The Indian Union Budget 2021-22 was tabled in the Parliament on 1 February 2021 by Ms. Nirmala Sitharaman, Finance Minister of India. Given below is a summary of the budget in two simple infographics. Part A of the Budget lays down the path for India to recover from the contraction that it is facing due to the COVID-19 pandemic. This part is divided into 6 pillars viz, health and wellbeing, Physical & Financial Capital, and Infrastructure, Inclusive Development for Aspirational India, Reinvigorating Human Capital, Innovation and R&D and Minimum Government and Maximum Governance. Part B of the Budget lists down various tax changes – both direct and indirect – that have been proposed.
Table of Contents
Summary of Indian Budget (Part A)
Pillar 1: Health & Well Being
[223K Cr Investment: 137%↑ from the last budget]
PM Atma Nirbhar Swasth Bharat Yojana: ~ 64K cr over 6 years:
- 17K rural & 11K urban Health centers
- Integrated public health labs in all districts
- Critical care hospital blocks in 602 districts and 12 central institutions
-Merge Supplementary Nutrition Programme & Poshan Abhiyan to launch Mission Poshan 2.0. – across 112 aspirational districts
Jal Jeevan Mission (Urban): 2.87K cr over 5 years:
- Universal water supply in all 4,378 ULBs
- 2.86 cr households with tap connections
- Liquid waste management in 500 AMRUT cities.
Urban Swachh Bharat Mission 2.0: 1.41K Cr over 5 years
Clean Air Budget: 2K cr for 42 urban centres with a million-plus population
Voluntary vehicle scrapping policy, to phase out old and unfit vehicles
Vaccines:
- Pneumococcal Vaccine, to be rolled out across India
- 35K cr for Covid-19 vaccine
Pillar 2: Physical and Financial Capital and Infrastructure
Production Linked Incentive scheme (PLI) for 13 sectors @ 1.97 lakh crores, over 5 years
Mega Investment Textiles Parks (MITRA) – promote exports; 7 textile parks in 3 years
Infrastructure: National Infrastructure Pipeline (NIP) – 565 new projects added (total 7400)
Infrastructure financing – Set-up a Development Financial Institution (DFI) – allocated 20K Cr for set-up
Capital Budget: 5.54 lakh crores which is 34.5% more than previous BE; over this, 2 lakh Cr to States and Autonomous Bodies
Road & Highways:
- Bharatmala: By March 11K kms complete & 8.5K more awarded
- NHs across Tamil Nadu, Kerala, West Bengal & Assam: 6,575 kms @ 2.12 lakh Cr
- Enhanced outlay of 1,18,101 lakh cr for MORTH of which 1.08 Cr is for capital – highest ever
Railways:
- National Rail Plan for India – 2030
- Allocated 1.1 lakh Cr, for Railways of which 1.07 cr is for capital expenditure
Urban Infrastructure: PPP Model to finance, acquire, operate and maintain over 20,000 buses @ 18K Cr
Power Infrastructure:
- Framework to give consumers choice among more than one Distribution Company
- Scheme to provide assistance to DISCOMS for infra creation @ 3 lakh Cr over 5 years
Ports, Shipping & Waterways:
- PPP for Port management – initially with 7 projects worth 2K Cr
- Ship recycling capacity to double by 2024 – will lead to 1.5 lakh additional jobs
Petroleum & Natural Gas:
- Ujjwala Scheme extended to additional 1 Cr beneficiaries
- Gas pipeline project in J&K
Financial Capital: a rationalized single Securities Markets Code, consolidating 4 Acts
Additional 1K Cr to Solar Energy Corporation of India and 1.5K Cr to Indian Renewable Energy Development Agency
Increase in permissible FDI limit from 49% to 74% in Insurance Companies and allow foreign ownership and control with safeguards
Recapitalization of 20K Cr for Public Sector Banks
Definition of ‘Small Companies’ revised under Companies Act
Policy of strategic disinvestment of public sector enterprises – estimated 1.75 lakh cr as receipts from disinvestment in
Aim to rationalise and bring down the number of Centrally Sponsored Schemes
