India’s 1st Digital Budget :91st Union Budget 2021-22

Hello readers, this is a very important post for upcoming exams. We have collaborated all information of this year’s Union Budget 2021-22 from official government websites. We urge you to read each and every point of the 3^rd budget of Narendra Modi led National Democratic Alliance (NDA) government’s second term.

• India’s First Digital Budget :- India’s first paperless budget which replaced the traditional ‘Bahi-Khata’ with Made-in-India tablet amid COVID-19 wrapped in a red-coloured cover with national emblem emblazoned on it.
• It should be noted that Nirmala Sitharaman in her first budget in 2019 replaced the leather briefcase carrying budget documents with a traditional red cloth ‘bahi-khata’.

“Union Budget” mobile application :- Finance Ministry also unveiled an app which provides complete access to the budget documents in Hindi and English. Developed by the National Informatics Centre (NIC) with support from the Department of Economic Affairs (DEA).

India’s Fiscal Position:-

On February 1, 2021, Union Minister Nirmala Sitharaman, Ministry of Finance presented her 3^rd and 91^st Union Budget of India for 2021-2022 in Parliament with an address to the speaker of Lok Sabha Om Birla stating India’s fiscal position as follows:

*BE means Budgeted Estimated and RE states Revised Estimates.

• GDP growth:  Nominal GDP is expected to grow at of 14.4% (i.e., real growth plus inflation) in 2021-22.
• GDP growth estimate: In Budget 2020-21 GDP was estimated to grow at 10%, which was revised at -13%.
• Total expenditure in 2021-22 is 1% higher than the revised estimate of 2020-21.  Expenditure in 2021-22 has increased at an annual rate of 14% over 2019-20.

• The government is expected to spend Rs 8,09,701 crore on interest payments in 2021-22, which is 17% higher than the revised estimate of 2020-21.
• It makes up 23% of the government’s estimated expenditure in 2021-22.

• Deficit – Government aims to steadily reduce the fiscal deficit to 4.5% of GDP by 2025-26.  

• The fiscal deficit in BE 2021-2022 is estimated to be 6.8% of GDP. The fiscal deficit in RE 2020-21 is pegged at 9.5% of GDP.

• According to the REFY21, the gross borrowing was raised to Rs 12.8 lakh crore as against the BE of Rs 7.8 lakh crore, registering an increase of 64%.
• Amendment to FRBM Act proposed to achieve targeted Fiscal Deficit levels
• The Contingency Fund of India is to be augmented from Rs. 500 crores to Rs. 30,000

crore through Finance Bill.

Expenditure by top 13 Ministries 

• 13 highest allocations account for 53% of the total budgeted expenditure in 2021-22.
• Ministry of Defence has the highest allocation in 2021-22 at Rs 4,78,196 crore (14% of the total budgeted expenditure of the government).

• Also Highest In 15 Years in Defence sector.
• It is nearly 18.75 per cent increase in Defence capital expenditure.
• Other than Ministry of Defence are Consumer Affairs, Food and Public Distribution, (ii) Home Affairs, (iii) Rural Development, and (iv) Agriculture and Farmers’ Welfare.
• Budget allocation of Rs.7524.87 Crore for the year 2021-22 is the highest ever for the Tribal Affairs Ministry

Highest Growth Estimation in top 13 ministries

•  Ministry of Jal Shakti Allocation has increased to Rs 69,053 crore in 2021-22,which is 64% higher than the actuals of 2019-20 and 184% higher than the revised estimate of 2020-21.
• Ministry of Consumer Affairs, Food and Public Distribution:  Allocation of 2021-22 saw an annual increase of 48% over 2019-20 due to a higher allocation for food subsidy and 262% higher than the revised estimate of 2020-21.
• Ministry of Railways:  Allocation to the Ministry of Railways in 2021-22 is Rs 1,10,055 crore, an annual increase of 25% over 2019-20.

Documents

The budget will also fast-forward the implementation of 13 promises of Budget 2015-16 during the Amrut Mahotsav of 2022 i.e. on the 75^th year of our Independence.

Before heading toward the complete highlights of the Union Budget let’s take a look on the below list of documents that are presented to the Parliament, besides the Finance Minister’s Budget Speech:

1. Annual Financial Statement (AFS)
2. Demands for Grants (DG)
3. Finance Bill
4. Statements mandated under FRBM Act:
5. Macro-Economic Framework Statement
6. Medium-Term Fiscal Policy cum Fiscal Policy Strategy Statement
7. Expenditure Budget
8. Receipt Budget
9. Expenditure Profile
10. Budget at a Glance
11. Memorandum Explaining the Provisions in the Finance Bill
12. Output Outcome Monitoring Framework
13. Key Features of Budget 2021-22
14. Implementation of Budget Announcements, 2020-2021

The documents shown at Serial Nos. A, B, and C are mandated by Art. 112,113 and 110(a) of the Constitution of India respectively, while the documents at Serial No. D(i) and (ii) are presented as per the provisions of the Fiscal Responsibility and Budget Management Act, 2003. Other documents at Serial Nos. E, F, G, H, I, J, K and L are in the nature of explanatory statements supporting the mandated documents.

