Presenting the first ever digital Union Budget, Union Minister of Finance and Corporate Affairs Nirmala Sitharaman stated that India’s fight against COVID-19 continues into 2021.
The key highlights of the Union Budget 2021-22 are as follows:
6 pillars of the Union Budget 2021-22:
- Health and Wellbeing
- Physical & Financial Capital, and Infrastructure
- Inclusive Development for Aspirational India
- Reinvigorating Human Capital
- Innovation and R&D
- Minimum Government and Maximum Governance
Health and Wellbeing
- Rs. 2,23,846 crore outlay for Health and Wellbeing in BE 2021-22 as against Rs. 94,452 crore in BE 2020-21 – an increase of 137%
- Rs. 35,000 crore for COVID-19 vaccine in BE 2021-22
- The Made-in-India Pneumococcal Vaccine to be rolled out across the country, from present 5 states – to avert 50,000 child deaths annually.
- Rs. 64,180 crore outlay over 6 years for PM AatmaNirbhar Swasth Bharat Yojana –a new centrally sponsored scheme to be launched, in addition to NHM
- Mission Poshan 2.0 to be launched
- Rs. 2,87,000 crore over 5 years for Jal Jeevan Mission (Urban)
- Rs. 1,41,678 crore over 5 years for Urban Swachh Bharat Mission 2.0
- Rs. 2,217 crore to tackle air pollution, for 42 urban centers with a million-plus population
- Voluntary vehicle scrapping policy to phase out old and unfit vehicles
- Fitness tests in automated fitness centres: After 20 years in case of personal vehicles and After 15 years in case of commercial vehicles
Physical and Financial Capital and Infrastructure
- Rs. 1.97 lakh crore in next 5 years for PLI schemes in 13 Sectors
- To create and nurture manufacturing global champions for an AatmaNirbhar Bharat
- To help manufacturing companies become an integral part of global supply chains, possess core competence and cutting-edge technology
- To bring scale and size in key sectors
- To provide jobs to the youth
- Mega Investment Textiles Parks (MITRA) scheme, in addition to PLI:
- National Infrastructure Pipeline (NIP) expanded to 7,400 projects:
- Measures in three thrust areas to increase funding for NIP:
- Rs. 20,000 crore to set up and capitalise a Development Financial Institution(DFI) –to act as a provider, enabler and catalyst for infrastructure financing
- Rs. 5 lakh crore lending portfolio to be created under the proposed DFI in 3 years
- Debt Financing by Foreign Portfolio Investors to be enabled by amending InvITs’ and REITs’ legislations
- Over Rs. 2 lakh crore to States and Autonomous Bodies for their Capital Expenditure.
- Over Rs. 44,000 crore for the Department of Economic Affairs to provide for projects/programmes/departments exhibiting good progress on Capital Expenditure
- Rs. 1,18,101 lakh crore, highest ever outlay, for Ministry of Road Transport and Highways –of which Rs. 1,08,230 crore is for capital
- Under the Rs. 5.35 lakh crore Bharatmala Pariyojana, more than 13,000 km length of roads worth Rs. 3.3 lakh crore awarded for construction:
- Economic corridors being planned:
- Rs. 1.03 lakh crore outlay for 3,500 km of NHs in Tamil Nadu
- Rs. 65,000 crore investment for 1,100 km of NHs in Kerala
- Rs. 25,000 crore for 675 km of NHs in West Bengal
- Over Rs. 34,000 crore to be allocated for 1300 km of NHs to be undertaken in next 3 years in Assam, in addition to Rs. 19,000 crore works of NHs currently in progress in the State
- Flagship Corridors/Expressways:
- Delhi-Mumbai Expressway –Remaining 260 km to be awarded before 31.3.2021
- Bengaluru-Chennai Expressway –278 km to be initiated in the current FY; construction to begin in 2021-22
- Kanpur-Lucknow Expressway –63 km expressway providing an alternate route to NH 27 to be initiated in 2021-22
- Delhi-Dehradun economic corridor –210 km to be initiated in the current FY; construction to begin in 2021-22
- Raipur-Vishakhapatnam –464 km passing through Chhattisgarh, Odisha and North Andhra Pradesh, to be awarded in the current year; construction to start in 2021-22
- Chennai-Salem corridor –277 km expressway to be awarded and construction to start in 2021-22
- Amritsar-Jamnagar –Construction to commence in 2021-22
- Delhi-Katra –Construction will commence in 2021-22
- Advanced Traffic management system in all new 4 and 6-lane highways:
- Speed radars
- Variable message signboards
- GPS enabled recovery vans will be installed
- Rs. 1,10,055 crore for Railways of which Rs. 1,07,100 crore is for capital expenditure
- National Rail Plan for India (2030): to create a ‘future ready’ Railway system by 2030
- 100% electrification of Broad-Gauge routes to be completed by December, 2023
