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Union Budget 2021-22 Summary

Budget Highlights 

  • Expenditure:  The government proposes to spend Rs 34,83,236 crore in 2021-22, 13% higher than the last year budget estimate.
  • Receipts: The receipts (other than borrowings) are expected to be Rs 19,76,424 crore in 2021-22, which is 23% higher than the revised estimates of 2020-21.
  • Nominal GDP is expected to grow at of 14.4% in 2021-22.
  • Deficits:  Revenue deficit is targeted at 5.1% of GDP in 2021-22, which is lower than the revised estimate of 7.5% in 2020-21.  Fiscal deficit is targeted at 6.8% of GDP in 2021-22, down from the revised estimate of 9.5% in 2020-21. The government aims to reduce fiscal deficit to 4.5% of GDP by 2025-26.  

Tax proposals

  • No changes in income tax rates for individuals and corporations.
  • The cess will be levied on some imported items including gold, silver, alcoholic beverages, coal, and cotton, and basic customs duty will be reduced by an equal amount.  The cess will be levied on petrol and diesel at the rate of Rs 2.5 and Rs 4 per litre respectively, with equivalent cuts in excise duty.  
  • Changes in customs duty: The duty has been increased on some items such as cotton, silk, some auto and mobile parts.
  • Time limit for the re-opening of income tax assessment will be reduced from 6 years presently to 3 years.
  • Businesses which carry 95% of their transactions digitally and whose turnover is less than five crore rupees, are exempted from keeping audited accounts. The threshold will be increased to Rs 10 crore.
  • The total indirect tax collections are estimated to be Rs 11,02,000 crore in 2021-22.  Of this, the government has estimated to raise Rs 6,30,000 crore from GST.  Out of the total tax collections under GST, 84% is expected to come from central GST (Rs 5,30,000 crore), and 16% (Rs 1,00,000 crore) from the GST compensation cess.
  • Revenue from Union Excise Duties is estimated at Rs 3,35,000 crore (annual increase of 18% over 2019-20).  
  • The collections from taxes on companies are expected to be Rs 5,47,000 crore in 2021-22, marginally lower (1%) than 2019-20.  
  • The collections from income tax are expected to record an annual increase of 7% in 2021-22 to Rs 5,61,000 crore.  
  • Non-tax revenue is expected to decrease by 14% over 2019-20 to Rs 2,43,028 crore.   The decline is due to a 40% fall in the dividend received from the Reserve Bank of India, nationalized banks and other financial institutions owned by the government. 
  • The disinvestment target for 2021-22 is Rs 1,75,000 crore.  This target is 3.5 times higher than the disinvestment of Rs 50,304 crore in 2019-20.  

 Subsidies

  • In 2021-22, the total expenditure on subsidies is estimated to be Rs 3,69,899 crore, an annual increase of 19% over 2019-20.   This is largely due to a higher allocation to food subsidy.  
  • Allocation to food subsidy is estimated at Rs 2,42,836 crore in 2021-22, a 49% annual increase as compared to 2019-20.  
  • Expenditure on fertilizer subsidy is estimated at Rs 79,530 crore in 2021-22, a 1% annual decrease as compared to 2019-20.  
  • Allocation to petroleum subsidy decreased at an annual rate of 40% from 2019-20 to 2021-22.  

Non-Tax proposals

  • LIC Act, 1956 amended to create a board of directors, issue shares, reduce government shareholding up-to 51% of equity (minimum 75% in the first five years), cap voting rights at 5% to shareholders other than central government.
  • Securities Contracts (Regulations) Act, 1956 amended to allow pooled investment fund which collects money from investors.  They may borrow money or issue debt securities.   Consequential amendments made in the SARFAESI Act, 2002 and in the Recovery of Debts due to Banks and Financial Institutions Act, 1993.
  • SEBI Act, 1992 amended to require registration by Alternative Investment Trusts and Business Trusts.   

