Union Budget 2021 Highlights: FM presents India’s first digital budget

Finance Minister Nirmala Sitharaman presents the Union Budget for 2021-2022 today. Here are live updates and key highlights from her budget speech.

   
Budget-2021

Accounting of govt expenditure, revenues far more transparent. We ensured spending won’t get delayed. Have increased spending in coming year due to which deficit has increased.

says Nirmala sitharaman, Hon’ble Finance Minister

Healthcare

Budget 2021 to spend Rs 2.23 lakh crore on healthcare, raising outlay by 137%

The allocation to healthcare in this budget has been increased substantially. The areas of focus will be preventive and curative healthcare as well as well being, she said.

The allocation is likely to be around Rs 2,23,846 crore, a 137% percentage rise from the previous budget.

Rs 35,000 cr has been budgeted for COVID-19 vaccination expenditure in FY22.

India will spend Rs 2.23 trillion on healthcare and launch a new central scheme with an outlay of Rs 64,180 crore over the next six years to improve health systems nationwide, said Finance Minister Nirmala Sitharaman on Monday.

FM lays out a Rs 64,180 crore spending plan for healthcare over the next six years 

  • Will be spent on primary, secondary and tertiary healthcare 
  • In addition to the National Health Mission. 
  • 17,000 rural and 11,000 urban health and wellness centres to be set up 
  • Integrated public health labs to be set up in each district 
  • New health infra scheme with higher outlay of Rs 61,000 crore

Infrastructure, Road, Transport & Highways

FY22 capital expenditure up 34.5% (Vs FY21 BE), at Rs 5.54 lakh crore, FM says. 

  • FY21 capital expenditure seen at Rs 4.39 lakh crore 
  • Rs 44,000 crore under capital expenditure to be given to Department of Economic Affairs in FY22 
  • Over and above this, Rs 2 lakh crore will be provided to states and autonomous bodies to nudge their expenditure. 

Government to set-up a Development Finance Institution (DFI), capitalised with Rs 20,000 crore 

  • Government will introduce bill to set up new professionally managed Development Financial Institution. 
  • New DFI aims to have lending portfolio of Rs 5 lakh crore in 3 years 
National Monetisation Pipeline for brownfield projects to be launched. NHAI and PGCIL have sponsored one InvIT each. 
  • 5 operational roads with estimated enterprise value of Rs 5,000 cr being transferred to NHAI InvIT 
  • Transmission assets worth Rs 7,000 crore to be transferred to PGCIL InvIT 
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 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 

FM’s infra boost: Providing Rs 1.15 lk cr for Railways, privatizing airports 

  • Out of the Rs 1.15 lk cr for Railways, Rs 1.07 lk cr is towards CAPEX 
  • 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. 
  • Next lot of airports to be privatized in tier 2 and 3 towns and cities  

New scheme at a cost of Rs 18,000 crore for augmentation of public bus transport services 

Will facilitate deployment of innovative PPP models enabling private players to finance, acquire, operate and maintain over 20,000 buses 

  • PPP mode to be utilised for managing operational services of major ports
  • Subsidy support to promote flagging of merchant ships
  • Recycling of Ships Act, 2019 enacted and recycling capacity to be doubled by 2024

Railways

Budget 2021: Rs 1.1 lakh crore for Indian Railways, FM announces mega rail plan

FM also revealed a new rail plan for a future-ready Indian Railways by 2030. Finance Minister mentioned the eastern and western dedicated freight corridors will be commissioned by June 2022. A section of the dedicated freight corridors will be made on Public-Private Partnership mode. She also said Railways will monetise the dedicated freight corridors.

MetroLite and Metro New Technologies to be deployed to provide metro rail systems in tier 2 cities and peripheral areas of tier 1 cities, at much lesser cost, with same experience, convenience and safety 

Finance Minister Nirmala Sitharaman also announced there will be 100 per cent electrification of broad gauge rail tracks by December 2023.