Click here to check the detailed information about Budget documents

Division of budget : Part-A & Part-B

The budget is divided into two parts viz. Part-A & Part-B.

       Part-A : Consisted of six pillars with emphasis on Atma Nirbhar Bharat.

       Part-B : Related to the Tax Proposals.

Now, we will have a detailed look on both parts.

Part A: 6 Pillars

1.Health and Wellbeing: 

Rs. 2,23,846 crores outlay has been allocated for Health and Wellbeing in BE 2021-22 as against Rs. 94,452 crores in BE 2020-21 – an increase of 2.37 times or 137%.

Following are the components of Health & Wellbeing:

PM Aatma Nirbhar Swasth Bharat Yojana, Centrally Sponsored Scheme (CSS) launched with Rs 64,180 crores over 6 years in addition to the National Health Mission.

Few interventions under the scheme are:

• Support for 17,788 rural and 11,024 urban Health and Wellness Centres.
• Strengthening of the National Centre for Disease Control (NCDC), its 5 regional branches and 20 metropolitan health surveillance units.
• Setting up of a national institution for One Health, a Regional Research Platform for WHO South East Asia Region, 9 Bio-Safety Level III laboratories and 4 regional National Institutes for Virology.

Vaccines:

• Provision of Rs 35,000 crore made for Covid-19 vaccine in BE 2021-22.
• An indigenous Pneumococcal Vaccine which is presently limited to only 5 states, will be rolled out across the country to prevent 50,000 child deaths annually.

Nutrition: Merging the Supplementary Nutrition Programme and the Poshan Abhiyan and launch the Mission Poshan 2.0 to improve nutritional outcomes across 112 Aspirational Districts.

Universal Coverage of Water Supply: Jal Jeevan Mission (Urban) will be launched with an outlay of 2,87,000 crores.

• Universal water supply in 4,378 Urban Local Bodies with 2.86 crore household tap connections,
• Liquid waste management in 500 AMRUT cities.
• It will be implemented over 5 years.
• Scheme allocation in 2021-22 (Rs crore)

Swachh Bharat Mission (Urban) will be implemented with allocation of  Rs 1,41,678 crores over a period of 5 years from 2021-2026.

Clean Air – Allocated 2,217 crores for 42 urban centres with a million-plus.

Vehicle Scrapping policy was announced to phase out old and unfit vehicles w.e.f April 1, 2022.

• 1. Fitness tests in automated fitness centres
• After 20 years in case of personal vehicles.
• After 15 years in case of commercial vehicles.
  2. Fitness test would cost approximately Rs 40,000. This is in addition to the road tax, and possible “Green Tax” which will be 10-25% of road tax.
• Scheme allocation in 2021-22 (Rs crore) in Health Sector

2.Physical and Financial Capital and Infrastructure

Production Linked Incentive scheme (PLI) with 1.97 lakh crore in next 5 years starting FY 2021-22.

• PLI schemes will implement in 13 Sectors to help manufacturing companies and provide jobs to youth.

Textiles Mega Investment Textiles Parks (MITRA) scheme will be set up over 1,000 acres of land.

• Set up with world class infrastructure, and plug-and-play facilities.
• 7 Textile Parks to be established over 3 years to double the industry size to $300 billion by 2025-26.

Infrastructure: National Infrastructure Pipeline (NIP) launched in December 2019 was expanded to 7,400 projects from 6835 projects.

• Measures are taken in three thrust areas to increase funding for NIP:-

1. Creation of institutional structures,
2. Big thrust on monetizing assets, and
3. Enhancing the share of capital expenditure.

1.  Creation of institutional structures

• Infrastructure financing – Development Financial Institution (DFI)
• 20,000 crores has been provisioned in the Union Budget to capitalise Development Financial Institution (DFI).
• The aim of the DFI is to have a lending portfolio of at least Rs 5 lakh crore in 3 years.

2. Big thrust on monetizing assets

• National Monetization Pipeline (NMP) to be launched for Brownfield Infrastructure Assets. Important asset monetization measures:
  1. 5 operational toll roads worth Rs. 5,000 crores being transferred to the NHAI (National Highways Authority of India ) InvIT (Infrastructure Investment Trusts).
  2. Transmission assets worth Rs. 7,000 crores to be transferred to the PGCIL (Power Grid Corporation of India Limited) InvIT.

• Dedicated Freight Corridor assets to be monetized by Railways, for operations and maintenance.

1. Next lot of Airports to be monetized for operations and management concession.
2. Other core infrastructure assets to be rolled out under the Asset Monetization Programme:

• Oil and Gas Pipelines of GAIL, IOCL and HPCL, AAI Airports in Tier II and III cities,
• Other Railway Infrastructure Assets,
• Warehousing Assets of CPSEs such as Central Warehousing Corporation and NAFED, and Sports Stadiums.

