The union budget of 2021-2022 was much anticipated than last year after Finance Minister Nirmala Sitharaman stated that the “FY22 Budget will be made in a manner never seen in 100 years in India”. However, after the 2 hours long session on February 1st, Nirmala Sitharaman has managed to introduce a ‘one of kind’ budget for the year 2021-22. It was certain that the health care system would be given more importance after the pandemic. Having said that, the tax slab for FY22 has not revised nor changed in any given manner which has been a major disappointment for the individual taxpayers.
Further, the 2021-2022 budget comes at a time when the Indian economy has contradicted to its lowest since 1952. Finance Minister Nirmala Sitharaman also said that the fiscal deficit for FY21 was pegged at 9.5% of the GDP. This is compared to 3.5% pegged in the previous year’s Budget.
She said, “At the beginning of this financial year, the pandemic resulted in weak revenue inflow. Unlike many other countries, we opted for a series of medium-size packages during the pandemic so that we could calibrate our response as per the situation. Once the health situation stabilized, we switched to providing a demand push.”
Further, she added that the deficit was supported by government borrowings, multilateral funds, and short-term borrowings.
“We need another ₹80,000 crore for which we will approach the market in the next two months,” Ms. Sitharaman said.
“For 2021-22, we are estimating a fiscal deficit of 6.8% of GDP. The gross borrowing from the market next year is expected to be ₹12 lakh crore,” she said. “We hope to achieve consolidation of debt by increasing buoyancy of tax revenues and increased receipts from asset monetisation,” she added.
On first reading, this is the least povertarian budget since 1997-98. If its vast & impressive reform promises, especially privatisation are kept, it will end up doing more for the poor than any since then. #Budget2021
— Shekhar Gupta (@ShekharGupta) February 1, 2021
Total Defense Budget in India this year is 4,78,195.62 lakh crore. #Budget2021
— Aditya Raj Kaul (@AdityaRajKaul) February 1, 2021
This BJP government reminds me of the garage mechanic who told his client, “I couldn’t fix your brakes, so I made your horn louder.” #Budget2021
— Shashi Tharoor (@ShashiTharoor) February 1, 2021
In my opinion, Finance Minister had raised a lot of expectations regarding #Budget2021 and she has fulfilled all of them. Given the current times, the budget is focussed on India’s growth and is tailored to accelerate the growth rate: NITI Aayog Vice Chairman Rajiv Kumar pic.twitter.com/T9XyFvTHOq
— ANI (@ANI) February 1, 2021
From the IRS F.O.R.C.E report to confiscatory taxation ideas from leading socialist intellectuals, from tax on unrealised cap gains on stocks to return of inheritance tax, too many bad ideas were floating in the virus-laden air. Big relief these are all dumped#Budget2021
— Shekhar Gupta (@ShekharGupta) February 1, 2021
Defence budget: MoD has been allocated ₹4,78,195.62 crore. Excluding pensions, that’s ₹3.62 lakh crore, up a negligible 7.4% from last year’s ₹3.37 lakh crore. Weapons/modernisation outlay up 18% from ₹1,13,734 lakh crore last year to ₹1,35,060 crore for 2021-22. #Budget2021 pic.twitter.com/VYNkHunaCM
— Shiv Aroor (@ShivAroor) February 1, 2021
After promising a century, FM is out hit wicket at Zero !! Instead of calling it as “budget of the century” it will be remembered as “blunder of the century” by BJP Govt #Budget2021
— Jaiveer Shergill (@JaiveerShergill) February 1, 2021
Here are the key highlights from the first reading of Budget 2021-22:
Agriculture infrastructure –
Agriculture Infrastructure and Development Cess (AIDC) has been proposed on petrol and diesel. It will Rs.2.5/litre on petrol and Rs.4/litre on diesel. Consequent to the imposition of AIDC, the Basic Excise Duty (BED) and Special Additional Excise Duty (SAED) on petrol and diesel are being reduced so that consumer does not have to bear any additional burden.
Custom duty changes –
Duty of copper scrap reduced to 2.5%. We have calibrated customs duty rates on chemicals to encourage domestic value addition. We are now reducing duty on naptha to 2.5%. Customs duty on gold and silver to be rationalized. We are raising duties on imported solar inverters from 5% to 20% and on solar lanterns from 5% to 15%. All nylon products to have 5 % customs duty. Tunnel boring machines will attract the custom of 7%. Exemption on certain leather will be withdrawn. To benefit farmers, we are raising customs duty on cotton from 0 to 10%.
Relief for senior citizens –
Many of them, despite having foregone several basic necessities of their own, have strived to build our nation. We shall reduce the compliance burden on those above 75 years. This means people above 75 years, who get pension and earn interest from deposits need not file IT returns.
First digital census ever –
We have been taking a number of steps to bring reforms in tribunals, which I will further rationalize this year. To have ease of doing business for those who deal with govt or central PSEs, I propose a system for a swift resolution of contractual disputes. The forthcoming census will be the first digital census ever. For it, I have allocated ₹3,758 crores this year. I propose to grant ₹300 crores to the Govt of Goa to celebrate 50 years of liberation. ₹1000 crore for the welfare of tea workers, especially women and children, in Assam and West Bengal.
100 Sainik Schools will be set up. 750 Eklavya schools will be set up in tribal areas. A Central University will come up in Ladakh. More than 15,000 schools will be strengthened under NEP 2020. An ‘umbrella’ structure will be created for central higher education institutions in various cities such as Hyderabad.
Migrant workers and labourers –
We have launched the One Nation, One Ration card to help migrant workers. I am happy to inform you that the ON OR plan is under implementation by 32 states and union territories reaching about 59 crore beneficiaries. I propose to launch a portal to maintain information on gig workers and construction workers, this will help provide benefits to migrant workers. Social security will be extended to gig and platform workers. This will be ensured through the four new labor codes. To further facilitate credit flows for the Standup India scheme for SCs, STs, and women, I propose to reduce the margin capital required for loans from 25% to 15%. We have taken a number of steps to help the MSME sector in this Budget with an allocation of ₹15,700 crores, more than double that of last year.
Financial Capital –
I propose to consolidate the provisions of the Sebi Act, Depositories Act, and two other laws, into a Unified Securities Market Code, says Nirmala Sitharaman. Towards investor protection, I propose to introduce an investor charter as a right for all investors in all financial products. I propose to amend the insurance act to increase the FDI limit from 49% to 74%.
Physical and Financial Capital and Infrastructure –
For a five trillion dollar economy, our manufacturing sector has to grow in double digits for a sustained period, says Finance Minister Nirmala Sitharaman. To achieve the same, a PLI scheme has been announced for 13 sectors. For this government has committed ₹1.97 lakh crore over the next 5 years. Recalling earlier performance-linked schemes announced for the manufacturing sector, she says in addition to that seven textile parks will be added in the next three years. The National Infrastructure Pipeline (NIP) was launched with 6,835 projects, which has now expanded to 7,400 projects.
Health and wellbeing –
A new centrally sponsored scheme called PM Atma Nirbhar Swasthya Bharat Yojana at the outlay of ₹64,180 crores over six years to develop primary, secondary, and tertiary healthcare systems. This will be in addition to the National Health mission and will support 17,000 rural and 11,000 urban health care centers. An urban Jal Jeevan Mission to be launched and implemented over five years with an outlay of ₹2.87 lakh crore. The Urban Swachh Bharat Mission will be implemented over five years. To tackle the burgeoning air pollution problem, I am allocating ₹2,217 crores for 32 urban centers, says the Finance Minister. ₹35,000 crores have been allocated for COVID-19 vaccines and intend to provide further funds if required.