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Budget 2021-22 provides a vision for AtmaNirbhar Bharat

The Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman addressing a Post Budget Press Conference, in New Delhi on February 01, 2021.
The Minister of State for Finance and Corporate Affairs, Shri Anurag Singh Thakur and other dignitaries are also seen.

Finance Minister Nirmala Sitharaman presented the Union Budget 2021-22 – the first budget of this new decade and also a digital one in the backdrop of the covid crisis. Laying a vision for AatmaNirbhar Bharat, she said the budget proposals will further strengthen the sankalp of nation first, doubling farmer’s income, strong infrastructure, healthy India, good governance, opportunities for youth, education for all, women empowerment, and inclusive development among others.

Financial Capital

The Finance Minister proposed to consolidate 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.


Increasing FDI in Insurance

She also proposed to amend the Insurance Act, 1938 to increase the permissible FDI limit from 49% to 74% and allow foreign ownership and control with safeguards. 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.

Disinvestment, Strategic Sale

The Finance Minister said a number of disinvestment proposals like that of BPCL, Air India, Shipping Corporation of India, Container Corporation of India, IDBI Bank, BEML, Pawan Hans, Neelachal Ispat Nigam would be completed in 2021-22. The Government has estimated Rs1,75,000 crore as receipts from disinvestment in 2020-21. In 2021-22, it would also bring the IPO of LIC. It has kept 4 areas that are strategic where bare minimum CPSEs will be maintained andrest privatized. In the non-strategic sectors, CPSEs will be privatised, otherwise shall be closed.

Inclusive Development for Aspirational India:

Sitharaman said the Government is committed to the welfare of farmers.  The MSP regime has undergone a sea change to assure prices that are at least 1.5 times the cost of production across all commodities. The procurement has also continued to increase at a steady pace.  This has resulted in increase in payment to farmers substantially.

To provide adequate credit to the farmers, the Government has enhanced the agricultural credit target to Rs16.5 lakh crore in FY22. Similarly, the allocation to the Rural Infrastructure Development Fund increased from Rs30,000 crore to Rs40,000 crore. The corpus of Rs 5000 crore for Micro Irrigation Fund created under NABARD will be doubled.

The scope of ‘Operation Green Scheme’ that is now applicable to tomatoes, onions, and potatoes, will be enlarged to include 22 perishable products. Some1000 more mandis will be integrated with e-NAM. The Agriculture Infrastructure Funds would be made available to APMCs for augmenting their infrastructure facilities.

The Finance Minister also announced to cover agriculture and allied sectors, farmers’ welfare and rural India, migrant workers and labour, and financial inclusion. And 5 major fishing harbours will be developed as hubs of economic activity.


Migrant, Gig Workers

For the first time globally, social security benefits will be extended to gig and platform workers. Minimum wages will apply to all categories of workers, and they will all be covered by the Employees State Insurance Corporation. Women will be allowed to work in all categories and also in the night-shifts with adequate protection. Compliance burden on employers will be reduced with single registration and licensing, and online returns. One Nation One Ration Card plan is under implementation by 32 states and UTs, reaching about 69 crore beneficiaries. The remaining 4 states and UTs will be integrated in the next few months.

MSMEs, Financial Inclusion

The budget has provided Rs15,700 crore to the MSME sector – more than double of this year’s budget estimates. To further facilitate credit flow under the scheme of Stand-Up India for SCs, STs, and Women, the Finance Minister proposed to reduce the margin money requirement from 25% to 15%, and to also include loans for activities allied to agriculture.

Reinvigorating Human Capital

More than 15,000 schools will be qualitatively strengthened to include all components of the National Education Policy. Some 100 new Sainik Schools will be set up in partnership with NGOs/private schools/states.

SC, ST Welfare

The government has set a target of establishing 750 Eklavya model residential schools in tribal areas with increase in unit cost of each such school. The central assistance under the Post Matric Scholarship Scheme for the welfare of SCs was enhanced and allocated Rs35,219 crore for 6 years till 2025-2026, to benefit 4 crore SC students.


Innovation and R&D 

The Finance Minister said the National Research Foundation outlay will be of Rs50,000 crore, over 5 years. It will ensure that the overall research ecosystem of the country is strengthened with focus on identified national-priority thrust areas.

