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  • 02 February, 2021

  • 5 Min Read

An introduction to Budget 2021-22

An introduction to Budget 2021-22


  • There is greater spending on health care and some fiscal push to undergird the struggling demand in the pandemic-hit economy.
  • The Union Budget for 2021-2022 presented to Parliament on Monday, instead reveals an estimated health outlay of ? 74,602 crore, almost 10% lower than the revised estimate of? 82,445 crore was earmarked for health spending in the current fiscal year.

More focus on drinking water and sanitation

  • The Minister, however, has claimed a 137% increase in the budgetary outlay on ‘health and well-being by including a one-time expenditure of? 35,000 crores were set aside for the COVID-19 vaccination programme, ? and 60,030 crores budgeted for the department of drinking water and sanitation, as well as the Finance Commission’s grants for both water and sanitation and health totalling almost? 50,000 crore.
  • In fact, the Economic Survey had eloquently made the case for providing a massive boost to health spending, which it reasoned would serve as a direct means to raising overall economic output by reducing the economic burden of illnesses.

PM Atma Nirbhar Swasth Bharat Yojana

  • The government intends to introduce a new centrally sponsored scheme, ‘PM Atma Nirbhar Swasth Bharat Yojana’, to develop primary, secondary, and tertiary care capacities over the next six years, at an estimated cost of? 64,180 crore.

Fiscal deficit

  • While the revised estimates for the current financial year project a fiscal deficit of 9.5% of GDP on account of expenditure surging to ?34.50-lakh crore, the Minister has opted for a mere? 33,000 crore increase in the overall expenditure outlay in her Budget estimates for the next fiscal.
  • Here again, she has pointed to the ?5.54-lakh crore set aside for capital expenditure to contend with a 34.5% increase in outlay over the current year’s Budget estimate.
  • Far from being an expansionary Budget, Ms Sitharaman has opted to contain overall spending so as to rein in the fiscal deficit to 6.8% in the coming fiscal itself (2021-22).
    • The country cannot afford a premature scaling down of fiscal support at a time of rising inequality.

Increasing the non-tax revenues

  • The Budget has accounted for ?1.75-lakh crore in capital receipts from disinvestment.
  • She also proposes to privatise two more public sector banks and a general insurer in 2021-22 and has committed to ensuring that the necessary legislative amendments to enable the LIC’s IPO are introduced in the current session of Parliament.
  • The Budget also throws open the doors for increased FDI in insurance — the foreign ownership limit would be raised to 74% after amendments to the Insurance Act, 1938.

The issue with the FDI in the insurance sector

  • Still, it remains to be seen how eager overseas insurers may be to raise their stakes, given the government’s intention to make its proposal politically acceptable by including safeguards such as mandating that a majority of board positions and key management personnel be restricted to resident Indians and requiring the companies to set aside a specified percentage of profits as general reserve.

National asset monetisation pipeline

  • Also on the block for possible sale or lease through concessions are state-owned undertakings’ land assets that the government intends to monetise.
  • In finding the capital for its National Infrastructure Pipeline, the Budget proposes an asset monetisation pipeline that would include highways, airports and ports.

Bad bank

  • The Budget proposes establishing both an Asset Reconstruction Company and an Asset Management Company that would consolidate and take over existing stressed debt and then help dispose of the assets.
  • It is these plans to privatise two state-run banks and also undertake a clean-up of the stressed assets that have prompted the Minister to set aside just? 20,000 crore to recapitalise the remaining public banks.


  • The aggressive stance on privatisation notwithstanding, the government is still likely to face an uphill task in achieving its ambitious disinvestment goal given that private investment is still anaemic.

Source: TH

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