Pillar 3: Inclusive Development
This section covers Agriculture and Allied sectors, farmers’ welfare and rural India, migrant workers and labour, and financial inclusion
Agriculture:
- SWAMITVA Scheme to cover all States & Uts
- Agricultural credit target enhanced to 16.5 lakh cr
- Allocation to Rural Infrastructure Development Fund increased from 30K Cr to 40K cr
- Micro Irrigation Fund doubled to 10K Cr
- 1,000 more mandis will be integrated with e-NAM
Fisheries: 5 major fishing harbours to be developed – Kochi, Chennai, Visakhapatnam, Paradip, and Petuaghat
Migrant Workers and Labourers:
- One Nation One Ration Card scheme – implemented in 32 states and UTs, reaching ~69 crores beneficiaries
- Social security benefits will extend to gig and platform workers. Minimum wages to apply to all categories of workers, and they will all be covered by the Employees State Insurance Corporation
Financial Inclusion:
- Stand Up India for SCs, STs, and women: reduce the margin money requirement from 25% to 15%
- MSME Sector: 15,700 Cr to this sector
Pillar 4: Reinvigorating Human Capital
School Education:
- National Education Policy in 15K schools
- 100 new Sainik Schools in partnership with NGOs/ private schools/states
Higher Education:
- Introducing Legislation for setting-up of Higher Education Commission of India
- Umbrella structures so that the major education institutions in States can have better synergy
- Setting- up a Central University in Leh.
Scheduled Castes and Scheduled Tribes Welfare:
- 750 Eklavya model residential schools in tribal areas – increase in unit cost of from 20 Cr to 38 Cr, and for hilly and difficult areas, to 48 Cr
- Post Matric Scholarship Scheme for SCs – allotted 35K Cr for 6 years till 2025-2026, to benefit 4 crores SC students
Skilling:
- Realign National Apprenticeship Training Scheme (NATS) for providing post-education apprenticeship, training of graduates and diploma holders in Engineering – @3K Cr
- Partnership with the UAE to benchmark skill qualifications, assessment, and certification, accompanied by the deployment of certified workforce.
Pillar 5: Innovation & R&D
National Research Foundation (NRF) @ 50K Cr over 5 years
1,500 Cr earmarked for a proposed scheme that will provide financial incentive to promote digital modes of payment.
National Language Translation Mission (NTLM): governance-and-policy related knowledge on the Internet being made available in major Indian languages
New Space India Limited (NSIL), a PSU under the Department of Space will execute the PSLV-CS51 launch, carrying the Amazonia Satellite from Brazil, along with a few smaller Indian satellites
Deep Ocean Mission @ 4K Cr over five years – cover deep ocean survey exploration and projects for the conservation of deep sea bio-diversity.
Pillar 6: Minimum Govt., Maximum Governance
National Commission for Allied Healthcare Professionals Bill – to ensure transparent and efficient regulation of 56 allied healthcare professions
National Nursing and Midwifery Commission Bill – for transparency, efficiency and governance reforms
Ease of Doing Business: Conciliation Mechanism and mandate its use for quick resolution of contractual disputes.
Digital Census: @3.7K Cr in the year 2021-2022
1K Cr for welfare of Tea workers in Assam and West Bengal
Fiscal Position:
- For 2020-21, original BE expenditure was 30.42 lakh Cr while RE estimates are `34.50 lakh crores
- Capital expenditure: BE was 4.12 lakh Cr while estimated in RE is 4.39 lakh Cr
- Thus, the fiscal deficit in RE 2020-21 is pegged at 9.5% of GDP
BE estimates for expenditure in 2021-2022 are 34.83 lakh Cr:
- 5.54 lakh Cr as capital expenditure, an increase of 34.5%
- Fiscal deficit in BE 2021-2022 is estimated to be 6.8% of GDP.
