Trade Analytics

Union Budget 2020-21

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Last updated: Feb, 2020

The first Union Budget of the third decade of 21st century was presented by the Minister for Finance & Corporate Affairs, Ms Nirmala Sitharaman in the Parliament on February 1st, 2020.  The budget aimed at energizing the Indian economy through a combination of short-term, medium-term, and long-term measures.

The Key Highlights of Union Budget 2020-21 are as follows:

  • Aspirational India - better standards of living with access to health, education and better jobs for all sections of the society
  • Economic Development for all - “Sabka Saath, Sabka Vikas, Sabka Vishwas”
  • Caring Society - both humane and compassionate; Antyodaya as an article of faith.
  • Three broad themes are held together by:
    • Corruption free, policy-driven Good Governance.
    • Clean and sound financial sector. 
  • Ease of Living underlined by the three themes of Union Budget 2020-21.


Three components of Aspirational India

  • Agriculture, Irrigation, and Rural Development
  • Wellness, Water, and Sanitation
  • Education and Skills


Sixteen Action Points for Agriculture, Irrigation and Rural Development

  • Rs 2.83 lakh crore (US$ 40.06 billion) to be allocated for the following 16 Action Points:
    • Rs 1.60 lakh crore (US$ 22.64 billion) for Agriculture, Irrigation & allied activities.
    • Rs 1.23 lakh crore (US$ 17.40 billion) for Rural development & Panchayati Raj.

 

  • Agriculture credit:
    • Rs 15 lakh crore (US$ 212.31 billion) target set for the year 2020-21.
    • PM-KISAN beneficiaries to be covered under the KCC scheme.
    • NABARD Re-finance Scheme to be further expanded.

 

  • Blue Economy
    • Rs 1 lakh crore (US$ 14.15 billion) fisheries exports to be achieved by 2024-25.
    • 200 lakh tonnes fish production targeted by 2022-23.
    • 3477 Sagar Mitras and 500 Fish Farmer Producer Organisations to involve youth in fisheries extension.
    • Growing of algae, seaweed and cage culture to be promoted.

 

  • Kisan Rail to be setup by Indian Railways through PPP.
  • Krishi Udaan to be launched by the Ministry of Civil Aviation for both international and national routes.
  • One-Product One-District introduced in order to improve better marketing and export in the Horticulture sector.
  • PM-KUSUM to be expanded:
    • 20 lakh farmers to be provided for setting up stand-alone solar pumps.
    • Another 15 lakh farmers to be helped to solarise their grid-connected pump sets.
    • Scheme to enable farmers to set up solar power generation capacity on their fallow/barren lands and to sell it to the grid.

 

  • Livestock:
    • Doubling of milk processing capacity to 108 million MT from 53.5 million MT by 2025.
    • Artificial insemination to be increased to 70 per cent from the present 30 per cent.
    • MNREGS to be dovetailed to develop fodder farms.
    • Foot and Mouth Disease, Brucellosis in cattle and Peste Des Petits ruminants (PPR) in sheep and goat to be eliminated by 2025.

 

  • Wellness, Water and Sanitation
    • Rs 69,000 crore (US$ 9.76 billion) allocated for overall Healthcare sector. 
    • Rs 6,400 crore (US$ 905.87 million) (out of Rs 69,000 crore[(US$ 9.76 billion)]) for PM Jan Arogya Yojana (PMJAY)
    • Jan Aushadhi Kendra Scheme to offer 2000 medicines and 300 surgicals in all districts by 2024.
    • TB Harega Desh Jeetega campaign launched - commitment to end Tuberculosis by 2025.
    • Rs 3.60 lakh crore (US$ 50.95 billion) approved for Jal Jeevan Mission
    • Rs 12,300 crore (US$ 1.74 billion) allocation for Swachh Bharat Mission in 2020-21

 

  • Education and Skills
    • Rs 99,300 crore (US$ 14.05 billion) for education sector and Rs 3,000 crore (US$ 424.62 million) for skill development in 2020-21.
    • National Police University and National Forensic Science University proposed for policing science, forensic science, and cyber-forensics.
    • Degree level full-fledged online education program by Top-100 institutions in the National Institutional Ranking Framework.
    • 150 higher educational institutions to start apprenticeship embedded degree/diploma courses by March 2021.
    • Ind-SAT proposed for Asian and African countries as a part of Study in India program.


