Full Analysis Of Union Budget 2021

The Build-up

The continued protest by farmer unions on the three agriculture-related laws cleared by Parliament in the last Monsoon Session, had put the pressure on the government to deliver.
The Union General Budget provided the best opportunity.

On 29^thJanuary, 2021, Prime Minister Narendra Modi described the current Budget Session as an opportunity to fulfil the dreams of freedom fighters.

Nirmala Sitharaman – The first Full Time female Finance Minster presented the Budget.
The first budget of the decade – was also a digital budget.
The speech lasted for 112 min.
The last General Budget 2020-21 was presented on 1^stFebruary, 2020.

Recap of the Indian Economy in COVID times

While the global economy was slowing down, COVID-19 pushed it to further uncertainty.
The risk of not having a lockdown was too high.
The total estimate of all relief measures announced by govt & RBI so far is ₹27.1 lakh crores.
- 13% of GDP.
India has two COVID-19 vaccines available.
- Two more vaccines will be rolled out soon.

To tackle the COVID-19 induced economic difficulties, the Government announced a ₹30-lakh-crore plan, through the following ‘ mini-budgets’ :

AtmaNirbhar Bharat programmes
Performance-linked incentives
Boost for domestic manufacturing
Improved credit access for enterprises
Moratorium on interest payments
Thrust on affordable housing
Booster shots for MNREGA

Within 48 hours of India’s lockdown declaration, the PM announced Pradhan Mantri Gareeb Kalyan Yojna.
- ₹2.76 lakh crores.

Theme of the Budget

AtmaNirbhar Bharat and
the sankalp of Nation-first
is planned to be strengthened through
6 pillars in FY22:

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

Healthcare

₹ 64,180 crores to be spent on a centrally sponsored scheme ‘AtmaNirbhar Swastha Bharat Yojana’ over the next six years:

Critical care hospital blocks
Strengthening of National Centre for Disease Control
Setting up of 17,000 rural and 11,000 urban health and wellness centres
Setting up of Integrated Public Health Labs in each district
₹ 35,000 crore for COVID-19 Vaccine in the financial year 2021-22.
The government will provide more funds, if required.
The pneumococcal vaccine is limited to only 5 states at present.
Now it will be rolled out across the country.
Will avert more than 50,000 child deaths annually.
National Commission for Allied Healthcare Professionals Bill introduced.
Will ensure transparent and efficient regulation of 56 allied healthcare professions.
National Nursing and Midwifery Commission Bill introduced
Supplementary Nutrition Programme & POSHAN Abhiyaan to be merged.
- Mission POSHAN 2.0 to be launched.
Will strengthen nutritional content, delivery & outcome.
Intensified strategy for improving nutritional outcomes in aspirational districts.

Outlay for health, therefore, increased to ₹2,23,846 crores.
- Increase of 137% relative to previous year’s budget.

Jal Jeevan Mission Urban

Spending of ₹2.87 lakh crores.
To achieve better health and quality of life, the government aims to provide universal water supply to 4378 urban bodies.
Liquid Waste management in 500 AMRUT cities.

Urban Clean India Mission

Urban Swachh Bharat 2.0 Mission to be launched, which will cost ₹1.41 lakh crore over 5 years.

Fecal sludge management.
Waste water treatment.
Management of waste from urban construction.

To tackle air pollution, the FM announced ₹2217 crores.
- Will cover 42 urban centres.

Vehicles to undergo fitness test in automated fitness centres:

After 20 years for personal vehicles, and
After 15 years for commercial vehicles.
- Voluntary vehicle scrapping policy to phase out old and unfit

Industry

₹ 1.97 lakh crores over 5 years starting this FY, for Production Linked Incentive Schemes.
- This will create global champions in manufacturing.
- Essential for an AatmaNirbhar Bharat.
- Will nurture and create jobs for youth.
Scheme of Mega Investment Textile Parks to be launched.
- To create world class infra in textile sector, with plug-and-play facilities.
7 textile parks to be set up over 3 years.
- To create global export champions.

Infrastructure

To give further thrust to National Infrastructure Pipeline, three concrete actions to be taken:

Creating institutional structures.
Monetizing assets.
Increasing share of capital expenditure in central and state budgets.

Professionally managed Development Financial Institution to be set up.
- Will provide, enable & catalyze infra financing.
- ₹ 20,000 crore to capitalize this institution.
- Aim is to have lending portfolio of at least ₹ 5 lakh crore in 3
National Monetization Pipeline of potential brownfield infrastructure assets to be launched.
- Will help in monetizing operating public infra assets.
Asset Monetization Dashboard to track progress and provide visibility to investors.
Five operational roads being transferred to NHAI.
₹7,000 crore assets to be transferred to PGCIL.
Railways to monetize dedicated freight corridor assets for O&M, after commissioning.
Next lot of airports to be monetized for operation & management concessions.
Sharp increase of 34.5% in capital expenditure.
- Resulted in allocation of ₹ 5.54 lakh crore.
Shows government’s effort to spend more on capital expenditure, despite resource crunch.
₹ 40,000 crore for programmes, projects and departments which show good progress in capital expenditure, if they are in need of further funds .
- More than ₹ 2 lakh crore for states and autonomous bodies for capex.

Roads and Highways

By March 2022, another 8,500 km of road projects to be awarded.
11,000 km of NH corridors to be completed, under Bharat Mala Pariyojna project.

