Union Budget 2021-22: Highlights

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(Image Source: Reuters)

Indian Finance Minister Nirmala Sitharaman on Monday unveiled the budget for fiscal 2021-22, which aims to shore up an economy badly-hit by the novel coronavirus pandemic.

The economy is projected to contract 7.7% in the current fiscal year, although the government forecasts growth of 11% for the coming fiscal year, after a massive COVID-19 vaccination drive and a rebound in consumer demand and investments.

(Image Source: Reuters)

These are the initial highlights from Sitharaman’s fiscal 2021-22 budget speech:

Deficit

  • 2020/21 fiscal deficit seen at 9.5% of GDP
  • 2021/22 fiscal deficit seen at 6.8% of GDP
  • 2025/26 fiscal deficit target set at 4.5% of GDP

Expenditure

  • 2020/21 revised expenditure 4.39 trillion rupees
  • 2020/21 capital expenditure estimated at 5.54 trillion rupees
  • 2021/22 gross expenditure seen at 34.83 trillion rupees in 2021/22
  • To provide more than 2 trillion rupees for states and autonomous bodies

Borrowing

  • India says will need 800 billion rupees in the next two months from the bond market
  • 2021/22 gross market borrowing seen at 12 trillion rupees

Healthcare

  • India to allocate 2.2 trillion rupees for healthcare in 2021/22
  • Sitharaman says to expect two or more COVID-19 vaccines soon
  • India to launch a new federal health scheme with an outlay of around 641 billion rupees over the next six years
  • To allocate 350 billion rupees for COVID-19 vaccines, and allocate more funds if needed

Finance

  • India to introduce a bill for development financial institution with a capital of 200 billion rupees
  • To infuse 200 billion rupees for the recapitalization of state-run banks in FY2022
  • India to consolidate certain SEBI regulations for Securities Market Code
  • To relax the FDI cap for the insurance sector to 74% from 49%
  • Set up asset reconstruction company to take over toxic assets
  • To cut money market requirement to 15% from 25%
  • To allocate 15 billion rupees for a scheme to incentivize the use of digital payments
  • India to incentivize incorporation of one-person companies
(Image Source: Reuters)

Taxation

  • Proposes exemption to senior citizens for filing income tax returns
  • Proposes changes in personal income taxes for non-resident Indian
  • To set up a dispute resolution panel for small taxpayers

Divestment

  • India sets 2021/22 divestment target at 1.75 trillion rupees
  • India to divest two public sector banks and one general insurance company
  • India to launch IPO of Life Insurance Corporation
  • India to announce a policy for the privatization of state-run companies
  • To create a new list of companies for divestment
  • India to introduce a new mechanism for the privatization of loss-running state-run companies
  • To monetize surplus lands of public sector entities

Infrastructure

  • To allocate 2.87 trillion rupees for clean water supplies over the next five years
  • To allocate 3 trillion rupees for power sector for next five years
  • To provide 10 billion rupees to Solar Energy Corporation of India
  • Sitharaman says will move to end power distribution company monopolies
  • To double ship recycling capacity by 2024
  • India to monetize infrastructure assets

Transport

  • Allocates 1.18 trillion rupees for the ministry of roads and highways
  • Allocates 1.1 trillion rupees for railways
  • Railways to monetize freight corridors
  • India to launch new vehicle scrapping policy
  • Proposes tax holiday for aircraft leasing firms in India

Agriculture

  • India allocates an estimated 1.7 trillion rupees for paddy procurement
  • Hikes enhanced agriculture credit target to 16.5 trillion Indian rupees in 2020/21
  • To include loans for activities in allied sectors in agriculture
  • To discontinue small savings fund loans to Food Corporation of India

Labour

  • To launch database for the gig economy, building, and construction workers
  • Social security benefits to be extended to gig economy workers

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