Presenting the first ever digital Union Budget, Union Minister of Finance and Corporate Affairs Ms. Nirmala Sitharaman stated that India’s fight against COVID-19 continues into 2021 and that this moment in history, when the political, economic, and strategic relations in the post-COVID world are changing, is the dawn of a new era – one in which India is well-poised to truly be the land of promise and hope.
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
1. Health and Wellbeing
- Rs. 2,23,846 crore (US$ 30.70 billion) outlay for Health and Wellbeing in BE 2021-22 as against Rs. 94,452 crore (US$ 12.95 billion) in BE 2020-21 – an increase of 137%.
- Focus on strengthening three areas: Preventive, Curative, and Wellbeing
- Steps being taken for improving health and wellbeing:
- Rs. 35,000 crore (US$ 4.80 billion) 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 (US$ 8.80 billion) outlay over 6 years for PM AatmaNirbhar Swasth Bharat Yojana – a new centrally sponsored scheme to be launched, in addition to NHM.
- Main interventions under PM AatmaNirbhar Swasth Bharat Yojana:
- National Institution for One Health.
- 17,788 rural and 11,024 urban Health and Wellness Centres.
- 4 regional National Institutes for Virology.
- 15 Health Emergency Operation Centres and 2 mobile hospitals.
- Integrated public health labs in all districts and 3382 block public health units in 11 states.
- Critical care hospital blocks in 602 districts and 12 central institutions.
- Strengthening of the National Centre for Disease Control (NCDC), its 5 regional branches and 20 metropolitan health surveillance units.
- Expansion of the Integrated Health Information Portal to all States/UTs to connect all public health labs.
- 17 new Public Health Units and strengthening of 33 existing Public Health Units.
- Regional Research Platform for WHO South-East Asia Region.
- 9 Bio-Safety Level III laboratories.
- Mission Poshan 2.0 to be launched:
- To strengthen nutritional content, delivery, outreach, and outcome.
- Merging the Supplementary Nutrition Programme and the Poshan Abhiyan.
- Intensified strategy to be adopted to improve nutritional outcomes across 112 Aspirational Districts.
Universal Coverage of Water Supply
- Rs. 2,87,000 crore (US$ 39.36 billion) over 5 years for Jal Jeevan Mission (Urban) - to be launched with an aim to provide:
- 2.86 crore household tap connections.
- Universal water supply in all 4,378 Urban Local Bodies.
- Liquid waste management in 500 AMRUT cities.
- 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.
- After 15 years in case of commercial vehicles.
2. Physical and Financial Capital and Infrastructure
Production Linked Incentive scheme (PLI)
- Rs. 1.97 lakh crore (US$ 27.02 billion) 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:
- 7 Textile Parks to be established over 3 years.
- Textile industry to become globally competitive, attract large investments and boost employment generation & exports.
- National Infrastructure Pipeline (NIP) expanded to 7,400 projects:
- Around 217 projects worth Rs. 1.10 lakh crore (US$ 15.09 billion) completed.
- Measures in three thrust areas to increase funding for NIP:
- Creation of institutional structures.
- Big thrust on monetizing assets.
- Enhancing the share of capital expenditure.
- Creation of institutional structures: Infrastructure Financing.
- Rs. 20,000 crore (US$ 2.74 billion) 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 (US$ 68.57 billion) 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.
- Big thrust on monetizing assets.
- National Monetization Pipeline to be launched.
- Important asset monetization measures:
- 5 operational toll roads worth Rs. 5,000 crore (US$ 685.72 million) being transferred to the NHAIInvIT.
- Transmission assets worth Rs. 7,000 crore (US$ 960.00 million) to be transferred to the PGCILInvIT.
- Dedicated Freight Corridor assets to be monetized by Railways, for operations and maintenance, after commissioning.
- Next lot of Airports to be monetized for operations and management concession.
- Other core infrastructure assets to be rolled out under the Asset Monetization Programme:
- Oil and Gas Pipelines of GAIL, IOCL and HPCL.
- AAI Airports in Tier II and III cities.
- Other Railway Infrastructure Assets.
- Warehousing Assets of CPSEs such as Central Warehousing Corporation and NAFED.
- Sports Stadiums.
- Sharp Increase in Capital Budget.
- Rs. 5.54 lakh crore (US$ 75.98 billion) capital expenditure in BE 2021-22 – sharp increase of 34.5% over Rs. 4.12 lakh crore (US$ 56.50 billion) allocated in BE 2020-21:
- Over Rs. 2 lakh crore (US$ 27.43 billion) to States and Autonomous Bodies for their Capital Expenditure.
- Over Rs. 44,000 crore (US$ 6.03 billion) for the Department of Economic Affairs to provide for projects/programmes/departments exhibiting good progress on Capital Expenditure.
