On February 1, 2021, Finance Minister Nirmala Sitharaman presented her third Union Budget on behalf of the NDA-2 government.
Breaking away from the traditional 'bahi-khata', the finance minister read out this year's budget from a 'made in India' tablet computer, making it the first paper-less budget announcement in India.
In the first part of her speech, Sitharam mentions 6 pillars for the budget - health and wellbeing, infrastructure, inclusive growth, human capital, R&D and minimum government, maximum governance; following which she moves onto proposed changes in taxation.
Here are the key takeaways from her speech:
- Reduced tax burden for senior citizens, pensioners over 75 years of age exempted from filing returns.
- Faceless dispute resolution mechanism for small taxpayers.
- Tax audit threshold increased to Rs.10 crore from Rs. 5 crore (for those transacting 95% digitally)
- Timeline for reopening of tax returns reduced to 3 years from 6 years.
- Tax holiday for aircraft leasing companies, start-ups, developers of affordable housing
- GST - anomalies like inverted duty structure to be removed. 400 old exemptions under customs duty to be reviewed.
- Relief for NRI - rules to remove double tax for NRIs for foreign retirement funds.
- Dividends to be exempted from TDS.
- Changes in customs duty policy - cutting duty on copper scrap to 2.5%, Naptha duty reduced to 2.5%, duty on shrimp feed increased to 15%, duty on cotton raised to 10%
- Introduction of Agri Infrastructure Development Cess - Rs. 2.5/litre on petrol, Rs. 4/litre on diesel, 2.5% on gold, silver and dore, 100% on alcoholic beverages, 17.5% on crude palm oil.
2. Health And Well-being
- Rs. 35,400 crore for COVID-19 vaccines for FY22
- Rs 64,180 crore to be spent by centre on healthcare over six years
- Universal water supply under Jal Jeevan Mission - Rs. 2.87 lakh crore to be spent in 4378 urban and local bodies over six years.
- Urban Swachh Bharat Mission 2.0 to be launched outlay of nearly ₹1.5 lakh crore over five years.
- Announcement of Voluntary vehicle scrapping policy; Fitness tests for personal vehicles older than 20 years and commercial vehicles older than 15 years - phased out if requirements not met.
- Budget outlay for health and wellbeing announced at Rs. 2.23 lakh crore - Sitharaman calls it a 137% increase from previous year.
3. Financial Capital
- Centre to introduce bill to set up a Development Finance Institution (DFI), capitalised with Rs 20,000 crore.
- Capital expenditure in FY22 to go up 44.5% at Rs. 5.54 lakh crore.
- Proposal for New Rationalised Securities Markets Code
- Government to privatise 2 PSU banks and one general insurance company in FY22
- LIC to come up with IPO in FY22
4. Agriculture, Rural Infra, Migrant Labour
- Raise provision to rural infrastructure development fund to Rs 40,000 crore from Rs 30,000 crore
- Proposal of 5 major fisheries hubs; to develop harbours and fish planting centre.
- Micro irrigation corpus to be doubled to Rs 10,000 crore.
- Agriculture infrastructure fund to be made available to APMCs to augment infrastructural facilities
- Minimum wages applicable to all workers; social security benefits to be extended to gig and platform workers.
- 3500 national highway corridor in Tamil Nadu; Rs. 65,000 for 1100 km in Kerala; Rs. 95,000 crore for road projects in West Bengal; and 1300km road projects in Assam over three years.
- Rs. 1.15 lakh crore dedicated to railway projects, R.s 1.07 lakh crore towards capital expenditure; National Rail Plan for 2030.
- Airports to be privatised in tier 2 and tier 3 cities.
- GAIL Ltd, Indian Oil Corp and HPCL pipelines to be monetised.
- Rs 1.41 lakh crore to be spent on Urban Clean India Mission
6. Power, Petrol And Natural Gas
- Reforms-based result-linked power distribution sector scheme to be launched with outlay of Rs. 3.06 lakh crore over 5 years.
- 100 more districts in next 3 years to the City Gas Distribution network.
- Gas pipeline project to be taken up in Union Territory of Jammu & Kashmir.
- Independent Gas Transport System Operator to be set up for facilitation and coordination of booking of common carrier capacity in all-natural gas pipelines on a non-discriminatory open access basis
7. Startups, MSMEs
- Doubled allocation for MSMEs, Rs. 15,700 crore allocated for FY22.
- Proposal to reduce margin money requirement for startups from 25% to 15%
- 100 new Sainik Schools to be set up in partnerships with NGOs
- Central University to be set up in Leh, Ladakh.
- 15,000 schools to be strengthened under the National Educational Policy 2020.
- Centre to spend Rs. 50,000 crore on National Research Foundation over five years.
- Legislation for setting up of higher education commission to be introduced.
9. Government Borrowing And Expenditure; Fiscal Deficit
- Government to borrow Rs 80,000 crore in the next two months to meet expenditure for current fiscal year.
- Government to borrow Rs 12 lakh crore in FY22 with expenditure pegged at Rs 34.83 lakh crore, which includes Rs 5.54 lakh crore of capital spending.
- FY21 fiscal deficit pegged at 9.5% of GDP; FY22 fiscal deficit target at 6.8% of GDP; Fiscal deficit to reduce to 4.5% by FY26
10. Space And Deep Ocean
- Launching of Deep Ocean mission with allocation of Rs. 4000 crore over 4 years
- New Space India Limited, a PSU under Department of Space to execute the PSLV-CS51 launch carrying the Amazonia Satellite from Brazil, along with a few smaller Indian satellites.
- "As part of the Gaganyaan mission activities, four Indian astronauts are being trained on Generic Space Flight aspects, in Russia," Sitharaman added.
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