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Alok Kirloskar
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Pragati Khare
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Vinay Kalantri

Budget 2021 Key announcement on top sectors

Budget 2021 Key announcement on top sectors


Finance Minister Ms. Nirmala Sitharaman announced the Union Budget 2021 to the parliament on February 1, 2021. As per the key highlights addressed in her speech, start-ups, MSMEs and research & innovation are likely to be covered by two key themes—first, boost the ‘Atmanirbhar Bharat’ initiative (self-reliant India) by promoting domestic producers and second, enable technological developments to increase productivity, access and quality across stakeholders.

  1. Laying down the 'Atmanirbhar Bharat' (self-reliant India) vision

The Union Budget 2021 aims to augment Atmanirbhar Bharat's (self-reliant India) target by enhancing India’s production capacity to become a cross-sectoral global manufacturing hub. The Union Budget for FY22 is focused on the following six pillars:

  • Health and well-being
  • Physical and capital infrastructure
  • Inclusive development for ‘Aspirational India’
  • Re-invigorating human capital
  • Innovation and R&D
  • Minimum government and maximum governance
  1. Opportunities in Technology

The government aims to leverage the power of technology to improve productivity in governance, access to services and the quality of goods and services in a range of areas.

Major Allocations

Union Budget 2021-22

Budget allocation (Rs. crore)

Budget allocation (US$ billion)

Ministry of Defence



Ministry of Consumer Affairs, Food and Public Distribution



Ministry of Home Affairs



Ministry of Rural Development



Ministry of Agriculture and Farmers' Welfare



Ministry of Road Transport and Highways



Ministry of Railways



Ministry of Education



Ministry of Health and Family Welfare



Ministry of Housing and Urban Affairs



Source: indiabudget.gov.in website

Key Announcements

  • Holistic Approach to Health

Investments in health infrastructure were increased by 2.37x, or 137%, in the Union Budget 2021. The emphasis on strengthening three areas—preventive health, curative health and well-being—with a total health sector allocation of Rs. 223,846 crore (US$ 30.70 billion) will be of immense assistance to the country.


Key interventions under Pradhan Mantri Aatmanirbhar Swasth Bharat Yojana (PMANSY) are as follows:

  • Outlay of Rs. 64,180 crore (US$ 8.80 billion) over six years to strengthen the existing ‘National Health Mission’ by developing capacities of primary, secondary & tertiary care and healthcare systems & institutions to detect and cure new and emerging diseases.
  • Support for Health and Wellness centres—the scheme will strengthen 17,000 rural and 11,000 urban health and wellness centres.
  • Setting up integrated public health labs in all districts and 3,382 block public health units in 11 states.
  • Establishing critical care hospital blocks in 602 districts and 12 central institutions.
  • Strengthening the NCDC (National Centre for Disease Control) to have five regional branches and 20 metropolitan health surveillance units.
  • Expanding integrated health information portal to all states/UTs.
  • Rolling out the pneumococcal vaccine, a ‘Made in India’ product, across the country.
  • Allocating Rs. 35,000 crore (US$ 4.80 billion) for Covid-19 Vaccine in 2021-22.


The government plans to launch ‘Mission Poshan 2.0’ to merge the supplementary nutrition programme with the ‘Poshan Abhiyan’ (Nutrition Mission) and improve nutritional outcomes across 112 aspirational districts.

  • Defence Manufacturing

By increasing the defence capital spending by 18.75%, the Union Budget 2021 has made a historic drive for defence enhancement.


In the budget, defence allocation was increased to Rs. 478,195.62 crore (US$ 65.64 billion) for FY22. The total allocation for defence services and other organisations/departments under the Ministry of Defence for FY22 is Rs. 362,345.62 crore (US$ 49.74 billion) (excluding defence pension), an increase of Rs. 24,792.62 crore (US$ 3.40 billion) over FY21.


In collaboration with NGOs/private schools/state-owned schools etc., the budget proposed to establish 100 new ‘Sainik’ schools in the country. The goal is to provide educational opportunities in the 'CBSE Plus' model of educational environment by involving government/private schools/NGOs to partner with culture, value system and the national pride of ‘Sainik’ schools in the establishment of their system.