Roads and Highways Infrastructure
- Rs. 1,18,101 crore (US$ 16.20 billion), highest ever outlay, for Ministry of Road Transport and Highways – of which Rs. 1,08,230 crore (US$ 14.84 billion) is for capital.
- Under the Rs. 5.35 lakh crore (US$ 73.37 billion) Bharatmala Pariyojana, more than 13,000 km length of roads worth Rs. 3.3 lakh crore (US$ 45.26 billion) awarded for construction:
- 3,800 km have already been constructed.
- Another 8,500 km to be awarded for construction by March 2022.
- Additional 11,000 km of national highway corridors to be completed by March 2022.
- Economic corridors being planned:
- Rs. 1.03 lakh crore (US$ 14.13 billion) outlay for 3,500 km of NHs in Tamil Nadu
- Rs. 65,000 crore (US$ 8.91 billion) investment for 1,100 km of NHs in Kerala.
- Rs. 25,000 crore (US$ 3.43 billion) for 675 km of NHs in West Bengal.
- Over Rs. 34,000 crore (US$ 4.66 billion) to be allocated for 1300 km of NHs to be undertaken in next 3 years in Assam, in addition to Rs. 19,000 crore (US$ 2.61 billion) works of NHs currently in progress in the State.
- 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 (US$ 15.09 billion) for Railways of which Rs. 1,07,100 crore (US$ 14.69 billion) 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 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 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 (US$ 2.47 billion) for a new scheme, to augment public bus transport:
- Innovative PPP models to run more than 20,000 buses.
- To boost automobile sector, provide fillip to economic growth, create employment opportunities for our youth.
- 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.
- 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.
Ports, Shipping, Waterways
- Rs. 2,000 crore (US$ 274.29 million) 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 (US$ 222.72 million) 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.
Petroleum & Natural Gas
- Extension 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.
- 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.
- Capital infusion of Rs. 1,000 crore (US$ 137.14 million) to Solar Energy Corporation of India and Rs. 1,500 crore (US$ 205.71 million) to Indian Renewable Energy Development Agency.
Increasing FDI in Insurance Sector
- To increase the permissible FDI limit from 49% to 74% and allow foreign ownership and control with safeguards.
Recapitalization of PSBs
- Rs. 20,000 crore (US$ 2.74 billion) in 2021-22 to further consolidate the financial capacity of PSBs.
- Inclusive Development for Aspirational India
- 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 (US$ 226.29 billion) in FY22 - animal husbandry, dairy, and fisheries to be the focus areas.
- Rural Infrastructure Development Fund to be enhanced to Rs. 40,000 crore (US$ 5.49 billion) from Rs. 30,000 crore (US$ 4.11 billion).
- To double the Micro Irrigation Fund to Rs. 10,000 crore (US$ 1.37 billion).
- ‘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 (US$ 15.63 billion) of trade value carried out through e-NAMs; 1,000 more mandis to be integrated with e-NAM to bring transparency and competitiveness.
- 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.
Migrant Workers and Labourers
- One Nation One Ration Card scheme for beneficiaries to claim rations anywhere in the country - migrant workers to benefit the most.
- Scheme implementation so far covered 86% of beneficiaries across 32 States and UTs.
- Remaining 4 states to be integrated in next few months.
- Portal to collect information on unorganized labour force, migrant workers especially, to help formulate schemes for them.
- Implementation of 4 labour codes underway.
- Social security benefits for gig and platform workers too.
- minimum wages and coverage under the Employees State Insurance Corporation applicable for all categories of workers.
- Women workers allowed in all categories, including nightshifts with adequate protection.
- Compliance burden on employers reduced with single registration and licensing, and online returns.
- 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.
- Reinvigorating Human Capital
- 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.
- Creation of formal umbrella structure to cover all Govt. colleges, universities, research institutions in a city for greater synergy.
- Glue grant to implement the same across 9 cities.
- Central University to come up in Leh for accessibility of higher education in Ladakh.
- Rs. 3000 crore for realignment of existing National Apprenticeship Training Scheme (NATS) towards post-education apprenticeship, training of graduates and diploma holders in Engineering.
- Initiatives for partnership with other countries in skilling to be taken forward, like partnership:
- With UAE to benchmark skill qualifications, assessment, certification, and deployment of certified workforce.
- With Japan for a collaborative Training Inter Training Programme (TITP) to transfer of skills, technique, and knowledge.
- National Language Translation Mission (NTLM) to make governance-and-policy related knowledge available in major Indian languages.
- PSLV-CS51 to be launched by New Space India Limited (NSIL) carrying Brazil’s Amazonia Satellite and some Indian satellites.