Economic Development

Industry, Commerce and Investment

  • Rs 27,300 crore (US$ 3.86 billion) allocated for 2020-21 for development and promotion of Industry and Commerce.
  • Five new smart cities proposed to be developed.
  • National Technical Textiles Mission to be set up:
    • With four-year implementation period from 2020-21 to 2023-24.
    • At an estimated outlay of Rs 1,480 crore (US$ 209.48 million).
    • To position India as a global leader in Technical Textiles.
  • New scheme NIRVIK to be launched to achieve higher export credit disbursement, which provides for:
    • Higher insurance coverage.
    • Reduction in premium for small exporters.
    • Simplified procedure for claim settlements.
  • Turnover of Government e-Marketplace (GeM) proposed to be taken to Rs 3 lakh crore (US$ 42.46 billion).
  • All Ministries to issue quality standard orders as per PM’s vision of “Zero Defect-Zero Effect” manufacturing.


Infrastructure

  • Rs 100 lakh crore (US$ 1.41 trillion) to be invested on infrastructure over the next 5 years
  • National Infrastructure Pipeline:
    • Rs 103 lakh crore (US$ 1.45 trillion) worth projects; launched on 31st December 2019.
    • More than 6,500 projects across sectors, to be classified as per their size and stage of development.
  • A National Logistics Policy to be released soon that will create a single window e-logistics market
  • Rs 1.7 lakh crore (US$ 24.06 billion) proposed for transport infrastructure in 2020-21.


Highways

  • Proposed to monetise at least 12 lots of highway bundles of over 6,000 Km before 2024.


Indian Railways

  • Five measures:
    • Large solar power capacity to be set up alongside rail tracks, on land owned by railways.
    • Four station re-development projects and operation of 150 passenger trains through PPP.
    • More Tejas type trains to connect iconic tourist destinations.
    • High speed train between Mumbai and Ahmedabad to be actively pursued.
    • 148 km long Bengaluru Suburban transport project at a cost of Rs 18,600 crore (US$ 2.63 billion), to have fares on metro model. Central Government to provide 20 per cent of equity and facilitate external assistance up to 60 per cent of the project cost.


Ports & Waterways

  • Economic activity along riverbanks to be energised as per Prime Minister’s Arth Ganga concept.


Airports

  • 100 more airports to be developed by 2024 to support Udaan scheme. 
  • Air fleet number expected to go up from present 600 to 1200 during this time.


Power

  • Rs 22,000 crore (US$ 3.11 billion) proposed for power and renewable energy sector in 2020-21.
  • Expansion of national gas grid from the present 16200 km to 27000 km proposed.


New Economy

To take advantage of new technologies:

  • Policy to enable private sector to build Data Centre parks throughout the country to be launched soon.
  • Fibre to the Home (FTTH) connections through Bharatnet to link 100,000 gram panchayats this year.
  • Rs 6,000 crore (US$ 849.25 million) proposed for Bharatnet programme in 2020-21.
  • Rs 8,000 crore (US$ 1.13 billion) proposed over five years for National Mission on Quantum Technologies and Applications.


Caring Society

  • Allocation of Rs 35,600 crore (US$ 5.03 billion) for nutrition-related programmes proposed for the FY2020-21.
  • Rs 28,600 crore (US$ 4.04 billion) proposed for women specific programs.
  • Financial support for wider acceptance of technologies, identified by Ministry of Housing and Urban Affairs to ensure no manual cleaning of sewer systems or septic tanks, to be provided.
  • Rs 85,000 crore (US$ 12.03 billion) proposed for 2020-21 for welfare of Scheduled Castes and Other Backward Classes
  • Rs 53,700 crore (US$ 7.60 billion) provided to further development and welfare of Scheduled Tribes.
  • Enhanced allocation of Rs 9,500 crore (US$ 1.34 billion) provided for 2020-21 for senior citizens and Divyang.


Culture & Tourism

  • Allocation of Rs 2,500 crore (US$ 353.85 million) for 2020-21 for tourism promotion. 
  • Rs 3,150 crore (US$ 445.85 million) proposed for Ministry of Culture for 2020-21.
  • An Indian Institute of Heritage and Conservation under Ministry of Culture proposed, with the status of a deemed University.


Environment & Climate Change

  • Allocation for this purpose to be Rs 4,400 crore (US$ 622.78 million) for 2020-21.
  • PM launched Coalition for Disaster Resilient Infrastructure (CDRI) with Secretariat in Delhi. Second such international initiative after International Solar Alliance.