Indigenously developed automatic train protection system to be launched


Education & Human Capital

  • Revamped Post Matric Scholarship Scheme for welfare of SCs
  • 100 new Sainik schools
  • 750 Eklavya schools in tribal areas
  • National Research Foundation with outlay of Rs 50,000 crore over 5 years
  • National Language Translation Mission to boost internet access
  • Deep Ocean Mission for ocean exploration and biodiversity conservation
  • Realigning National Apprenticeship Training scheme for graduates and
  • diploma holders in Engineering
  • Partnership with UAE and Japan in area of skill development and recognition

Taxation

Finance Minister has left direct taxes unchanged, but took steps in direct tax incentives to ease compliance for taxpayers. The FM proposed making it so that advance tax liability on dividend income shall arise only after payment of dividend. The Budget also looked at pre-filled tax forms with respect to details like salary income, tax payment and TDS. Some of the other key highlights include:

  • Pensioners over 75 years of age are exempt from filing returns. 
  • Govt to set-up a faceless dispute resolution mechanism for small taxpayers. 
  • Government to notify rules to eliminate double tax for NRIs on foreign retirement funds 
  • Finance Minister allocates Rs 3,726 crore for forthcoming Census. This will be the first digital census. 
  • For ease of compliance, dividend payment for REIT and InVIT exempted from tax. 
  • Govt proposes to increase threshold for tax audit to Rs. 10 crore vs Rs. 5 crore for those transacting 95% digitally 
  • Advance tax liability on dividend to arise only after declaration. 
  • FPI to get deduction of tax on dividend at lower treaty rate. 
  • Govt proposes to extend exemption available for the purchase of affordable houses & to provide tax exemption for affordable rental housing projects for another year
  • FM proposes tax exemption for aircraft leasing cos; tax exemption for notified affordable housing for migrant workers
  • Rs 1.5 lakh deduction on payment of interest for affordable housing extended by 1 yr:
  • Tax holiday for startups extended by 1 yr; exemption on capital gains on investment in startups extended by 1 yr

Government to provide tax exemption for relocating funds to IFSC.

The finance minister announced that 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.

“Income tax return filers increased to 6.48 cr in 2020 from 3.31 cr in 2014”- Nirmala Sitharaman, Hon’ble Finance Minister

Nirmala Sitharaman proposed to review more than 400 old exemptions in customs this year. To put into place new customs duty structure by Oct-1, 2021. 

  • Revoked ADD and CVD on certain steel products. 
  • Reduced duties on copper scrap from 5% to 2.5%. 
  • Some parts of mobiles to move from NIL to 2.5% rate. 
  • Cutting duty on copper scrap 2.5% from 5%. 
  • Exempting duty on steel scrap for a specified period. 

Govt to borrow about Rs 12 lakh cr in FY22; expenditure pegged at Rs 34.83 lakh cr, including Rs 5.54 lakh cr of capital spending 

  • Exemption duty on steel scrap up to March 2022; customs duty on naphtha cut to 2.5 pc: FM
  • Rationalising customs duties on gold and silver, says FM in Budget for 2021-22
  • Customs duty on cotton increased to 10%, silk to 15%
  • Increase in duty on solar invertors and lanterns to promote domestic production

Agri Infrastructure and Development Cess on a number of items including fuel and liquor was also announced. however, there would be no additional burden on the consumer overall.

Budget imposed a Rs 2.5 per litre agri infra cess on petrol, Rs 4 on diesel, and of 100% on alcoholic beverages.


Inclusive Development

Minimum wages will now apply to all categories of workers and women will be allowed to work in all categories with adequate protection.

One nation one ration card scheme under implementation in 32
states and UTs.

A portal to be launched for gig, building and construction workers.
Social security benefits will be extended to gig and platform workers.

The employers who delay the deposit of workers’ share of social security contributions like employees’ provident fund will not be able to claim the amount as deduction from their income. An amendment in this regard is will be done in the Finance Bill 2021, to ensure that firms deposit the social security contributions of their employees like Employees’ State Insurance (ESI) well in time


MSME & Startups

MSME allocation to be doubled. Government to set aside Rs 15,700 crore in FY22 

Government also proposes to reduce margin money requirement from 25% to 15% for startups. 