- As part of the Gaganyaan mission activities:
- 4 Indian astronauts being trained on Generic Space Flight aspects, in Russia
- First unmanned launch is slated for December 2021.
- Rs. 4,000 crore over five years for Deep Ocean Mission survey exploration and conservation of deep-sea biodiversity.
- Minimum Government, Maximum Governance
- Rs. 3,768 crore allocated for first digital census in the history of India.
- Rs. 300 crore grant to the Government of Goa for the diamond jubilee celebrations of the state’s liberation from Portuguese.
- Rs. 1,000 crore for the welfare of Tea workers especially women and their children in Assam and West Bengal through a special scheme.
- RE for Expenditure is Rs. 34.50 lakh crore (US$ 473.14 billion) as against original BE expenditure of Rs. 30.42 lakh crore (US$ 417.19 billion).
- Quality of expenditure has been maintained as Capital Expenditure estimated as per RE is Rs. 4.39 lakh crore (US$ 60.21 billion) in 2020-2021 as against Rs. 4.12 lakh crore (US$ 56.50 billion) in BE 2020-21.
- Estimates of Rs. 34.83 lakh crore (US$ 477.67 billion) BE for expenditure in 2021-2022 including Rs. 5.5 lakh crore (US$ 75.43 billion) as capital expenditure, an increase of 34.5% to give required push to economy.
- Corporate tax rate slashed to make it among the lowest in the world.
- Burden of taxation on small taxpayers eased by increasing rebates.
- Return filers almost doubled to 6.48 crore in 2020 from 3.31 crore in 2014.
- Faceless Assessment and Faceless Appeal introduced.
Relief to Senior Citizens:
- 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.
Reducing Disputes, Simplifying Settlement:
- Time limit for re-opening cases reduced to 3 years from 6 years.
- National Faceless Income Tax Appellate Tribunal Centre to be established.
Relaxation to NRIs:
- Rules to be notified for removing hardships faced by NRIs regarding their foreign retirement accounts.
Incentivising Digital Economy:
- Limit of turnover for tax audit increased to Rs. 10 crore (US$ 1.37 million) from Rs. 5 crore (US$ 685.72 thousand) for entities carrying out 95% transactions digitally.
Relief for Dividend:
- 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.
Attracting Foreign Investment for Infrastructure:
- 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.
Supporting ‘Housing for All’:
- Additional deduction of interest, up to Rs. 1.5 lakh (US$ 2.06 thousand), 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 incentives to IFSC in GIFT City:
- 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.
Ease of Filing Taxes:
- Details of capital gains from listed securities, dividend income, interest from banks, etc. to be pre-filled in returns.
Relief to Small Trusts:
- Exemption limit of annual receipt revised from Rs. 1 crore (US$ 137.14 thousand) to Rs. 5 crore (US$ 685.72 thousand) for small charitable trusts running schools and hospitals.
Electronic and Mobile Phone Industry:
- Some exemptions on parts of chargers and sub-parts of mobiles withdrawn
- Duty on some parts of mobiles revised to 2.5% from ‘nil’ rate.
Iron and Steel:
- 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 March 31, 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%.
- 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 gemstones 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.
Rationalization of Procedures and Easing of Compliance:
- Turant Customs initiative, a Faceless, Paperless, and Contactless Customs measures.
- New procedure for administration of Rules of Origin.
Achievements and Milestones during the COVID-19 pandemic
- Pradhan Mantri Garib Kalyan Yojana (PMGKY):
- Valued at Rs. 2.76 lakh crore (US$ 37.85 billion).
- Free food grain to 80 crore people.
- Free cooking gas for 8 crore families.
- Direct cash to over 40 crore farmers, women, elderly, the poor and the needy.
- AatmaNirbhar Bharat package (ANB 1.0):
- Estimated at Rs. 23 lakh crore (US$ 315.43 billion) – more than 10% of GDP.
- PMGKY, three ANB packages (ANB 1.0, 2.0, and 3.0), and announcements made later were like 5 minibudgets in themselves.
- Rs. 27.1 lakh crore worth of financial impact of all three ANB packages including RBI’s measures – amounting to more than 13% of GDP.
- Structural reforms:
- One Nation One Ration Card.
- Agriculture and Labour Reforms.
- Redefinition of MSMEs.
- Commercialisation of the Mineral Sector.
- Privatisation of Public Sector Undertakings.
- Production Linked Incentive Schemes.
- Status of India’s fight against COVID-19:
- 2 Made-in-India vaccines – medically safeguarding citizens of India and those of 100-plus countries against COVID-19.
- 2 or more new vaccines expected soon.
- Lowest death rate per million and the lowest active cases.
Note: Conversion rate used as on February 1, 2021 is Rs. 1 = US$ 0.014