Governance

  • Clean, corruption-free, policy driven, well in intent and most importantly trusting in faith.
  • Major reforms in recruitment to Non-Gazetted posts in Government and Public sector banks:
    • An independent, professional and specialist National Recruitment Agency (NRA) for conducting a computer-based online Common Eligibility Test for recruitment.
    •  A test-centre in every district, particularly in the Aspirational Districts.
  • New National Policy on Official Statistics to:
    • Promote use of latest technologies including AI.
    • Lay down a road-map towards modernised data collection, integrated information portal and timely dissemination of information.
  • A sum of Rs 100 crore (US$ 14.15 million) allocated to begin the preparations for G20 presidency to be hosted in India in the year 2022.
  • Development of North East region:
    • Improved flow of funds using online portal by the Government.
    • Greater access to financial assistance of Multilateral and Bilateral funding agencies.
  • Development of Union Territories of J&K and Ladakh:
    • An amount of Rs 30,757 crore (US$ 4.35 billion) provided for the financial year 2020-21.
    • The Union Territory of Ladakh has been provided with Rs 5,958 crore (US$ 843.31 million).

 

Fiscal Management

  • For FY 2019-20:
    • Revised Estimates of Expenditure: at Rs 26.99 lakh crore (US$ 382.02 billion).
    • Revised Estimates of Receipts: estimated at Rs 19.32 lakh crore (US$ 273.46 billion).
  • For year 2020-21:
    • Nominal growth of GDP estimated at 10 per cent.
    • Receipts: estimated at Rs 22.46 lakh crore (US$ 317.90 billion)
    • Expenditure: at Rs 30.42 lakh crore (US$ 430.57 billion)


Direct Tax

  • Personal Tax: around 70 of the existing exemptions and deductions out of more than 100 to be removed in the new simplified regime.
  • New and simplified personal income tax regime proposed:

Taxable Income Slab (Rs)

Existing tax rates

New tax rates

0-2.5 Lakh

Exempt

Exempt

2.5-5 Lakh

5

5

5-7.5 Lakh

20

10

7.5-10 Lakh

20

15

10-12.5 Lakh

30

20

12.5-15 Lakh

30

25

Above 15 Lakh

30

30

  • New regime to entail estimated revenue forgone of Rs 40,000 crore (US$ 5.66 billion) per year.
  • Corporate Tax:  Tax rate of 15 per cent extended to new electricity generation companies.
  • Dividend Distribution Tax (DDT):
    • DDT removed making India a more attractive investment destination.
    • Deduction to be allowed for dividend received by holding company from its subsidiary.
    • Rs 25,000 crore (US$ 3.53 billion) estimated annual revenue forgone.
       
  • Start-ups:
    • Start-ups with turnover up to Rs 100 crore (US$ 14.15 million) to enjoy 100 per cent deduction for three consecutive assessment years out of 10 years
       
  • MSMEs to boost less-cash economy:
    • Turnover threshold for audit increased to Rs 5 crore (US$ 0.70 million) from Rs 1 crore (US$ 0.14 million) for businesses carrying out less than five per cent business transactions in cash.
       
  • Tax concession for foreign investments:
    • 100 per cent tax exemption to the interest, dividend and capital gains income on investment made in infrastructure and priority sectors before 31st March 2024 with a minimum lock-in period of three years by the Sovereign Wealth Fund of foreign governments.
       
  • Affordable housing:
    • Additional deduction up to Rs 1.5 lakh (US$ 2,123) for interest paid on loans taken for an affordable house extended till 31st March 2021.
    • Date of approval of affordable housing projects for availing tax holiday on profits earned by developers extended till 31st March 2021.
       
  • Tax Facilitation Measures
    • Instant PAN to be allotted online through Aadhaar.
    • ‘Vivad Se Vishwas’ scheme, with a deadline of 30th June 2020, to redu     ce litigations in direct taxes.
    • Faceless appeals to be enabled by amending the Income Tax Act.
       

Future Aim for sustaining India’s unique global leadership, driven by Digital Revolution 

  • Seamless delivery of services through Digital Governance.
  • Improvement in physical quality of life through National Infrastructure Pipeline.
  • Risk mitigation through Disaster Resilience.
  • Social security through Pension and Insurance penetration.

 

 

Note: Conversion rate used as on 31st January 2019, Re 1 = US$ 0.014154