- Broad Gauge Route Kilometers (RKM) electrification to reach 46,000 RKM, i.e. 72% by end of 2021
- Western Dedicated Freight Corridor (DFC) and Eastern DFC to be commissioned by June 2022, to bring down the logistic costs –enabling Make in India strategy
- Additional initiatives proposed:
- The Sonnagar-Gomoh Section (263.7 km) of Eastern DFC to be taken up in PPP mode in 2021-22
- Future dedicated freight corridor projects –
- East Coast corridor from Kharagpur to Vijayawada
- East-West Corridor from Bhusaval to Kharagpur to Dankuni
- North-South corridor from Itarsi to Vijayawada
- Measures for passenger convenience and safety:
- Aesthetically designed Vista Dome LHB coach on tourist routes for better travel
- High density network and highly utilized network routes to have an indigenously developed automatic train protection system, eliminating train collision due to human error
- Raising the share of public transport in urban areas by expansion of metro rail network and augmentation of city bus service
- Rs. 18,000 crore for a new scheme, to augment public bus transport:
- Innovative PPP models to run more than 20,000 buses
- A total of 702 km of conventional metro is operational and another 1,016 km of metro and RRTS is under construction in 27 cities
- ‘MetroLite’ and ‘MetroNeo’ technologies to provide metro rail systems at much lesser cost with similar experience in Tier-2 cities and peripheral areas of Tier-1 cities.
- Central counterpart funding to:
- Kochi Metro Railway Phase-II of 11.5 km at a cost of Rs. 1957.05 crore
- Chennai Metro Railway Phase –II of 118.9 km at a cost of Rs. 63,246 crore
- Bengaluru Metro Railway Project Phase 2A and 2B of 58.19 km at a cost of Rs. 14,788 crore
- Nagpur Metro Rail Project Phase-II and Nashik Metro at a cost of Rs. 5,976 crore and Rs. 2,092 crore respectively.
- 139 Giga Watts of installed capacity and 1.41 lakh circuit km of transmission lines added, and additional 2.8 crore households connected in past 6 years
- Consumers to have alternatives to choose the Distribution Company for enhancing competitiveness
- Rs. 3,05,984 crore over 5 years for a revamped, reforms-based and result-linked new power distribution sector scheme
- A comprehensive National Hydrogen Energy Mission 2021-22 to be launched
- Rs. 2,000 crore worth 7 projects to be offered in PPP-mode in FY21-22 for operation of major ports
- Indian shipping companies to get Rs. 1624 crore worth subsidy support over 5 years in global tenders of Ministries and CPSEs
- To double the recycling capacity of around 4.5 Million Light Displacement Tonne (LDT) by 2024; to generate an additional 1.5 lakh jobs
- Extention of Ujjwala Scheme to cover 1 crore more beneficiaries
- To add 100 more districts to the City Gas Distribution network in next 3 years
- A new gas pipeline project in J&K
- An 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
- A single Securities Markets Code to be evolved
- Support for development of a world class Fin-Tech hub at the GIFT-IFSC
- A new permanent institutional framework to help in development of Bond market by purchasing investment grade debt securities both in stressed and normal times
- Setting up a system of Regulated Gold Exchanges: SEBI to be notified as a regulator and Warehousing Development and Regulatory Authority to be strengthened
- To develop an investor charter as a right of all financial investors
- Capital infusion of Rs. 1,000 crore to Solar Energy Corporation of India and Rs. 1,500 crore to Indian Renewable Energy Development Agency
- To increase the permissible FDI limit from 49% to 74% and allow foreign ownership and control with safeguards
- Asset Reconstruction Company Limited and Asset Management Company to be set up
- Rs. 20,000 crore in 2021-22 to further consolidate the financial capacity of PSBs
- Amendments to the DICGC Act, 1961, to help depositors get an easy and time-bound access to their deposits to the extent of the deposit insurance cover
- Minimum loan size eligible for debt recovery under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 proposed to be reduced from Rs. 50 lakh to Rs. 20 lakh for NBFCs with minimum asset size of Rs. 100 crore
- To decriminalize the Limited Liability Partnership (LLP) Act, 2008
- Easing Compliance requirement of Small companies by revising their definition under Companies Act, 2013 by increasing their thresholds for Paid up capital from “not exceeding Rs. 50 Lakh” to “not exceeding Rs. 2 Crore” and turnover from “not exceeding Rs. 2 Crore” to “not exceeding Rs. 20 Cr”.