  • Government to set aside Rs 15,700 crore in FY22 
  • Government also proposes to reduce margin money requirement from 25% to 15% for startups. 

One-person companies: The govt plans to allow incorporation of one-person companies with no restriction on paid-up capital and turnover. Non-resident Indians will also be allowed to incorporate one-person companies in India, the FM added. 

  • No restriction on paid-up capital and turnover, to incentivise incorporation of one-person companies 
  • Conversion of 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 

The Finance Minister proposed to revise definition under 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.

Breaking : Rail stocks at a high as FM increases spending. FY22 allocation for railways at Rs 1,10,055 cr. 


Agriculture 

Farmers find a way in the bahi khata. FM announces enhanced agri credit target for FY22, gives update on welfare schemes. 

  • To increase provision to rural infra development fund to Rs 40,000 crore from Rs 30,000 crore 
  • Five major fishing harbours to be developed as hubs for economic activity 
  • Micro irrigation corpus doubled to Rs 10,000 cr. Agriculture infra fund will be made available to APMCs. 

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.

1000 more mandis will be integrated with the eNAM.

The Budget focuses on increasing farmers’ income, several measures have been taken in this direction. Farmers will be able to get loans easily.

FM also announced that agricultural infrastructure funds would be made available to the Agricultural Produce Market Committees (APMCs) for augmenting their infrastructural facilities.

‘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.

Proposed to extend this scheme during 2021-22 to cover all states and Union Territories.

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.

Fishing: Proposed substantial investments in the development of modern fishing harbours and fish landing centres.

Five major fishing harbours – Kochi, Chennai, Visakhapatnam, Paradip and Petuaghat to be developed as hubs for economic activities.

Multipurpose Seaweed Park to be set up in Tamil Nadu

Existing Scheme updates 

  • 1.54 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 

Government has also proposed farm cess of Rs 2.5/litre on petrol, Rs 4 on diesel


Urban Development

Jal Jeevan Mission (Urban) for universal water supply in all ULBs

Urban Swachh Bharat Mission with outlay Rs 1,41,678 crore over 5 years

Rs 2,217 crore for 42 urban centres to tackle air pollution


Power Sector

The viability of distribution companies is a serious concern. A revamped, reform-based, results-linked, power distribution sector scheme will be launched with an outlay of Rs 3,05,982 crore over five years.

The scheme will provide assistance to discoms for infrastructure creation, inclusion of prepaid smart metering, feeder separation, upgradation of systems.

She also said that during the last six years, 139 GW of power generation capacity has been added and 2.8 crore households were provided electricity connection.

She also noted that 1.41 lakh circuit kilometres of power transmission lines were added in the last six years.

FM also announced that government will soon put in place a framework to allow electricity consumers choose service providers

Hydrogen energy mission will be launched


Financial Services

Finance Minister Nirmala Sitharaman proposes to consolidate provisions of SEBI Act, Depositories Act, Securities Contracts Regulation Act, Government Securities Act 

Government to amend Insurance Act to allow higher FDI 

  • FDI limit in insurance increase to 74% from 49%. 
  • Govt allows foreign ownership in insurance with safeguards. 

She also announced that the government will set up an asset reconstruction company (ARC) and an asset management company (AMC) to house stressed assets currently in book of Indian banks.

Besides, Government allots Rs. 20,000 crore for bank recapitalisation, as FM emphasizes the need to clean up banks’ books 

The finance minister announced that 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.

Government to privatise 2 PSU banks, one general insurance company in FY22: Nirmala Sitharaman 

  • Will bring IPO of LIC in FY22 

Petroleum & Natural Gas

Pipelines of GAIL (India) Ltd, Indian Oil Corp (IOC) and HPCL will be monetised, says FM in Budget for 2021-22. 