Health and Wellbeing

There is substantial increase in investment in health infrastructure and the budget outlay for health and wellbeing is Rs2,23,846 crore as against this year’s estimates of Rs94,452 crore, an increase of 137%. A new centrally sponsored scheme, PM AatmaNirbharSwasth Bharat Yojana, will be launched with an outlay of about Rs 64,180 crore 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 diseases.


Provision of Rs35,000 crore has been made for covid vaccine in the budget estimates.

Physical Capital and Infrastructure

For a USD 5 trillion economy, the country’s manufacturing sector has to grow in double digits on a sustained basis. Production Linked Incentive (PLI) schemes to create manufacturing global champions have been announced for 13 sectors.  For this, the Government has committed nearly Rs.1.97 lakh crore in the next 5 years starting FY 2021-22.

A scheme of Mega Investment Textiles Parks (MITRA) will be launched in addition to the PLI scheme. 7 Textile Parks will be established over 3 years.

Infrastructure financing – DFI

The National Infrastructure Pipeline (NIP) launched with 6835 projects has now expanded to 7,400 projects. Around 217 projects worth Rs1.10 lakh crore under some key infrastructure ministries have been completed.

Sitharaman said a professionally managed Development Financial Institution is necessary to act as a provider, enabler and catalyst for infrastructure financing. Accordingly, a bill to set up the DFI will be introduced. The Government has provided a sum of Rs20,000 crore to capitalise this institution and the ambition is to have a lending portfolio of at least Rs5 lakh crore for this DFI in three years’ time.

Asset Monetisation

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. Five operational roads with an estimated enterprise value of Rs 5000 crore are being transferred to the NHAIInvIT. Similarly, assets of a value of Rs 7000 crore will be transferred to the PGCIL InvIT.Railways will monetize Dedicated Freight Corridor assets, the next lot of airports will be monetized and other core infrastructure assets also will be rolled out under the Asset Monetization Programme.

Roads, Highways Infra

The Finance Minister announced that more than 13,000 km length of roads, at a cost of Rs 3.3 lakh crore, has already been awarded under Bharatmala Pariyojana project. By March 2022, the Government would be awarding another 8500 kms and complete an additional 11,000 kms of national highway corridors. More economic corridors are also being planned.  She also provided an enhanced outlay of Rs1,18,101 lakh crore for Ministry of Road Transport and Highways, of which Rs1,08,230 crore is for capital, the highest ever.

Railway Infrastructure 

The budget has provided a record sum of Rs 1,10,055 crore for Railways, of which Rs1,07,100 crore is for capital expenditure. Indian Railways has prepared a National Rail Plan to create a ‘future ready’ railway system by 2030. Western Dedicated Freight Corridor (DFC) and Eastern DFC will be commissioned by June 2022. For Passenger convenience and safety several measures are proposed.

Urban Infrastructure

A new scheme will be launched at a cost of Rs18,000 crore to support augmentation of public bus transport services. Two new technologies – ‘MetroLite’ and ‘MetroNeo’ – will be deployed in tier-2 cities and peripheral areas of tier-1 cities.

Power Infrastructure

Expressing serious concern over the viability of Distribution Companies, the Finance Minister proposed to launch a revamped reforms-based result-linked power distribution sector scheme with an outlay of Rs3,05,984 crore over 5 years.

Ports, Shipping, Waterways

The budget proposes to offer more than Rs2,000 crore for major ports on public private partnership mode in FY21-22.

Water Supply, Swachch Bharat Mission

The Finance Minister announced that the Jal Jeevan Mission (Urban), will be launched for universal water supply in all 4378 urban local bodies and liquid waste management in 500 AMRUT cities, with an outlay of Rs2,87,000 crore. Urban Swachh Bharat Mission will be implemented with a total financial allocation of Rs 1,41,678 crore over a period of 5 years from 2021-2026.

Petro & Natural Gas

Ujjwala Scheme will be extended to cover 1 crore more beneficiaries and 100 more Ujjwal districts will be added in the next 3 years to the City Gas Distribution network.

Minimum Government, Maximum Governance 

Sitharaman said the forthcoming Census could be the first digital census in the history of India and for this monumental and milestone-marking task, Rs 3768 crore has been allocated in 2021-2022.