- Promoting start-ups and innovators by incentivizing the incorporation of One Person Companies (OPCs):
- Launch of data analytics, artificial intelligence, machine learning driven MCA21 Version 3.0 in 2021-22
- Rs. 1,75,000 crore estimated receipts from disinvestment in BE 2020-21
- Strategic disinvestment of BPCL, Air India, Shipping Corporation of India, Container Corporation of India, IDBI Bank, BEML, Pawan Hans, Neelachal Ispat Nigam limited etc. to be completed in 2021-22.
- Other than IDBI Bank, two Public Sector Banks and one General Insurance company to be privatized
- IPO of LIC in 2021-22
- New policy for Strategic Disinvestment approved; CPSEs except in four strategic areas to be privatized
- NITI Aayog to work out on the next list of CPSEs to be taken up for strategic disinvestment
- Incentivizing States for disinvestment of their Public Sector Companies, using central funds
- Special Purpose Vehicle in the form of a company to monetize idle land
- Introducing a revised mechanism for ensuring timely closure of sick or loss making CPSEs
- Treasury Single Account (TSA) System for Autonomous Bodies to be extended for universal application
- Separate Administrative Structure to streamline the ‘Ease of Doing Business’ for Cooperatives
- Ensured MSP at minimum 1.5 times the cost of production across all commodities.
- SWAMITVA Scheme to be extended to all States/UTs, 1.80 lakh property-owners in 1,241 villages have already been provided cards
- Agricultural credit target enhanced to Rs. 16.5 lakh crore in FY22 – animal husbandry, dairy, and fisheries to be the focus areas
- Rural Infrastructure Development Fund to be enhanced to Rs. 40,000 crore from Rs. 30,000 crore
- To double the Micro Irrigation Fund to Rs. 10,000 crore
- ‘Operation Green Scheme’ to be extended to 22 perishable products, to boost value addition in agriculture and allied products
- Around 1.68 crore farmers registered and Rs. 1.14 lakh crore of trade value carried out through e-NAMs; 1,000 more mandis to be integrated with e-NAM to bring transparency and competitiveness.
- APMCs to get access to the Agriculture Infrastructure Funds for augmenting infrastructure facilities
- Investments to develop modern fishing harbours and fish landing centres – both marine and inland
- 5 major fishing harbours – Kochi, Chennai, Visakhapatnam, Paradip, and Petuaghat to be developed as hubs of economic activity
- Multipurpose Seaweed Park in Tamil Nadu to promote seaweed cultivation
- One Nation One Ration Card scheme for beneficiaries to claim rations anywhere in the country – migrant workers to benefit the most
- Portal to collect information on unorganized labour force, migrant workers especially, to help formulate schemes for them
- Implementation of 4 labour codes underway
- Under Stand Up India Scheme for SCs, STs and women,
- Margin money requirement reduced to 15%
- To also include loans for allied agricultural activities
- Rs. 15,700 crore budget allocation to MSME Sector, more than double of this year’s BE
- 15,000 schools to be strengthened by implementing all NEP components. Shall act as exemplar schools in their regions for mentoring others
- 100 new Sainik Schools to be set up in partnership with NGOs/private schools/states
- Legislation to be introduced to setup Higher Education Commission of India as an umbrella body with 4 separate vehicles for standard-setting, accreditation, regulation, and funding
- Central University to come up in Leh for accessibility of higher education in Ladakh
- 750 Eklavya model residential schools in tribal areas:
- Revamped Post Matric Scholarship Scheme for welfare of SCs
- Proposed amendment to Apprenticeship Act to enhance opportunities for youth
- Rs. 3000 crore for realignment of existing National Apprenticeship Training Scheme (NATS) towards post-education apprenticeship, training of graduates and diploma holders in Engineering
- Rs. 1,500 crore for proposed scheme to promote digital modes of payment
- National Language Translation Mission (NTLM) to make governance-and-policy related knowledge available in major Indian languages