Policy Highlights 

  • A Securities Markets Code will be introduced to consolidate four Acts including the SEBI Act, 1992 and the Government Securities Act, 2007.  
  • Disinvestment of Air India, IDBI Bank, and Pawan Hans will be completed in 2021-22.  
  • Legislative amendments will be introduced to privatize two public sector banks and a General Insurance company.  
  • An Asset Reconstruction Company Limited and Asset Management Company will be set up to consolidate and take over existing stressed debt, and manage and dispose assets.  An institutional framework will be created for the corporate bond market to instill confidence among participants and enhance liquidity of secondary markets.  An investor charter will be introduced for financial investors across all products.
  • Alternate methods of debt resolution and special frameworks for MSMEs will be introduced. A Conciliation Mechanism will be set up for quick resolution of contractual disputes.
  • A portal to collect information on gig workers, and construction workers, among others will be launched to help frame schemes on health, housing, insurance, and others for migrant unorganized workers.  The Apprenticeship Act will be amended to enhance apprenticeship opportunities.
  • PM Atma-Nirbhar Swasth Bharat Yojana will be launched to develop capacity of health systems, strengthen national institutions, and create institutions to detect and cure new and emerging diseases.
  • Mission Poshan 2.0 will be launched after merging Supplementary Nutrition Programme and the Poshan Abhiyan to strengthen nutrition outcomes.  The National Nursing and Midwifery Commission Bill will be introduced.
  • Legislation to set-up a Higher Education Commission of India will be introduced, having vehicles for standard-setting, accreditation, regulation, and funding.  A grant to create formal umbrella structures for institutes of higher education in nine cities will be created.  
  • A Bill to establish a Development Financial Institution for infrastructure financing will be introduced. The DFI will be used to establish a lending portfolio of at least five lakh crore rupees for financing infrastructure projects.  A National Monetisation Pipeline of potential infrastructure assets such as dedicated freight corridor assets of the railways will be launched.  Debt financing of real estate and infrastructure investment trusts by foreign portfolio investors will be enabled to ease access of finance in the infrastructure and real estate sectors.
  • Economic corridors to augment road infrastructure are being planned in Tamil Nadu, Kerala, West Bengal, and Assam.  Seven projects for major ports will be offered on public-private partnership mode in 2021-22.  A voluntary vehicle scrapping policy to phase out old and unfit vehicles was also announced.
  • Ujjwala scheme will be extended to cover one crore more beneficiaries.  An independent gas transport system operator will be set up to coordinate booking of common carrier capacity in all natural-gas pipelines.A Hydrogen Energy Mission to generate hydrogen from green power sources will be launched.
  • The Deep Ocean Mission will be launched, covering survey explorations and projects for conservation of bio-diversity. 
  • The Jal Jeevan Mission (Urban) will be implemented to enable universal water supply and liquid waste management in urban areas.  The Urban Swachh Bharat Mission 2.0 will focus on sludge and waste water management, and on ensuring a reduction in single-use plastic and air pollution.  Allocation to the Jal Jeevan Mission (earlier known as the National Rural Drinking Water Mission) has increased by 355% over the revised estimate of 2020-21 to Rs 50,011 crore.
  • Operation Green Scheme, currently applicable to tomatoes, onions, and potatoes, will be enlarged to include 22 perishable products.  The Agriculture Infrastructure Fund will be made available to APMCs to improve infrastructure facilities.
  • To facilitate credit flow for SCs, STs, and women, margin money requirement under StandUp India scheme will be reduced from 25% to 15%.   750 Eklavya model residential schools will be established in tribal areas.
  • Among schemes, the MGNREGS has the highest allocation in 2021-22 at Rs 73,000 crore.  Allocation to the scheme has seen an annual increase of 1% over 2019-20.  
  • The PM-KISAN scheme (income support to farmers) has the second highest allocation in 2021-22 at Rs 65,000 crore, an annual increase of 16% over 2019-20
  • Agriculture infrastructure fund to be made available for APMCs for augmenting their infrastructure. 1,000 more Mandis to be integrated into the E-NAM market place. Five major fishing hubs, including Chennai, Kochi and Paradip, to be developed. A multipurpose seaweed park to be established in Tamil Nadu.       

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