakh.
  15. Government to now allow one-person companies
  • No restriction on paid-up capital and turnover, to incentivize incorporation of one-person companies
  • Conversion of the one-person company to any other kind, reducing residency limit from 182 days to 120 days
  • Allow non-resident Indians to incorporate one-person companies in India
  1. Divestment target for FY22 at Rs 1.75 lakh cr. In FY21, the government had budgeted to raise Rs 2.1 lakh crore through divestments but fell short.
  2. The stake sale in LIC may conclude this year. The government will bring IPO of LIC in FY22
  3. The government has approved a new public sector enterprises policy, which is intended to drive privatization.
  4. Fiscal support in FY22 depends on revenue generation from the success of these privatization programmes.
  5. Government to privatize 2 PSU banks, one general insurance company in FY22.
  6. BPCL, CONCOR, Pawan Hans, Air India divestments to be completed in FY22
  7. FM announces enhanced Agri credit target for FY22, gives update on welfare schemes.
  8. To increase provision to a rural infra development fund to Rs 40,000 crore from Rs 30,000 crore
  9. Five major fishing harbours to be developed as hubs for economic activity
  10. Micro-irrigation corpus doubled to Rs 10,000 cr. Agriculture infra funds will be made available to APMCs.
  11. Around 1.68 crore farmers are registered and Rs 1.14 crore trade value has been carried out through e-NAM, the national agricultural market.
  12. The Budget proposes setting up a faceless dispute resolution committee for individual taxpayers, making Income Tax Appellate Tribunal faceless, and constituting the dispute resolution committee for small taxpayers.
  13. 1000 more mandis will be integrated with the eNAM.
  14. FM also announced that agricultural infrastructure funds would be made available to the Agricultural Produce Market Committees (APMCs) for augmenting their infrastructural facilities.
  15. ‘Swamitva’ scheme, under which a record of rights is being provided to property owners of villages, FM shared that up to 1.80 lakh property owners in 1,241 villages have been given property cards.
  16. Proposed to extend this scheme during 2021-22 to cover all states and Union Territories.
  17. Animal Husbandry: To provide adequate credit to our farmers, Govt, enhanced the agricultural credit target to 16.5 lakh cr. We will focus on ensuring credit flow to animal husbandry, dairies, and to fisheries.
  18. Fishing: Proposed substantial investments in the development of modern fishing harbours and fish landing centers. Five major fishing harbours – Kochi, Chennai, Visakhapatnam, Paradip, and Petuaghat to be developed as hubs for economic activities.
  19. Existing Scheme updates
  • 54 crore farmers benefited from MSP in paddy and wheat in FY21 vs 1.24 crore YoY
  • Amount paid to farmers for wheat in FY21 was Rs 75,060 crore vs Rs 62,802 crore in FY20
  • Amount paid to farmers for paddy in FY21 seen at Rs 1.72 crore Rs vs Rs 1.41 lakh crore in FY20
  • Amount paid to farmers for pulses in FY21 seen at Rs 10,530 crore vs Rs 8,285 crore in FY20
  1. 69 crore beneficiaries or 86% covered under one-nation, one-ration
  2. MSME allocation to be doubled. Government to set aside Rs 15,700 crore in FY22
  3. The government also proposes to reduce margin money requirement from 25% to 15% for startups.
  4. Minimum wages to now apply to all categories of workers. Social security benefits will be extended to gig and platform workers.
  5. The government has raised basic customs duty on import of sub-parts of mobile phones and battery chargers from nil to 2.5% in FY21-22. The price impact will be known once the details are clear.
  6. FM proposed to provide Rs 1,000 crores for the welfare of tea workers especially women and their children in Assam and West Bengal.
  7. A total of Rs 39.67 crore has been allocated to the Lokpal for the next fiscal, according to Union Budget 2021-22. The provision is for the establishment and construction-related charged expenditure for the Lokpal, it said.
  8. The Finance Minister proposed an increase in customs duty of various parts including ignition wiring sets, safety glass, and parts of signaling equipment to 15 percent with effect from February 2.
  9. The Centre has allocated about Rs 1,66,547 crore to the Ministry of Home Affairs for 2021-22 fiscal with a majority of the funds going to the police forces. Also, Rs 30,757 crore has been allocated to Jammu and Kashmir and Rs 5,958 crore for Ladakh — the two newly created Union Territories. The MHA has been allocated Rs 1,66,546.94 crore for the next fiscal with Rs 1,03,802.52 crore for the central armed police forces like the CRPF, BSF, CISF, etc.
  10. Propose to review more than 400 old exemptions to customs duty, and from October 1 will put in place a revised customs duty structure free of any distortion, the FM said. Govt plans on reducing customs duty uniformly to 7.5% on products of non-alloy, alloy, and stainless steel, exempting duty on steel scrap till March 2022. The FM added that to provide relief to copper recyclers, the govt will be reducing duty on copper scrap from 5% to 2.5%.54581
  11. Government announces multi-state co-operative for ease of doing business
  12. India to launch Deep Ocean Mission, with the allocation of Rs 4,000 crore over 4 years.
  13. FY21 fiscal deficit at 9.5% of GDP
  14. Hope to get back to the fiscal consolidation path by FY26. The fiscal deficit will reach below 4.5% by FY26, says Sitharaman.
  15. The pandemic necessitated deviation from glide path to achieve fiscal deficit target under FRBM Act.
  16. FM reduces the tax burden on senior citizens above 75 years. Pensioners over 75 years of age are exempt from filing returns.
  17. Finance Minister allocates Rs 3,726 crore for forthcoming Census. This will be the first digital census, Sitharaman said.
  18. Government to notify rules to eliminate the double tax for NRIs on foreign retirement funds
  19. Govt to extend the eligibility of erstwhile tax sop on a home loan up to FY22; propose that affordable housing projects can avail tax holiday for one more year
  20. Tax holiday for aircraft leasing business in Gift city.
  21. Government to provide tax exemption for relocating funds to IFSC.
  22. Income tax return filers increased to 6.48 cr in 2020 from 3.31 cr in 2014, says FM.
  23. Tax incentives for startups, including an extension in capital gains exemption by one year, in Union Budget 2021-22. The eligibility for claiming tax holiday for startups will also be extended by one more year to March 2022.
  24. Tax exemptions for affordable house loans. Additional tax deduction of Rs 1.5 lakh for interest on home loan for affordable housing extended.
  25. Finance Minister Nirmala Sitharaman said the government will borrow Rs 80,000 crore in the remaining two months to meet FY21 expenditure.
  26. Nirmala Sitharaman proposes to review more than 400 old exemptions in customs this year. To put into place new customs duty structure by Oct-1, 2021.
  27. The first Budget of the decade leaves direct taxes unchanged. These are the tax incentives announced.
  28. A new cess on agriculture development, which will be 100% on alcoholic beverages, 2.5 per liter on petrol and Rs. 4 per liter on diesel. The new agri development cess will be applicable from February 2, 2021.
  29. The Agri cess would be 17.5% on crude palm oil, 20% on crude soya bean and sunflower oil, 30% on Kabuli chana, 10% on peas, 50% on Bengal gram, and 20% on lentil. On cotton, it would be 5%. The cess would be 2.5% on gold and silver bars, 35% on apples, 5% on specified fertilizers, and 1.5% on coal, lignite, and peat.
  30. Nearly 19 percent increase in Defence capital expenditure
  31. Rs 1600-crore scheme to provide subsidy to shipping companies in global tenders

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