Union Budget 2021-22

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:

 Vaccines

• 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.

Health Systems

• 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.

 

Nutrition

• 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.

Scrapping Policy

• 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.

 

Textiles

• 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.

Infrastructure

• 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:
  1. Oil and Gas Pipelines of GAIL, IOCL and HPCL.
  2. AAI Airports in Tier II and III cities.
  3. Other Railway Infrastructure Assets.
  4. Warehousing Assets of CPSEs such as Central Warehousing Corporation and NAFED.
  5. 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.

 Railway Infrastructure

• 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.

 

Urban Infrastructure

• 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.

Power Infrastructure

• 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.

Financial Capital

• 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

Agriculture

• 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.

Fisheries

• 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.

 Financial Inclusion

• 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

School Education

• 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.

 Higher Education

• 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.

Skilling

• 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.

 

• Innovation and R&D

• 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.

Fiscal Position

• 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.

Direct Taxes

Achievements:

• 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%.

Textiles:

• Basic Customs Duty (BCD) on caprolactam, nylon chips and nylon fiber & yarn reduced to 5%.

Chemicals:

• Calibrated customs duty rates on chemicals to encourage domestic value addition and to remove inversions.
• Duty on Naptha reduced to 2.5%.

Renewable Energy:

• 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.

Capital Equipment:

• 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%.

MSME Products:

• 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.

Agriculture Products:

• 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