Budget 2021-22: Highlights of Finance Minister Nirmala Sitharaman’s proposals

Finance Minister Nirmala Sitharaman presented the Union Budget 2021-22 in Parliament today. Atmanirbhar Bharat, Health sector and infrastructure received a push in her proposals.   

The following are the highlights from her speech:

Health care sector: The FM allocated an outlay of 2,23,846 crores to the health care sector, an increase of 137% compared to last year’s budget. An Aatmanirbhar Swastha Bharat scheme was announced, to be launched with an outlay of 64,180 crore over 6 years. An outlay for Rs 35,000 crores was allocated for the rollout and development of the COVID-19 vaccines.  

Physical and financial capital and infrastructure: Sitharaman announced Rs 20,000 crore would be earmarked to the Development Financial Institution with an aim to expand the lending portfolio, and target debt financing in the infrastructure sector. Highway projects were announced in the states of Tamil Nadu, West Bengal and Kerala. A sharp increase of 34.5%  in capital expenditure was announced, as an outlay of Rs 5.54 lakh crore will be provided. Seven textile parks over three years will also be set up. Sitharam set the agricultural credit target at Rs. 16.5 crore. An outlay of over Rs 1.1 lakh crore was allocated for railways, with 100% electrification of broad-guage routes to be completed by December 2023. Rs 1.97 lakh crore will be allocated on various Production-Linked Initiative schemes over the next 5 years. 

Power infrastructure and energy sector: In a bid to give a boost to renewable energy, Sitharaman announced an outlay of 1,000 crore to the Solar Energy Corporation of India and 1,500 crore to the Indian Renewable Development Agency. The Ujjwala scheme will be extended to 1 crore more beneficiaries. City gas distribution network will be expanded to include 100 more districts. Also, Jammu & Kashmir will get piped gas network.

Also read: Union Budget 2021: Nirmala Sitharaman announces big push for Aatmanirbhar Bharat

Amendments to Financial Provisions: Sitharaman proposed to amend the Insurance Act to increase the Foreign Direct Investment (FDI) limit in insurance to 74% from 49%. 

Micro, Small and Medium Entreprises (MSMEs):  The allocation for MSMEs was proposed to be doubled to Rs 15,700 crore.

Deep Ocean Mission:  A Deep Ocean Mission will be launched, with an allocation of Rs 4,000 crore over the next four years. 

Census:  The first forthcoming digital census was announced. An outlay of Rs 3,726 crore was allocated. 

Provisions for NRIs: Sitharaman announced the hardships related to double taxation on foreign retirement funds would be eliminated through new rules. NRIs will allowed to incorporate One Person Companies in India.

Tax holiday:  The FM announced that tax holiday for affordable housing projects will be extended by 1 more year. She also proposed that eligibility for claiming tax holidays by startups would be increased by 1 year. Tax exemption for allocating funds to IFSC was also announced. Tax holidays were also announced for air craft leasing companies. 

Also read: Centre committed to bring down fiscal deficit below 4.5% of GDP by 2025-26: Nirmala Sitharaman

Customs duty: Sitharaman proposed to review more than 400 exemptions in the existing customs duty structure. The revised structure would be put in place from October 1. she proposed reducing customs duty to a flat rate of 7.5% on products of alloy, non-alloy and stainless steel. Duty on copper scrap will also be reduced from 5% to 2.5%. 

Direct taxes:  The direct tax regime remains unchanged. However measures to ease compliance for tax payers were announced.

Disinvestment:  Sitharaman announced that the government aims to earn Rs 1.75 lakh crore through disinvestments in the FY 2021-22. Significantly, she announced that the LIC IPO will be brought forward in the coming year. Plans are also in place to complete the ongoing disinvestments of BPCL, CONCOR and SCI. 

Also read: At 1 hour and 48 minutes, Nirmala Sitharaman makes her shortest budget speech

Fiscal deficit and borrowing:  Fiscal deficit was estimated at 9.5% of GDP for FY 2021. To finance the deficit, Sitharaman announced that the government planned to borrow Rs 80,000 crores from the markets. A deficit of 6.8%of GDP was set as a target for FY 2022. FY 2022 expenditure was projected as Rs 34.83 lakh crore. 

Fuel and liquor cess:  Agricultural Infrastructure and Development Cess will be levied on certain items, including fuel and liquor. It was also noted that their would be no additional burden on the consumer overall.