- The gross borrowing from the market for the next year would be around `12 lakh crores
Normal ceiling of net borrowing for the states at 4% of GSDP for the year 2021-2022
Discontinue the NSSF Loan to FCI for Food Subsidy
1.18 lakh Cr as Revenue Deficit Grant to 17 states
Summary of Indian Budget (Part B)
Direct Taxes
Senior Citizens: 75 & above who only have pension and interest income exempted from filing their income tax returns
Time-limit for re-opening of assessment reduced to half to 3 years from the present 6 years
Dispute Resolution Committee: Anyone with a taxable income up to 50 lakh and disputed income up to 10 lakh shall be eligible
Income Tax Appellate Tribunal now faceless, that is, all communication electronic
Relaxations to NRIs: notify rules for removing double taxation
Audit Exemption: Increase the limit for tax audit from 5 Cr to 10 Cr for those who carry out 95% of their transactions digitally
Attracting foreign investors into Infra: relax some of these conditions relating to prohibition on private funding, restriction on commercial activities, and direct investment in infrastructure.
Affordable Housing:
- Additional deduction of interest, amounting to `1.5 lakh, for loan taken till 31st March 2022 for home purchase
- Tax holiday till 31st March 2022 on affordable housing projects
Tax incentives to IFSC: tax holiday for capital gains for aircraft leasing companies, tax exemption for aircraft lease rentals paid to foreign lessors; tax incentive for relocating foreign funds in the IFSC; and to allow tax exemption to the investment division of foreign banks located in IFSC.
Ease filing of returns: details of capital gains from listed securities, dividend income, and interest from banks, post office, etc. will also be pre-filled.
Small charitable trusts running educational institutions and hospitals – blanket exemption limit increased from 1 Cr to 5Cr
Late deposit of employee’s contribution to Provident Fund by the employer will not be allowed as deduction to the employer
Eligibility for claiming tax holiday and capital gains exemption for investment for start-ups extended to 31 March 2022
Indirect Taxes
Custom Duty Rationalization:
- Review more than 400 old exemptions this year
- From 1st Oct 2021, put in place a revised customs duty structure, free of distortions
- any new customs duty exemption henceforth will have validity up to the 31st March following two years from the date of its issue
Electronic and Mobile Phone Industry:
- Withdrawing a few exemptions on parts of chargers and sub-parts of mobiles.
- Some parts of mobiles will move from ‘nil’ rate to 2.5%
Iron and Steel:
- Reducing Customs duty uniformly to 7.5% on semis, flat, and long products of non-alloy, alloy, and stainless steels.
- Duty exempted on steel scrap for a period up to 31st March, 2022
- Reducing duty on copper scrap from 5% to 2.5%
Textile: Reduction of BCD rates on caprolactam, nylon chips and nylon fiber & yarn to 5%
Chemicals: Reduced reducing customs duty on Naptha to 2.5%
Gold & Silver: customs duty reduced from 12.5 percent to 7.5 percent
Renewable Energy: To encourage domestic production, we are raising duty on solar invertors from 5% to 20%, and on solar lanterns from 5% to 15%
Capital Equipment & Auto Parts: withdraw exemptions on tunnel boring machine. It will attract a customs duty of 7.5%; and its parts a duty of 2.5%. Customs duty on certain auto parts increased to 15%
MSME Products: Increase in duty-
- From 10% to 15% on steel screws and plastic builder wares
- From 5% to 15% on prawn feed
- Withdrawing exemption on imports of certain kind of leathers
Agri Products:
- Raising customs duty on cotton from nil to 10% and on raw silk and silk yarn from 10% to 15%; withdrawing end-use based concession on denatured ethyl alcohol
- Agriculture Infrastructure and Development Cess (AIDC)