3. Sharp Increase in Capital Budget

• 5.54 lakh crore capital expenditure is estimated in BE 2021-22 which states a sharp increase of 34.5% over Rs. 4.12 lakh crore allocated in BE 2020-21 (mentioned above in table).
• More than 2 lakh crores will be allocated to States and Autonomous Bodies.
• More than Rs. 44,000 crores will be allocated for Department of Economic Affairs (DEA) to provide for projects/programmes/departments exhibiting good progress.

Roads and Highways Infrastructure – 1,18,101 lakh crores for Ministry of Road Transport and Highways, highest ever ,of which Rs.1,08,230 crore is for capital.

• Under the 5.35 lakh crore Bharatmala Pariyojana project, more than 13,000 km length of roads worth Rs. 3.3 lakh crore awarded for construction.
• 3,800 km have already been constructed
• Another 8,500 km to be awarded for construction by March 2022
• Additional 11,000 km of national highway corridors to be completed by March 2022.
• 1.03 lakh crore outlay for 3,500 km of NHs in Tamil Nadu.
• 65,000 crore investment for 1,100 km of NHs in Kerala.
• 25,000 crores for 675 km of NHs in West Bengal.
• Over Rs. 34,000 crores to be allocated for 1300 km of NHs to be undertaken in next 3 years in Assam, in addition to Rs. 19,000 crore works of NHs currently in progress in the State.
• Few Flagship Corridors/Expressways:
• Delhi-Mumbai Expressway – Remaining 260 km to be awarded before March 3, 2021
• Bengaluru-Chennai Expressway – 278 km to be initiated in the current FY; construction to begin in 2021-22
• Amritsar-Jamnagar – Construction to commence in 2021-22
• Delhi-Katra – Construction will commence in 2021-22
• Advanced Traffic management system in all new 4 and 6-lane highways including Speed radars.
• Variable message signboards, and GPS enabled recovery vans.
• Scheme allocation in 2021-22 (Rs crore) in Road Sector

Railway Infrastructure:

• 1,10,055 crores for Railways of which Rs. 1,07,100 crores is for capital expenditure.
• National Rail Plan for India – 2030 to create a ‘future ready’ Railway system by 2030.
• Western Dedicated Freight Corridor (DFC) and Eastern DFC will be commissioned by June 2022 to enable ‘Make in India’ strategy.
• Proposed passenger convenience and safety measures are:
• Introduced Vista Dome LHB (Linke Hofmann Busch ) coach on tourist routes.
• 100% electrification of Broad-Gauge routes to be completed by December, 2023.
• Broad Gauge Route Kilometers (RKM) electrification to reach 46,000 RKM, i.e. 72% by end of 2021.

Urban Infrastructure:

• 18,000 crores new scheme will be launched for augment public bus transport services.
• MetroLite’ and ‘MetroNeo’ ,new technologies will be deployed to provide metro rail systems at much lesser cost with same experience, convenience and safety in Tier-2 cities and peripheral areas of Tier-1 cities.
• Central Counterpart funding will be provided to the following:
• Kochi Metro Railway Phase-II of 11.5 km at a cost of Rs. 1957.05 crore.
• Chennai Metro Railway Phase –II of 118.9 km at a cost of Rs. 63,246 crores.
• Bengaluru Metro Railway Project Phase 2A and 2B of 58.19 km at a cost of Rs. 14,788 crores.
• Nagpur Metro Rail Project Phase-II and Nashik Metro at a cost of Rs. 5,976 crore and Rs. 2,092 crores respectively.
• Scheme allocation in 2021-22 (Rs crore) in Urban Sector

Power Infrastructure:

• 3,05,984 crores over 5 years for a revamped, reforms-based and result-linked new power distribution sector scheme
• Scheme provides assistance to Distribution Companies (DISCOMS) for Infrastructure creation including pre-paid smart metering and feeder separation, upgradation of systems, etc., tied to financial improvements.
• National Hydrogen Energy Mission 2021-22 to be launched.

Ports, Shipping, Waterways Infrastructure:

• Rs 2,000 crore will be offered to the seven major ports on Public private partnership(PPP) mode in FY21-22.
• Rs 1624 crore subsidy support scheme proposed to launch in global tenders floated by Ministries and CPSEs over 5 years.
• Proposed to double the ship recycling capacity of around 4.5 Million Light Displacement Tonne (LDT) by 2024.
• Proposed to generate an additional 1.5 lakh jobs.

Petroleum & Natural Gas Infrastructure:

• Ujjwala Scheme which has benefited 8 crores households will be extended to cover 1 crore more beneficiaries.
• 100 more districts will be added in next 3 years to the City Gas Distribution network.
• A gas pipeline project will be taken up in Jammu & Kashmir.
• An independent Gas Transport System Operator will be set up for facilitation and coordination of booking of common carrier capacity in all-natural gas pipelines on a non-discriminatory open access basis.