Union Budget 2021 live: Ujjwala Scheme will be extended to cover 1 cr more beneficiaries. 

  • 100 more districts to be added in the next 3 years for city gas distribution 
  • An independent gas transport system operator to be set up 

Fiscal Position

FY22 fiscal deficit seen at 6.8%. 
  • The government had pegged the fiscal deficit at 3.5% for FY21 in the last budget before the onset of the Covid-19 crisis. 
  • Govt to borrow about Rs 12 lakh cr in FY22; expenditure pegged at Rs 34.83 lakh cr, including Rs 5.54 lakh cr of capital spending 
  • NSSF loan to FCI for food subsidy to be replaced by making budget provisions
  • Rs1,18,452 crore as Revenue Deficit grant to 17 states in 2021-22
  • The pandemic necessitated deviation from glide path to achieve fiscal deficit target under FRBM Act said FM.

Divestment target for FY22 at Rs 1.75 lakh cr, FM said

  • In FY21, the government had budgeted to raise Rs 2.1 lakh crore through divestments but fell short. 
  • Some of the big ticket divestments planned last year, like the stake sale in LIC, may conclude this year. 
  • The government has approved a new public sector enterprises policy, which is intended to drive privatisation. 
  • Fiscal support in FY22 depends on revenue generation from the success of these programmes. 
  • It will complete the divestments of BPCL, CONCOR and SCI in financial year 2021-22. 

Manufacturing & Industry

PLI launched to create manufacturing global champions across 13 sectors
with amount committed nearly Rs 1.97 lakh crore in next 5 years starting
FY2021-22

NIP Project pipeline expanded to 7400 project

MITRA Scheme to create world class infrastructure for global champions in
textile sector leading to creation of 7 textile parks over 3 years.


Rs 1.41 lakh crore for Urban Clean India Mission 
  • Urban Swachh Bharat 2.0 Mission to be launched at outlay of Rs 1.41 lakh crore over 5 years. 
  • Jal Jeevan Mission Urban to have an outlay of Rs 2.87 lakh crore. 

India has two COVID-19 vaccines available and we expect two more vaccines soon. India currently also has one of the lowest death rate and active cases in the world. 

says The Finance Minister,

Six Pillars of Budget 2021-22

  • Health and Well-Being  
  • Physical and Financial capital and infrastructure  
  • Inclusive Development for Aspirational India  
  • Reinvigorating Human Capital  
  • Innovation and R&D  
  • Minimum Govt., Maximum Governance 

The total estimate of all relief measures announced by govt & RBI so far is Rs 27.1 lakh cr (13% of GDP).

Hon’ble Finance Minister, Ms. Nirmala Sitharaman

Nirmala Sitharaman recaps policies announced so far. “The government stretched its resources to provide for the most vulnerable,”

A vision for Atmanirbhar Bharat in part of Sitharaman’s first part. FY22 budget proposals based on six pillars 

This is to further strengthen the sankalp of Nation-first. 


India’s first paperlss, completely digital Budget 2021 is here. Will it deliver as per expectations? Here are the excerpts from FM’s budget speech

“Faith is the bird that feels the light and sings when the dawn is still dark”   

Hon’ble Finance Minister, Ms. Nirmala Sitharaman

She quotes Rabindranath Tagore, adding that this moment in history is the dawn of a new era, where India is well-poised to be the land of promise and hope” 

Preparation of budget was undertaken in an environment like ‘never before’.

Hon’ble Finance Minister, Ms. Nirmala Sitharaman

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: FM 

Union Budget 2021 Live: Through the past year, the Finance Minister announced a Rs 30-lakh-crore plan, in ‘mini-budgets’ to beat Covid 

  • AtmaNirbhar Bharat programmes 
  • Performance-linked incentives 
  • Boost for domestic manufacturing 
  • Improved credit access for enterprises 
  • Moratorium on interest payments 
  • Thrust on affordable housing 
  • Booster shots for MNREGA