The Union Budget 2021-2022 – What’s there in it for you?

The Union Budget remains the most important financial decision of the country as the Finance Minister proposes it every year. Finance Minister Nirmala Sitharaman announced the Union Budget on 1 February 2021 and said that the budget stands on six main pillars this year.

 They are – healthcare, infrastructure, inclusive development, human capital strengthening, Research and Innovation, and the idea of governance. Many sectors saw a hike in budget allocation while many lost a share due to several reasons and factors. 

The reading session of the budget began on 29 January 2021 with a run-through of the economic survey of India 2021.

The Chief Economic Adviser of India, Krishnamurthy Venkata Subramanian addressed the highlight of the economic survey industry-wise.

The survey is based on intense research in every field based on government policies, programs, profit, income, taxes, import, export, and more. The budget is mostly based on the results of the economic survey.

The ministers get an idea of the functioning of each sector and it enables them to make a more efficient decision regarding the industries. 

The Economic Survey 2020

• The key highlight of the survey was the contraction of India’s GDP by 7.7% in the fiscal year 2021-22. 
• The country will see a V-shaped economic recovery attributed to GST collection, vaccine drive, power demand, and steel consumption.
• IMF expects India to be the fastest-growing economy in the world in the coming two years. The agriculture of India will grow by 3.4% while the industry and the service will contract by  9.6% and 8.8% respectively. 
• The current account of the country has a surplus of 2% of GDP and the Net FPI Inflows were the highest in 17 years in November 2020. 
• The fiscal deficit is 9.5% of the GDP and is expected to fall to 6.8% in 2021-22.

Now let us take a look at the budget allocation sector wise – 

Health and Sanitation Budget 2021-22

The healthcare sector was obviously the first focus of the budget due to the corona pandemic and vaccine drives going around the country.  

• PM Atma Nirbhar Swasthya Bharat Yojana is the highlight of the health budget for which the government will release Rs 64,180 Crore in the next 6 years. The centrally sponsored scheme will work on developing primary, secondary, and tertiary healthcare in the country. This is an extension of the National Health Mission.  
• The second important scheme is Mission POSHAN 2.0 which will work in 112 districts of India and improve the nutritional outcomes there. An amount of 35,000 crores will be released for the vaccine drive in India in 2021-22. Jal Jeevan Mission Urban will function to improve water supply nationwide. 
• Transport and tourism sanitization will also be the focus. The existing health units at airports (32), seaports (12), and land port will undergo modernization. Above that 17 new public health units will start operating this year. The Swach Bharat Abhiyaan will continue in Urban India. 

Education Budget 2021-22

• The focus of the budget when it came to the educational sector was skill education. The Ministry of education received Rs 93,224 crores which were further divided between secondary and primary education in a 60:40 ratio respectively. 
• The National Research Foundation will get 50,000 crores to work the matters of national importance. The Finance Minister announced it as one of the pillars too.
• The National Language translation mission will function online with a list of regional languages and will act as an extension of National Education Policy 2020. 
• 100 new Sainik Schools and 750 Eklavya schools will open up in 2021 to increase the reach of education in the country. A plan to open up a Central University in Ladakh is put forward too. 

Infrastructure Budget 2021-22

• The infrastructure of the country needs the attention of the hour and the Finance Minister understood as she allotted 5.54 Lakh Crores for the infrastructure projects going on in the country. Out of this 20,000 Crores are reserved for Development Financial Institutions. 
• National Monetization Pipeline is another highlight which will focus on monetizing the infrastructure assets. The NHAI and Power Grid Corporation of India will get 5000 Crore and 7000 Crores respectively.
• The Vehicle scrapping policy will come in place which will test all the automated fitness centers every 20 years for personal vehicles and 20 years for commercial vehicles. The railway will be 100% electrified with National Rail Plan to be ready by 2023. 
• The metro services will start in 27 more cities in India. The National Hydrogen Mission will work on hydrogen generation from green sources. Additionally recycling capacity of ports will increase by 50% by 2024.
• The States borrowing can increase by 4% of GSDP this year is a proposal by the government. In addition, the FDI limit to get pushed to 74% and decriminalization of Limited Liability Parnetrnship were also proposed. 
• A Unified Securities Market Code will undergo formulation. An asset resolution company will set up to look at the stressed loans. The deposit insurance now stands at 5 lakhs for bank depositors. 
• Two Public sector unit banks and one general insurance firm will shut down this year.  The sale of BPCL, IDBI Bank, and Air India will follow up as well. LIC is planning to launch its own IPO this fiscal year. 

Tax and Revenue Budget 2021-22

The Female leaders are always more empathetic and Smt. Sitharam proved it correctly with her taxation proposals for the union budget 2021-22. 

• Seniors citizens above the age of 75 years will no longer have to file income tax returns. These people depend on their pension and earn interest from deposits and thus will exempt from IT returns. 
• The income tax return assessment will now have a reopening window of 3 years only if the amount is below 50 Lakhs. In case of amounts above that. The penalty can go up to 10 years. 
• The affordable housing projects can take an exemption of one year from filing the IT returns. Above that small trusts with a receipt lower than 5 crores are eased too. 
• The duty on copper scrap and naphtha reduced to 2.5% while duty on solar inverters and solar lanterns increased to 20% and 15% respectively. The nylon product duty is 5%, Tunnel boring machines will be 7% and cotton will be 10%.

Agriculture Budget 2021-22

• The Department of Agriculture, Farmers’ Welfare, and Department of Agricultural Research received an amount of Rs 1,31,531.19 crore in the union budget 2021-22. The amount is less than the current budget because of higher spending in Pradhan Mantri Kisan Samman Nidhi. 
• Agriculture infrastructure fund of 1,00,000 Crore will be given to APMCs for better infrastructure facilities. The E Nam market place will integrate 1000 more mandis this year. 
• The major fishing hubs of India will see development activities through the funds allocated in the infrastructure budget. 

Employment / Labour Budget 2021-22

• Many economists and industry experts are unhappy with the budget allocation for job opportunities in the country. The labor ministry of India received Rs13,306 crore which is almost 400 Crores less than the current budget.
• A portal to keep a track of gig and construction workers is proposed and extension of social security to them is another objective. 
• The margin capital requirement for the Stand-up India scheme reduced to 15% for the vulnerable sections of the country, i.e. SCs, STs, and women.

Conclusion

While many proposals will reach the majority in both houses with flying colors, many might not cross the benchmarks. It all depends on the senior government leaders.

Many factors like covid, farmer’s protest, AI, etc will have to be considered before the final implementation takes place. The finance minister looks confident about her decision and has backed up all the allocation with adequate research and logic.

The puzzle around their effectiveness should start falling in place with the start of the fiscal year 2021-22.