Financial Capital Infrastructure:

Single Securities Markets Code – Consolidate the provisions of SEBI Act, 1992, Depositories Act, 1996, Securities Contracts (Regulation) Act, 1956 and Government Securities Act, 2007 into a rationalized single Securities Markets Code.  Other measures are as follows:

• Support for development of a world class Fin-Tech hub at the GIFT-IFSC
• Setting up a system of Regulated Gold Exchanges: SEBI to be notified as a  regulator and Warehousing Development and Regulatory Authority to be strengthened
• To develop an investor charter as a right of all financial investors
• Capital infusion of 1,000 crore to Solar Energy Corporation of India and Rs. 1,500 crore to Indian Renewable Energy Development Agency

Increasing FDI in Insurance Sector

• Proposed to amend the Insurance Act, 1938 to increase the permissible FDI limit from 49% to 74% and allow foreign ownership and control with safeguards.

Stressed Asset Resolution

• Asset Reconstruction Company Limited and Asset Management Company to be set up to consolidate and take over the existing stressed debt.

Recapitalization of PSBs

• 20,000 crores in 2021-22 to further consolidate the financial capacity of Public Sectors Banks.

Deposit Insurance

• Amendments to the DICGC Act, 1961, to help depositors get an easy and time-bound access to their deposits to the extent of the deposit insurance cover.
• Minimum loan size eligible for debt recovery under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 proposed to be reduced from Rs. 50 lakhs to 20 lakhs for NBFCs with minimum asset size of Rs.100 crore.

Disinvestment and Strategic Sale

• Approved a policy of strategic disinvestment of Central Government Public Sector Enterprises (CPSEs) will provide a clear roadmap for disinvestment in all non-strategic and strategic sectors.

1. Strategic Sector : Bare minimum presence of the public sector enterprises and remaining to be privatised or merged or subsidiarized with other CPSEs or closed.

Following 4 sectors to come under it :

• Atomic energy, Space and Defence
• Transport and Telecommunications
• Power, Petroleum, Coal and other minerals
• Banking, Insurance and financial services

2.Non- Strategic Sector : In this sector, CPSEs will be privatised, otherwise shall be closed.

• Government has estimated 1,75,000 crores as receipts from disinvestment in BE 2020-21, out which Rs 1 lakh crore is to come from selling government stake in public sector banks (PSBs) and financial institutions. About Rs 75,000 crore would come as Central Public Sector Enterprises (CPSEs) disinvestment receipts.
• The disinvestment of Bharat Petroleum Corporation Limited (BPCL), Air India, Shipping Corporation of India (SCI), Container Corporation of India (CONCOR), IDBI Bank, Bharat Earth Movers Limited (BEML), Pawan Hans, NeelachalIspat Nigam limited among others would be completed in 2021-22.
• Other than IDBI Bank, there would be privatization of two Public Sector Banks (PSBs)and one General Insurance company in 2021-22.
• Centre will introduce the initial public offer (IPO) of Life Insurance Corporation (LIC) in 2022.
• Special Purpose Vehicle in the form of a company to monetize idle land.

Company Matters

• To decriminalize the Limited Liability Partnership (LLP) Act, 2008.
• Easing Compliance requirement of Small companies by revising their definition under Companies Act, 2013 by increasing their thresholds for Paid up capital from “not exceeding Rs. 50 Lakh” to “not exceeding Rs. 2 Crore” and turnover from “not exceeding Rs. 2 Crore” to “not exceeding Rs. 20 Cr”.
• Promoting start-ups and innovators by incentivizing the incorporation of One Person Companies (OPCs):
• Allowing their growth without any restrictions on paid up capital and turnover.
• Allowing their conversion into any other type of company at any time.
• Reducing the residency limit for an Indian citizen to set up an OPC from 182 days to 120 days.
• Allowing Non-Resident Indians (NRIs) to incorporate OPCs in India.

3.Inclusive Development for Aspirational India

Under the pillar of Inclusive Development for Aspirational India, the Finance Minister announced to cover Agriculture and Allied sectors, farmers’ welfare and rural India, migrant workers and labour, and financial inclusion.

Agriculture:

Announced 9 measures for Agriculture Sector:-

1. SWAMITVA (Survey of Villages and Mapping with Improvised Technology in Village Areas’) Scheme to be extended to all States/UTs. SWAMITVA Scheme launched to bring transparency in property ownership in villages.
2. Agricultural credit target for farmers will be enhanced to Rs 16.5 lakh crore in FY22 for farmers.
3. Allocation to the Rural Infrastructure Development Fund from Rs 30,000 crore to Rs 40,000 crore which is said to be 33%.
4. Micro Irrigation Fund will be doubled to Rs.10,000 crore for the year 2021-2022 by allocating another Rs.5000 crore under NABARD. Government has set a target to cover 20 lakh hectares of micro irrigation in all states per year and eventually 1 crore hectares in five years
5. ‘Operation Green Scheme’ that is presently applicable to tomatoes, onions, and potatoes (TOPS), to be enlarged to include 22 perishable products.
6. 1,000 more mandis will be integrated with e-NAM to bring transparency and competitiveness.
7. Agriculture Infrastructure Fund is to be available to Agricultural Produce Market Committee(APMC)s for increasing their infrastructure facilities.
8. Minimum Support Price (MSP) regime has to ensure price that is at least 1.5 times the cost of production across all commodities.
9. With steady increase in the procurement, payment to farmers increased. There is a steady increase the procurement of wheat, rice, pulses from farmers.