Once the health situation stabilised, the government spending will be ramped up so as to revive domestic demand. As a result, against an original estimated expenditure of Rs30.42 lakh crore for 2020-2021, the budget provides Rs34.50 lakh crore. The capital expenditure estimated is Rs4.39 lakh crore in 2020-2021 as against Rs4.12 lakh crore in  2019-20.

The Finance Minister said fiscal deficit in 2020-21 is pegged at 9.5% of GDP. The government would need another Rs 80,000 crore for which it would be approaching the markets in these 2 months.  The fiscal deficit in 2021-2022 is estimated to be 6.8% of GDP. The gross borrowing from the market for the next year would be around Rs12 lakh crore. The Government intend to reach a fiscal deficit level below 4.5% of GDP by 2025-2026.

In accordance with the views of the 15th Finance Commission, the Government is allowing a normal ceiling of net borrowing for the states at 4% of GSDP for the year 2021-2022. On the Commission’s recommendation, the Budget provides Rs1,18,452 crore as revenue deficit grant to 17 states in 2021-22.

Direct Tax Proposals

The budget seeks to reduce compliance burden on senior citizens who are of 75 years of age and above. Such senior citizens having only pension and interest income will be exempted from filing their income tax returns. The budget proposes to notify rules for removing the hardship of non-resident Indians returning to India on the issue of their accrued incomes in their foreign retirement account. The budget proposes to make dividend payment to REIT/InvIT exempt from TDS.  For Foreign Portfolio Investors, the budget proposes deduction of tax on dividend income at lower treaty rate.

The Finance Minister proposed to extend the eligibility period for claim of additional deduction for interest of Rs1.5 lakh paid for loan taken for purchase of an affordable house to 31 March 2022.  She also announced extension of eligibility period for claiming tax holiday for affordable housing projects by one more year to 31 March 2022.  For promoting supply of affordable rental housing for the migrant workers, the Minister announced a new tax exemption for the notified affordable rental housing projects.

Funding of Startups

In order to incentivize startups, Sitharaman announced extension in the eligibility for claiming tax holiday for startups by one more year till 31 March, 2022.  In order to incentivize funding of startups, she proposed extending the Capital Gains exemption for investment in startups by one more year till 31March, 2022.

The Budget provides reduction in the time-limit for reopening of income tax proceedings to 3 years from the present 6 years.  In serious tax evasion cases, where there is evidence of concealment of income of Rs50 lakh or more in a year, the assessment can be reopened up to 10 years.

Until 30 January, 2021, over 100,000 tax payers have opted to settle tax disputes of over Rs85 thousand crore under the Direct Tax Vivad se Vishwas Scheme.  To further reduce litigation of small tax payers, the Finance Minister proposed to constitute a Dispute Resolution Committee.  She also announced setting up of National Faceless Income Tax Appellate Tribunal Centre.

To incentivize digital transactions and to reduce the compliance burden of the person who is carrying almost all of the transactions digitally, the budget proposes to increase the limit for tax audit for persons who are undertaking 95% of their transactions digitally from Rs5 crore to Rs10 crore.

The budget proposes to make notified infrastructure debt funds eligible to raise funds by issuing tax efficient zero-coupon bonds.

The budget proposes that details of capital gains from listed securities, dividend income and interest from banks, post office etc will also be pre-filled to ease filing of returns.  Details of salary income, tax payment, TDS etc already come pre-filled in returns.

Indirect tax proposals

The Finance Minister assured the House that every possible measure shall be taken to smoothen the GST further and remove anomalies such as the inverted duty structure. She proposed to review 400 old exemptions in the customs duty structure this year.  Extensive consultation will be conducted and from 1 October 2021, a revised customs duty structure free of distortions will be put in place. Any new customs duty exemptions henceforth will have validity up to the 31 March following 2 years of the date of its issue.

The Finance Minister announced rationalization of customs duty on gold and silver and withdrawal of a few exemptions on parts of chargers and sub-parts of mobile phones. Also, some parts of mobiles will move from ‘nil’ rate to a moderate 2.5% rate.

To benefit farmers, the Finance Minister announced raising of customs duty on cotton, raw silk and silk yarn. She also proposed an Agriculture Infrastructure and Development Cess on a small number of items.

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