BUDGET 2021-22 DATA
Prominent Themes of Budget 2020-21
Budget 2020-21 is woven around three prominent themes:
- Aspirational India in which all sections of the society seek better standards of living, empowerment with access to health, education and better jobs.
- Economic development for all is indicated in the Prime Minister’s exhortation of “Sabka Saath, Sabka Vikas, Sabka Vishwas”. This would entail reforms across swathes of the economy. Simultaneously, it would mean yielding more space for the private sector. Together, they would ensure higher productivity and greater efficiency.
- Humane and compassionate Society Antyodaya is an article of faith.
- New Development Finance Institution is being set up to fund infrastructure projects under National Infrastructure Pipeline.
- Proposed Conciliation Mechanism with mandate for quick resolution of contractual disputes with Central Public Sector Enterprises (CPSEs).
- The additional capacity of ?1000cr. for Solar Energy Corporation of India and ?1500cr. for Indian Renewable Energy Development Agency has been planned.
- During the last six years, 139 GW of power-generation capacity has been added and 2.8 Crore households provided electricity connection.
- New Scheme to provide assistance to discoms from infrastructure creation to financial improvements.
- Proposal to introduce a National Hydrogen Energy Mission in the next financial year for generating hydrogen from green power sources.
Agriculture, Irrigation and Rural Development
- Budget Allocation for the Department of Agriculture, Cooperation and Farmer Welfare was slashed by 8.5% in 2021-22. Therefore outlays for PM KISAN, AASHA slashed.
- Allow state run APMCs to access 1Lakh Crore Agriculture Infrastructure Fund.
AIF was created as part of the COVID19 stimulus package to develop cold chain storage and other post-harvest management infrastructure.
- Agriculture Infrastructure Development Cess to be levied on Petrol, Diesel, gold, apples and alcohol, to improve facilities for production, conservation and processing of fall produce.
- AIDC of ? 2.5 per litre has been levied on petrol and ? 4 per litre on diesel. However, the Basic Excise duty and Special Additional Excise Duty rates on them have been reduced so that there is no additional cost to the consumer.
- Basic Customs Duty rates have been reduced on most items where AIDC is being imposed, so as to not put a burden on the end consumer.
- To help achieve the goal of making India a $5 trillion economy, the government has committed to providing 1.97 lakh crore over five years for the PLI scheme to boost domestic manufacturing.
- The allocation to micro, small and medium enterprises (MSMEs) was doubled to 15,700 crores for the next financial year from 7,572 crores in 2020-2021.
- According to the Federation of Indian Micro and Small & Medium Enterprises, a reduction in customs duties on steel and ferrous and non-ferrous scrap will help bring down the raw material prices.
- Under the Bharatmala project, more than 13000 kilometres of road have been awarded and by next year additional 8500 km will be awarded for construction.
- Proposed allocation of 1.1 lakh crore for Indian Railways with 2021-22 Capital Expenditure Outlay(2.15 lakh crore) 33% increase than a previous financial year.
- Major ports handle about 60% of their total cargo traffic.
- Seven major ports worth 2,000 crores, will see their Operations privatised in the year 2021-2022.
- Subsidy Scheme of 1,624 crores for a period of five years for Indian shipping companies to encourage more merchant ships with Indian flags.
- The country’s share in the ship recycling business is around 30% at present. The capacity of recycling shipyards would be doubled from 4.5 million light displacement tonnes by 2024.
- India has enacted the Recycling of Ships Act, 2019 and acceded to the Hong Kong International Convention (HKC). 90 ship recycling yards at Alang had achieved HKC compliance certificates.
- The country’s share in the ship recycling business is around 30% at present.
- Stake sales are expected to fetch 1.75 lakh crore 2021-22. (75000 crores from CPSCs and 1 lakh crore from two PSU banks and one General Insurance Company).
- Strategic sectors- Atomic Energy, Space and Defence
-Transport and TelecomPower.
-Petroleum, Coal and Other minerals.
-Banking, Insurance and Financial Services.
- FDI limit in the insurance sector will be raised to 74% from 49%.
- One-time payment of ? 2 lakh crore to FCI to ease its loan from the National Small Savings Fund.
- Budget outlay for Health and Well-being is increased by 137% to 2.23 lakh crore.
- National Commission for Allied Healthcare Professionals and the National Nursing and Midwifery Commission was introduced to ensure transparent and efficient regulation of allied healthcare professions, stealing the willingness of asked healthcare workers.
- Rs. 1,000 crore for the Welfare of Tea workers especially women and their children in Assam and West Bengal through a special scheme.
- Budget Outlay: Outlay for Health and Wellbeing in 2021-22 as against 2020-21 is an increase of 137%.
- Setting up of:
- A National Institution for One Health, a regional platform for WHO South East Asian Region,9 Bio Safety Level III Labs and 4 Regional National Institute of Virology.