• Scheme allocation in 2021-22 (Rs crore) in Agriculture Sector

Fisheries :- 5 major fishing harbours at Kochi, Chennai, Visakhapatnam, Paradip, and Petuaghat will be developed as hubs of economic activity to develop modern fishing harbours and fish landing centres – both marine and inland.

Seaweed :- Multipurpose Seaweed Park to be established in Tamil Nadu to promote seaweed cultivation.

Migrant Workers and Labourers

• One Nation One Ration Card plan is implemented by 32 states and UTs which helps migrant workers to claim rations anywhere.
• reaching about 69 crore beneficiaries i.e a total of 86% beneficiaries covered.
• Portal for unorganized labour force, to collect relevant information on gig, building and construction-workers among others and to formulate Health, Housing, Skill, Insurance, Credit, and food schemes for migrant workers.
• Implementation of 4 labour codes –

1.Industrial Relations Code

2.Code on Social Security, 2020

3.Occupational Safety, Health and Working Conditions Code

4.Code of Wages.

• Scheme allocation in 2021-22 (Rs crore) in Employment Sector

Financial Inclusion for weaker sections

To protect the weaker and vulnerable sections of the society especially during the COVID-19 pandemic.

Already announced Pradhan Mantri Garib Kalyan Yojana(PMGKY) valued at Rs.2.76 lakh crore, provided free food grain to 800 million people, free cooking gas for 80 million families and cash directly to over 400 million farmers, women, elderly, the poor and the needy.

• Stand Up India To facilitate credit flow for SCs, STs, and women under the scheme, reduce the margin money requirement from 25% to 15%.
• Allocated 15,700 crores to MSME sector – more than double of this year’s BE.
• 1,000 crores for the welfare of Tea workers especially women and their children in Assam and West Bengal for which a special scheme will be formulated.

4.Reinvigorating Human Capital

Education

• Budget proposes Qualitative Strengthening of 15,000 Schools to include all components of National Education Policy.
• 100 new Sainik Schools will be set up in partnership with NGOs/private schools/states.
• Scheme-wise allocation in 2021-22 (Rs crore) in Education sector :-

Higher Education

• 15,000 schools to be strengthened by implementing all NEP components. Shall act as exemplar schools in their regions for mentoring others.
• Proposal to set up Higher Education Commission of India, as an umbrella body having 4 separate vehicles for standard-setting, accreditation, regulation, and funding.
• Central University in Leh proposed to set up a for accessible higher education in Ladakh.

Scheduled Castes and Scheduled Tribes Welfare

• Target of establishing 750 Eklavya Model Residential Schools in the tribal areas.
• Unit cost of each such school from Rs. 20 crores to Rs. 38 crores, and for hilly and difficult areas, to Rs. 48 crores.
• Post Matric Scholarship Scheme for the welfare of Scheduled Castes, the Central Assistance was enhanced and allocated  35,219 crore for 6 years till 2025-2026, to benefit 4 crore SC students.

Measures to Increase Employability of Youth

• Proposed amendment to Apprenticeship Act to enhance opportunities for youth.
• National Apprenticeship Training Scheme (NATS) – 3000 crores allocated for realignment of existing NATS towards post-education apprenticeship, training of graduates and diploma holders in Engineering.
• Initiatives for partnership with other countries in skilling to be taken forward, similar to partnership.
• With UAE to benchmark skill qualifications, assessment, certification, and deployment of certified workforce.
• With Japan for a collaborative Training Inter Training Programme (TITP) to transfer of skills, technique and knowledge.

5.Innovation and R&D

• Government will undertake a new initiative – National Language Translation Mission (NTLM).
• Outlay of Rs 50,000 crore, spread over five years, for National Research Foundation
• The New Space India Limited (NSIL), a PSU under the Department of Space will execute the PSLV-CS51 launch, carrying the Amazonia Satellite from Brazil, along with a few smaller Indian satellites.
• As part of the Gaganyaan mission activities, four Indian astronauts are being trained on Generic Space Flight aspects, in Russia. The first unmanned launch is slated for December 2021.
• 4,000 crores over five years for Deep Ocean Mission survey exploration and conservation of deep-sea biodiversity. Click Here to Read about Deep Ocean Mission
• 1,500 crores for proposed scheme to promote digital modes of payment.

