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.
- 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.
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.
- 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.
- Proposed to monetise at least 12 lots of highway bundles of over 6,000 Km before 2024.
- 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.
- 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.
- 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.
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.
- 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.
- 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).
- 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)
- 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
Above 15 Lakh
- 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 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