- Integrated Public Health Labs in all districts.
- Rs.35,000 crore for Covid-19 vaccine in Budget Expenditure (BE) 2021-22.
- The Made-in-India pneumococcal vaccine is to be rolled out across the country.
- Health Systems: PM AatmaNirbhar Bharat Yojana – a new centrally sponsored scheme to be launched, in addition to National Health Mission (NHM).
- Nutrition: Mission Poshan 2.0 is to be launched to improve nutrition.
- Universal Coverage of Water Supply: Jal Jeevan Mission (Urban) - to be launched - to bring safe water to 2.86 crore households through tap connection.
- Swachch Bharat, Swasth Bharat: Strengthening of Urban swatch Bharat.
- Mission Clean Air: Rs. 2,217 crores to tackle air pollution, for 42 urban centres with a million plus population.
- Scrapping Policy: Voluntary vehicle scrapping policy to phase out old and unfit vehicles.
- Fiscal Deficit shot up to 9.5% of GDP due to impact of Covid-19 pandemic – Causes being, low revenue flows due to lockdown and negative economic growth, high government spending to provide relief to vulnerable sections, and stimulus package to revive demand.
- The fiscal deficit is pegged at 6.8% of GDP for 2021-22.
- TARGET is to bring it back to less than 4.5% of GDP by 2025-26.
- The original fiscal deficit target for 2020-21 was 3.5 %.
- Pensioners aged 75 and above, having only additional interest income, will be exempt from filing income tax ID if the tax amount has been deducted by the paying Bank.
Defence and Internal Security
- Non-Lapsable Fund for the purpose of defence and internal security modernization.
- 15th Finance Commission recommendation of 41% vertical share in the divisible pool of taxes for five year period starting 2021-22 Income will be continued.
- States have been granted enhanced borrowing room of up to 4% of GSDP for 2021-22.
- Additional 0.5% limit for those undertaking critical power sector reforms.
- To assuage fears about losing some share in tax transfers due to the reliance on 2011 census data instead of the 1971 census, which could penalise states that did better on managing demographics. It has done so by giving 12.5% weightage for demographic performance in its tax transfer calculations.
Taxes and Cess
- By November 2020, only 42.1% of FY21's estimated tax revenue was collected the lowest in at least 10 years. Tax collections contracted by 8.3% y-o-y in FY21 (up to November), the first contraction in at least 10 years
Source: Office of the Controller General of Accounts.
- The Contingency Fund of India is to be augmented from Rs. 500 crores to Rs. 30,000 crores through Finance Bill.
- No exemption on interest, if Provident Fund PF contribution is more than Rs. 2.5 lakh.
- Exemption from filing tax returns for senior citizens over 75 years of age and having only pension and interest income; tax to be deducted by paying the bank.
- Tax settlement commission abolished.
- Higher Tax Collection at Source rate for non-filers.
- Reducing time to file belated returns.
- Agriculture Infrastructure and Development Cess (AIDC) on a small number of items.
- Dispute Resolution Committee to be set up for taxpayers with taxable income up to Rs. 50 lakh and disputed income up to Rs. 10 lakh.
- National Faceless Income Tax Appellate Tribunal Centre to be established.
- The corporate Tax Rate stood at 25.71% down from 35% in 2016-17.
- The BSE Sensex surged with almost all sectors registering an increase. Banks, Finance, Realty, and Capital goods witnessed a greater than a 5% rise in the index value.
- Setting up of a Single Security Market Code by consolidating the provisions of SEBI Act, 1992, Depositories Act, 1996, Securities Contracts (Regulation) Act, 1956 and Government Securities Act, 2007.
According to analysts, this move will improve the ease of doing business in the country’s financial markets, cut down compliances, reduce costs and do away with friction between various stakeholders.
- A permanent institutional framework was proposed, which would purchase investment grade debt securities both in stressed and normal times and help in the development of the bond market.
- To provide protection to investors, it’s proposed to introduce an investor charter as the right of all financial investors across all financial products.
- The impetus for military modernization led to increase in the allocation of capital expenditure in the defence budget of 18.75%.
- 15th FC recommended a dedicated non-lapsable MODERNISATION FUND FOR DEFENCE AND INTERNAL SECURITY (MFDIS) to bridge the gap between projected budgetary requirements and the allocation for defence and internal security, this find was created in the Public Account of India.
- The Commission said the fund will have four specific sources of incremental funding, which include
1. transfers from the Consolidated Fund of India,
2. disinvestment proceeds of defence public sector undertakings (DPSUs),
3. proceeds from the monetisation of surplus defence land, including the realisation of arrears of payment for defence land used by the State governments and for public projects and cost recovered from encroached land,
4. proceeds of receipts from defence land.