6.Minimum Government, Maximum Governance

• 3,768 crores allocated in the year 2021-2022 for the forthcoming first digital census in the history of India.
• Proposed Conciliation Mechanism with mandate for quick resolution of contractual disputes with CPSEs
• 300 crore grants will be provided to the Government of Goa for the diamond jubilee celebrations of the state’s liberation from Portuguese
• 1,000 crores allocated for the welfare of Tea workers especially women and their children in Assam and West Bengal through a special scheme.
• Nursing and Midwifery Commission Bill 2020 to replace 73 years old Indian Nursing Council Act 1947 has finalised by the Ministry of Health and Family Welfare (MoH&FW).

Net borrowing of the States

• Net borrowing for the states allowed at 4% of GSDP for the year 2021-2022 as per recommendation of 15th Finance Commission (FC).
• Additional borrowing ceiling of 0.5% of GSDP will be provided subject to conditions.
• States expected to reach a fiscal deficit of 3% of GSDP by 2023-24, as recommended by the 15th Finance Commission.

Fifteenth Finance Commission

• The Fifteenth Finance Commission (XVFC) led by Chairman Nand Kishore (NK) Singh submitted its Report titled “Finance Commission in COVID Time” for the period of five years from 2021-22 to 2025-26 to the President, retaining vertical shares of states at 41%.
• Funds to UTs of Jammu and Kashmir and Ladakh would be provided by Centre.
• On the Commission’s recommendation, 1,18,452 crores have been provided as Revenue. Deficit Grant to 17 states in 2021-22, as against  Rs. 74,340 crores to 14 states in 2020-21.

Part B: Taxation

Part B has started with a famous kural from Tamil language text, Thirukkural, which consisting of 1,330 short couplets of seven words each, or kurals,

A King/Ruler is the one who creates and acquires wealth,
protects and distributes it for common good. –  Thirukkural 385

It should be noted that the gross GST revenue collected in the month of January 2021 till 6PM on January 31, 2021 is Rs 1,19,847 crore of which Central Goods and Services Tax (CGST) is Rs 21,923 crore, State Goods and Services Tax (SGST) is Rs 29,014 crore, Integrated Goods and Services Tax (IGST) is Rs 60,288 crore (including Rs 27,424 crore collected on import of goods) and Cess is Rs 8,622 crore (including Rs 883crore collected on import of goods).

• The total number of GSTR-3B Returns filed for the month of December up to January 31, 2021 is 90 lakhs.

Direct Tax Proposals:

Achievements

• Corporate tax rate slashed to make it among the lowest in the world.
• Small taxpayers burden on taxation eased by increasing rebates.
• Return filers almost doubled to 6.48 crore in 2020 from 3.31 crore in 2014.
• Faceless Assessment and Faceless Appeal

Relief to Senior Citizens

• Senior citizens who are of 75 years of age and above having only pension and interest income will be exempted from filing their income tax return.
• The paying bank will deduct the necessary tax on their income.

Reduction in Time for Income Tax Proceedings

• Now time limit has been reduced for re-opening of assessment to 3 years from the present 6 years.
• Serious tax evasion cases, with evidence of concealment of income of Rs. 50 lakh or more in a year, to be re-opened only up to 10 years.

Dispute Resolution Committee

• Dispute Resolution Committee to be set up for taxpayers with taxable income up to Rs. 50 lakh and disputed income up to Rs. 10 lakhs.
• Over 1 lakh taxpayers opted to settle tax disputes of over Rs. 85,000 crores through

Vivad Se Vishwas Scheme until 30th January 2021.

Faceless ITAT

• National Faceless Income Tax Appellate Tribunal(ITAT) Centre is to be established. All communication between the Tribunal and the appellant shall be electronic.

Relaxation to NRI 

• Rules to be notified for removing hardships faced by NRIs regarding their foreign

retirement accounts and hardship of double taxation.

Exemption from Audit

• The limit for tax audit increased to 10 crores from 5 crores for those persons who carry out 95% of their transactions digitally.

Relief for Dividend

• Dividend payment to Real estate investment trust (REIT)/ Infrastructure Investment Trusts (InvITs) exempted from tax deduction at source (TDS).
• Advance tax liability on dividend income only after declaration/ payment of dividend.
• Deduction of tax on dividend income at lower treaty rate for Foreign Portfolio Investors.

Attracting foreign investment into infrastructure sector

• Infrastructure Debt Funds eligible to raise funds by issuing tax efficient Zero-Coupon Bonds.
• Relaxing some conditions relating to prohibition on private funding, restriction on commercial activities, and direct investment in infrastructure.

Affordable Housing/Rental Housing 

• Extended additional deduction of `1.5 lakh shall therefore be available for loans taken up till 31st March 2022, for the purchase of an affordable house under ‘Housing for All’ .
• Tax holiday for Affordable Housing projects extended till March 2022.
• Tax exemption allowed for notified Affordable Rental Housing Projects.

