HIGHLIGHTS OF UNION BUDGET 2021

~ by Trinanjan Chakraborty

  • Fiscal deficit for FY 2021 at 9.5% of GDP against budgeted target of 3.5%. Fiscal deficit target for FY 2022 kept at 6.8% of GDP. Government targets to bring it down to 4.5% of GDP by 2025-26
  • Capital expenditure allotment in FY 2022 at ₹ 5.54 lakh crores – up from ₹ 4.12 lakh crores in the Revised Estimate for previous fiscal. Gross market borrowings target of ₹ 12 lakh crores for FY 22
  • Spending on Healthcare sector proposed to be hiked by 137% to ₹ 2.23 lakh crores. ₹ 35, 000 crores allotted for COVID-19 vaccine development. Announcement of development of 2 more indigenous COVID-19 vaccines (in addition to Bharat Biotech’s Covaxin and Serum Institute’s Covishield)
  • A new central healthcare scheme announced to strengthen the country’s healthcare infrastructure over the next six years. The Pradhan Mantri Atma Nirbhar Swasthya Bharat Yojana, which will operate in addition to the existing National Health Mission, has been allocated around ₹ 64,180 crores
  • Disinvestment target pegged at ₹ 1.75 lakh crores – lower than the 2.1 lakh crores target set for preceding fiscal. This is in recognition of the adverse market conditions due to COVID-19. BPCL, IDBI Bank, two more PSU banks, one insurance company, Air India, Pawan Hans, Container Corporation of India, SCI, BEML to be privatized among others. LIC IPO in 2022
  • FDI in Insurance raised to 74% from previous 49%
  • No change in income tax slabs, no increase in standard deductions. Senior citizens above 75 years of age with only pension income will now be exempted from filing income tax returns. The bank paying income to them will deduct the necessary tax from their bank account
  • Government to set up an asset reconstruction company for taking over bad loans of banks – the proverbial “Bad bank.” A new development finance institution to be set up with an outlay of ₹ 20,000 crores. The new entity will be formed through a statute but will be professionally managed
  • Government to infuse ₹ 20,000 crores into public sector banks in FY22
  • ₹ 3,768 crores allocated for upcoming Census. This will be India’s first digital census
  • Agri Infra cess imposed as follows:
    • 1.5% on coal, lignite & peat
    • 2.5% on gold, silver and dore bars
    • 5% on cotton
    • 10% on peas, 17.5% on crude palm oil, 20% on crude soyabean, sunflower oil
    • 20% on lentil (masur), 30% on Kabuli chana
    • 35% on apples
    • 50% on Bengal gram/chick peas
    • ₹ 2.5 per litre agri infra cess on petrol, ₹ 4 on diesel; 100% agri infra cess on alcohol. However, this will not impact end consumers
  • Four states get major highway projects: Tamil Nadu (3,500 km – ₹ 1.03 lakh crores), Kerala (1,100 km – ₹ 65,000 crores), West Bengal (675 km – ₹ 25,000 crores) and Assam (1,300 km – ₹ 34,000 crores)
  • Seven port projects worth more than ₹ 2,000 crores investment announced. ₹ 1,500 crores earmarked for scheme to incentivize digital payments
  • Tax holiday for startups, capital gains exemption extended by 1 year. ₹ 1.5 lakh tax deduction on payment of interest for affordable housing extended by 1 year
  • Exemption from tax audit limit doubled to ₹ 10 crores turnover for companies doing most of their business through digital modes
  • NRIs allowed to operate One Person Companies in India
  • To further ease filing of IT returns, details of capital gains and interest from banks, post offices, etc. will be pre-filled. Time frame for reopening of income-tax assessment cases halved from 6 to 3 years
  • Scrapping policy to remove unfit motor vehicles on a voluntary basis introduced. All private vehicles beyond 20 years and commercial vehicles older than 15 years old will have to undergo a fitness test
  • An independent gas transport system operator for booking and coordination to be set-up for ensuring for unbiased allocation of natural gas transportation capacity. Extension of benefit of Ujjawala scheme to an additional 1 crore people

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