₹ 1,18,101 crore for the Ministry of Road Transport and Highways.
Of this, ₹ 1.08 lakh crore is for capital – the highest ever provided.
Western Dedicated Freight Corridor and Eastern Dedicated Freight Corridor to be commissioned by June 2022.
Various additional initiatives too being proposed.
New scheme for augmentation of public bus transport
Will cost ₹18,000 crore.
Will facilitate deployment of innovative PPP models enabling private players to finance, acquire, operate and maintain over 20,000 buses.

Railways

100% electrification of rail broad gauge routes to be completed by December 2023.
High density rail networks and highly utilized rail routes to be provided with indigenously developed automatic train protection system.
This will eliminate train collision due to human error.
Record sum of ₹ 1,10,055 crore to be provided for Indian Railways.
Of this, ₹ 1,07,100 is for capital expenditure only.

MetroLite and Metro New Technologies to be deployed to provide metro rail systems in:

tier 2 cities and
peripheral areas of tier 1 cities.

**Costs less, but provides same experience, convenience and safety.

Ports

Seven port projects worth more than ₹ 2,000 crore to be offered by major ports in PPP Mode
Will move to a model where private partner will manage operations of ports.
Scheme for promoting flagging of merchant ships in India to be launched.
Subsidy support to Indian shipping companies will be provided by Ministries and CPSEs – ₹ 1,624 crore over 5 years for this

Energy

Framework to be put in place, to provide consumers alternatives to choose from, from among multiple power distribution companies.
Revamped, reforms-based, result-linked Power Distribution Sector Scheme to be launched, with outlay of ₹ 3,05,984 crore over 5 years.
- Will provide assistance to distribution companies for infrastructure creation.
Comprehensive National Hydrogen Energy Mission to be launched.
Will help generate hydrogen from green power sources.
Ujjwala scheme has benefited 8 crore households, so far.
It will be extended to cover 1 crore more beneficiaries.
100 more districts to be added in next 3 years, to City Gas Distribution Network.
Independent Gas Transport System Operator to be set up.
- This will allow facilitation and coordination of booking of common gas carrier capacity.
- Cover all natural gas pipelines, on non- discriminatory and open access basis.
Additional capital infusion of ₹ 1000 crore to Solar Energy Corporation of India.
₹ 1500 crore to IREDA, to give further boost to green energy sector.

Banking and Finance

Insurance Act 1938 to be amended.
To increase permissible FDI limit in insurance companies from 49% to 74%.
Allow foreign ownership and control with safeguards.
Asset Reconstruction Company Ltd to be set up.
It will consolidate and take over existing stressed debts.
Also, manage and dispose of assets for eventual value realization.
Deposit Insurance Cover for bank customers to be increased from ₹ 1 lakh to ₹ 5 lakh.
Provision to be streamlined to enable depositors get access to funds within insurance cover limit.
Minimum loan size eligible for debt recovery under SARFAESI Act 2002, to be reduced from ₹ 50 lakh to ₹ 20 lakh.
For NBFCs with minimum asset size of ₹ 100 crore

A single and rationalized Securities Markets Code to be set up, by consolidating provisions of:

SEBI Act 1992,
Depositories Act 1996,
Securities Contracts Regulation 1956 and
Securities Act 2007.

For investor protection, Investor Charter to be introduced.
Permanent institutional framework to set up, to instill confidence in corporate bond market participants during times of stress.
To set up a system of regulated gold exchanges in the country, SEBI will be notified as regulator.
Warehousing Dev. and Regulatory Authority will be strengthened.
Two public sector banks apart from IDBI and one general insurance company to be taken up for strategic disinvestment in 2021-’22.
IPO of LIC to be brought in this year.
Policy on Strategic Disinvestment of Public Sector Enterprises has been approved.
₹ 1.75 lakh crore is estimated to be the receipts in 2021-’22, by way of strategic disinvestment.
Previous budget for 2020-21 set a target of raising ₹2.1 lakh crore

Companies

Definition of small companies under Companies Act 2013 to be revised.
Companies with paid-up capital up to ₹ 2 crore & turnover up to ₹ 20 crore will fall under small companies.
Benefit more than 2 lakh companies in compliance requirements.
Promoting start-ups and innovators by incentivizing the incorporation of One Person Companies (OPCs):
Allowing Non Resident Indians (NRIs) to incorporate OPCs in India.
To further streamline Ease of Doing Business for cooperatives, a separate administrative structure for them to be set up .

Defence

Ministry of defence has been allocated Rs 4,78,195.62 crore.
Excluding pensions, it is pegged at Rs 3.62 lakh crore from last year’s Rs 3.37 lakh crore.
Modernisation fund for the armed forces has gone up from Rs 1,13,734 last year to Rs 1,35,060 crore for the financial year 2021-22.

Agriculture

Agricultural credit target enhanced to ₹ 16.5 lakh crore.
Focus will be on ensuring increased credit flow to animal husbandry, dairy and fisheries sectors.
Scope of Operation Greens Scheme to be extended from tomatoes, onions and potatoes to 22 perishable crops.
Allocation for Rural Infrastructure Development Fund to be enhanced from ₹ 30,000 crore to ₹ 40,000 crore
₹ 5,000 crore Micro Irrigation Fund to be augmented by another ₹ 5,000 crore.
1,000 more mandis to be integrated with National Agriculture Market or eNAM.
Agricultural Infrastructure Fund to be made available to APMCs for augmenting their infrastructure facilities

Dairy & Fisheries

Labour

Portal that will collect relevant information on gig workers, building and construction workers and others to be launched.
Will help formulate health, housing, skill, food, credit and insurance schemes for all migrant workers.

Education

More than 15,000 schools to be qualitatively strengthened, with all components of National Education Policy.
100 new ‘Sainik’ schools to be set up.
Higher Education Commission to be set up.