Tax incentives to IFSC

• Tax holiday for capital gains from incomes of aircraft leasing companies.
• Tax exemptions for aircraft lease rentals paid to foreign lessors.
• Tax incentive for relocating foreign funds in the IFSC.
• Tax exemption to investment division of foreign banks located in IFSC.

Pre-filling of Returns

• Details of salary income, tax payments, TDS, etc. already come pre-filled in income tax returns.

• To further ease filing of returns, details of capital gains from listed securities, dividend income, and interest from banks, post office, etc. will also be pre-filled.

Relief to Small Trusts

• Exemption limit of annual receipt revised from ₹1 crore to ₹5 crore for small charitable trusts running schools and hospitals.

Start-ups

• In order to incentivize start-ups in the country, an extension in the eligibility for claiming tax holiday is announced for start-ups by one more year till 31st March, 2022.
• There is also a proposal of extending the Capital Gains exemption for investment in start-ups by one more year till 31st March, 2022.

Labour Welfare 

• Late deposit of employee’s contribution by the employer not to be allowed as deduction to the employer.
• Eligibility for tax holiday claim for start-ups extended by one more year.
• Capital gains exemption for investment in start-ups extended till 31st March, 2022.

Indirect Taxes

It is proposed to review 400 old exemptions in the custom duty structure this year.  In this regard, consultation will be conducted and from 1st October, 2021.  New customs duty exemptions to have validity up to the 31st March following two years from its issue date.

GST:

Measures taken till date:

• Nil return through SMS
• Quarterly return and monthly payment for small taxpayers
• Electronic invoice system
• Validated input tax statement
• Pre-filled editable GST return
• Staggering of returns filing
• Enhancement of capacity of GSTN system
• Use of deep analytics and AI to identify tax evaders

Custom Duty Rationalization

• Twin objectives: Promoting domestic manufacturing and helping India get onto global value chain and export better.
• 80 outdated exemptions already eliminated.
• Revised, distortion-free customs duty structure to be put in place from 1st October 2021 by reviewing more than 400 old exemptions.
• New customs duty exemptions to have validity up to the 31st March following two years from its issue date.

Electronic and Mobile Phone Industry

A large number of commonly used items, including refrigerators, air conditioners, LED lights and mobile phones, will become more expensive due to a hike in customs duty on imported parts like:

• Some exemptions on parts of chargers and sub-parts of mobiles withdrawn
• Duty on some parts of mobiles revised to 2.5% from ‘nil’ rate

Iron and Steel

• Customs duty reduced uniformly to 7.5% on semis, flat, and long products of non-alloy, alloy, and stainless steels.
• Duty on steel scrap exempted up to 31st March, 2022.
• Anti-Dumping Duty (ADD) and Counter-Veiling Duty (CVD) revoked on certain steel products.
• Duty on copper scrap reduced from 5% to 2.5%.

Textiles

• Basic Customs Duty (BCD) on caprolactam, nylon chips and nylon fiber & yarn reduced to 5%.

Chemicals

• Calibrated customs duty rates on chemicals to encourage domestic value addition and to remove inversions.
• Duty on Naptha reduced to 2.5%.

Gold and Silver

• Custom duty on gold and silver to be rationalized.

Renewable Energy

• Phased manufacturing plan for solar cells and solar panels to be notified.
• Custom Duty on solar invertors raised from 5% to 20%, and on solar lanterns from 5% to 15% to encourage domestic production.

Capital Equipment

• Tunnel boring machine to now attract a customs duty of 7.5%; and its parts a duty of 2.5%.
• Duty on certain auto parts increased to general rate of 15%.

MSME Products

• Duty on steel screws and plastic builder wares increased to 15%.
• Prawn feed to attract customs duty of 15% from earlier rate of 5%.
• Exemption on import of duty-free items rationalized to incentivize exporters of garments, leather, and handicraft items.
• Exemption on imports of certain kind of leathers withdrawn.
• Customs duty on finished synthetic gem stones raised to encourage domestic processing.

Agriculture Products

• Customs duty on cotton increased from nil to 10% and on raw silk and silk yarn from 10% to 15%.
• Withdrawal of end-use based concession on denatured ethyl alcohol.
• Agriculture Infrastructure and Development Cess (AIDC) on a small number of items.

Rationalization of Procedures and Easing of Compliance

• Turant Customs initiative, a Faceless, Paperless, and Contactless Customs measures .
• New procedure for administration of Rules of Origin.

Other Proposals:

Development Assistance for Other Countries

• Rs 18,154 crore allocated to Ministry of External Affairs (MEA) in the union budget, out of which Rs 7,148 crore has been earmarked as aid to neighbouring countries as well as in Africa and Latin America for 2021-22.
• As a part of this, Bhutan will get the maximum allocation of Rs 3,004 crore while Rs 100 crore will be given to Chabahar port project in Iran.
• The overall development portfolio including the assistance to the countries accounted for 42% of the total outlay.
• A significant share of the aid portfolio in the budget is to cater to India’s sustained COVID assistance to friendly countries including the supply of coronavirus vaccines as grants under the ‘Vaccine Maitri’
• The allocation of Rs 18,154 crore is the highest for the ministry till date

History of Union Budget

Under the Article 112 of the Constitution of India, Union Budget is aka Annual financial statement is the annual budget of India. The budget is presented by means of the Financial bill and Appropriation bill which has to be passed by Lok Shaba. Union Budget comes into effect from April 1.