  • Infrastructure
  • In order to establish India’s manufacturing global leadership and boost the Aatmanirbhar Bharat (self-reliant India) scheme, the production-linked incentive scheme (PLI) was launched across 13 sectors, with an amount of ~Rs. 1.97 lakh crore (US$ 27.02 billion) for the next five years.
  • The government expanded the ‘National Infrastructure Pipeline (NIP)’ to 7,400 projects. ~217 projects worth Rs. 1.10 lakh crore (US$ 15.09 billion) were completed as of 2020.
  • Roads and Highways Infrastructure
    • The government announced an outlay of Rs. 1,18,101 crore (US$ 16.20 billion) for the Ministry of Road Transport and Highways.
    • Under the Bharatmala Pariyojana project worth Rs. 5.35 lakh crore (US$ 73.37 billion), >13,000 km length of roads worth Rs. 3.3 lakh crore (US$ 45.26 billion) was awarded for construction. Another 8,500 kms length of roads and an additional 11,000 kms of National Highway corridor would be completed by March 2022.
  • Textiles Infrastructure
    • Mega Investment Textiles Parks (MITRA) scheme was launched to establish world-class infrastructure in textile sector and establish seven textile parks over three years.
  • Railway Infrastructure
    • For FY21, Indian Railways has the highest-ever total plan capex of Rs. 2,15,058 crore (US$ 29.52 billion), which is expected to become the catalyst of change to make India ‘Aatmanirbhar (self-reliant)’.
    • In Budget 2021, an outlay of Rs. 110,055 crore (US$ 15.09 billion) was announced for Railways, an increase of 53% YoY.
  • The ‘National Rail Plan’ aims at developing adequate rail infrastructure by 2030 to cater to the projected traffic requirements up to 2050.
  • 100% electrification of all broad gauge routes by 2023.
    • Broad Gauge Route Kilometres (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 the ‘Make in India’ strategy.
  • Power Infrastructure
    • The government announced Rs. 305,984 crore (US$ 42 billion) over the next five years for a revamped, reforms-based and result-linked new power distribution sector scheme.
    • A comprehensive ‘National Hydrogen Energy Mission 2021-22’ will be launched.


  • Agriculture and Allied Industries

In the Union Budget 2021-22, Ms. Sitharaman, announced that agricultural produce marketing committees (APMCs) will become eligible beneficiaries to utilise the financing facility under Agriculture Infrastructure Fund (AIF), worth Rs. 1 lakh crore (US$ 13.73 billion) to enhance infrastructure at regulated markets, commonly known as ‘mandis’. The scheme will be valid from FY20 to FY29.


Farmers, FPOs (Farmer Producer Organization), PACS (Primary Agricultural Credit Societies), marketing cooperative societies, SHGs, joint liability groups (JLG), multipurpose cooperative societies, agri-entrepreneurs, start-ups and public-private partnership ventures funded by the central/state agency or local body, and now by APMC mandis, will be the primary beneficiaries.


  • Education
  • The allocation for ‘National Apprenticeship Training Scheme’ (NATS) has been significantly increased for FY22 to Rs. 500 crore (US$ 68.63 million) from previous Rs. 175 crore (US$ 24.02 million), for the provision of post-education apprenticeship, graduate training and engineering diploma holders.
  • The government gave a major boost to the innovation and R&D sector by announcing an outlay of Rs. 50,000 crore (US$ 6.86 billion) over the next five years to the National Research Foundation (NRF).


  • Gems and Jewellery

To rationalise the duty structure of gold and silver, the government reduced the import duty on gold and silver to 7.5%, from 12.5%.


  • Insurance

In the budget 2021, the government proposed to increase FDI’s (foreign direct investment) limit in the insurance sector to 74%, to attract greater overseas capital inflows and help enhance insurance penetration in the country.



The overall increased spending in budget allocations has garnered considerable attention among international investors, especially among American companies. “They (US firms) are excited. They feel like India’s budget that offers less government fine-tuning for the first time in many, many years. It is a well- defined budget that attracts a lot of foreign investment”, said Mr. Mukesh Aghi, President of US–India Strategic and Partnership Forum (USISPF).

The Budget 2021 represents an approach that focuses more on regenerating demand and attracting investments to generate supply from India. For example, changes in policy in sectors such as insurance is aimed at attracting large institutional investors.