- National Commission for Allied Healthcare Professionals already introduced to ensure transparent and efficient regulation of the 56 allied healthcare professions
- The National Nursing and Midwifery Commission Bill introduced for the same in nursing profession
- Rs. 3,768 crore allocated for first digital census in the history of India
Tax Proposals
Vision of a transparent, efficient tax system to promote investments and employment in the country with minimum burden on tax payers
- 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 bank
- Time limit for re-opening cases reduced to 3 years from 6 years
- Serious tax evasion cases, with evidence of concealment of income of Rs. 50 lakh or more in a year, to be re-opened only up to 10 years, with approval of the Principal Chief Commissioner
- 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
- Limit of turnover for tax audit increased to Rs. 10 crore from Rs. 5 crore for entities carrying out 95% transactions digitally
- Dividend payment to REIT/ InvIT exempt from TDS
- Advance tax liability on dividend income only after declaration/ payment of dividend
- Deduction of tax on dividend income at lower treaty rate for Foreign Portfolio Investors
- Infrastructure Debt Funds made eligible to raise funds by issuing Zero Coupon Bonds
- Relaxation of some conditions relating to prohibition on private funding, restriction on commercial activities, and direct investment
- Additional deduction of interest, up to Rs. 1.5 lakh, for loan taken to buy an affordable house extended for loans taken till March 2022
- Tax holiday for Affordable Housing projects extended till March 2022
- Tax exemption allowed for notified Affordable Rental Housing Projects
- Tax holiday for capital gains from incomes of aircraft leasing companies
- Tax exemptions for aircraft lease rentals paid to foreign lessors
- Tax incentive for relocating foreign funds in the IFSC
- Tax exemption to investment division of foreign banks located in IFSC
- Details of capital gains from listed securities, dividend income, interest from banks, etc. to be pre-filled in returns
- Exemption limit of annual receipt revised from ₹1 crore to ₹5 crore for small charitable trusts running schools and hospitals
- Late deposit of employee’s contribution by the employer not to be allowed as deduction to the employer
- Eligibility for tax holiday claim for start-ups extended by one more year
- Capital gains exemption for investment in start-ups extended till 31st March, 2022
- Duty on some parts of mobiles revised to 2.5% from ‘nil’ rate
- Customs duty reduced uniformly to 7.5% on semis, flat, and long products of non-alloy, alloy, and stainless steels
- Duty on steel scrap exempted up to 31st March, 2022
- Anti-Dumping Duty (ADD) and Counter-Veiling Duty (CVD) revoked on certain steel products
- Duty on copper scrap reduced from 5% to 2.5%
- Basic Customs Duty (BCD) on caprolactam, nylon chips and nylon fiber & yarn reduced to 5%
- Calibrated customs duty rates on chemicals to encourage domestic value addition and to remove inversions
- Duty on Naptha reduced to 2.5%
- Custom duty on gold and silver to be rationalized
- Phased manufacturing plan for solar cells and solar panels to be notified
- Duty on solar invertors raised from 5% to 20%, and on solar lanterns from 5% to 15% to encourage domestic production
- Tunnel boring machine to now attract a customs duty of 7.5%; and its parts a duty of 2.5%
- Duty on certain auto parts increased to general rate of 15%
- Duty on steel screws and plastic builder wares increased to 15%
- Prawn feed to attract customs duty of 15% from earlier rate of 5%
- Exemption on import of duty-free items rationalized to incentivize exporters of garments, leather, and handicraft items
- Exemption on imports of certain kind of leathers withdrawn
- Customs duty on finished synthetic gem stones raised to encourage domestic processing
- Customs duty on cotton increased from nil to 10% and on raw silk and silk yarn from 10% to 15%.
- Withdrawal of end-use based concession on denatured ethyl alcohol
- Agriculture Infrastructure and Development Cess (AIDC) on a small number of items