At First in Union Budget

• Until 2016, every year it is presented on the last working day of February by the Finance Minister of India in Parliament.
• But after 2016 Government presents it on the first day of February.
• First Union budget of independent India was presented by India’s first finance minister R. K. Shanmukham Chetty in 1947.
• First Indian governor of RBI who presented the Interim Budget In 1951-52 was C D Deshmukh
• First PM who presented the Union Budget Pandit was Jawaharlal Nehru in 1958-59.

Other Interesting facts 

• Black Budget – Union Budget 1973-74 is known as Black Budget of India as budget deficit rose to Rs 550 crore.
• In 2017, Rail Budget was merged with the Union Budget.
• In 2020, Nirmala Sitharaman delivered the longest Budget speech by Finance Minister of India that lasted 159 minutes (about two hours and 40 minutes). It was longest by the duration.
• The printing of budget documents starts roughly one week ahead of presenting in the Parliament with a customary ‘Halwa ceremony’ in which halwa (a sweet dish) is prepared in large quantities and served to the officers and support staff involved.

Achievements and Milestones during the COVID-19 pandemic

• Pradhan Mantri Garib Kalyan Yojana (PMGKY):

• Valued at Rs. 2.76 lakh crore
• Free food grain to 80 crore people
• Free cooking gas for 8 crore families
• Direct cash to over 40 crore farmers, women, elderly, the poor and the needy

• Aatma Nirbhar Bharat package (ANB 1.0):

• Estimated at Rs. 23 lakh crore – more than 10% of GDP

• PMGKY, three ANB packages (ANB 1.0, 2.0, and 3.0), and announcements made later were like 5 mini-budgets in themselves
• Rs. 27.1 lakh crore worth of financial impact of all three ANB packages including RBI’s measures – amounting to more than 13% of GDP
• Structural reforms:

• One Nation One Ration Card
• Agriculture and Labour Reforms
• Redefinition of MSMEs
• Commercialisation of the Mineral Sector
• Privatisation of Public Sector Undertakings
• Production Linked Incentive Schemes

• Status of India’s fight against COVID-19:
• 2 Made-in-India vaccines – medically safeguarding citizens of India and those of 100-plus countries against COVID-19
• 2 or more new vaccines expected soon
• Lowest death rate per million and the lowest active cases

2021 – Year of milestones for Indian history

• 75th year of India’s independence
• 60 years of Goa’s accession to India
• 50 years of the 1971 India-Pakistan War
• Year of the 8th Census of Independent India
• India’s turn at the BRICS Presidency
• Year for Chandrayaan-3 Mission
• Haridwar MahaKumbh

Vision for AatmaNirbhar Bharat

• AatmaNirbharta – not a new idea – ancient India was self-reliant and a business epicentre of the world
• AtmaNirbhar Bharat – an expression of 130 crore Indians who have full confidence in their capabilities and skills
• Strengthening the Sankalp of
• Nation First
• Doubling Farmer’s Income
• Strong Infrastructure
• Healthy India
• Good Governance
• Opportunities for Youth
• Education for All
• Women Empowerment
• Inclusive Development
• 13 promises made in the Union Budget 2015-16, and resonating with the vision of AatmaNirbharta, to materialise during the AmrutMahotsav of 2022 – on the 75th year of our independence

Some Important Terminologies:

GDP (Gross Domestic Product):

GDP represents the total monetary value of all final goods and services produced within a country during a specified period of time, normally a year.

GDP =Private consumption+ gross investment + government investment + government spending + Net Export (exports – imports)

Nominal GDP:

Nominal GDP (or “Current GDP”) is a face value of output, without any inflation adjustment, Nominal GDP always higher than the Real GDP of the country

Real GDP:

Real GDP (or “Constant GDP”) is a value of output adjusted for inflation or deflation. Real GDP is used to calculate GDP growth.

Inflation:

Inflation refers to the rise in the prices of most goods and services of daily or common use, such as food, clothing, housing, recreation, transport, etc

inflation is primarily measured by two main indices

• WPI (Wholesale Price Index)
• CPI (Consumer Price Index)

Deflation:

Deflation refers to fall in the prices of daily or commonly used goods and services

Gross Value Added (GVA):

GVA is defined as the value of output minus the value of intermediate consumption, It provides the rupee value for the number of goods and services produced in an economy after deducting the cost of inputs and raw materials.

Gross Value Added = GDP + subsidies on products – taxes on products

Fiscal Deficit:

Fiscal deficit measures how much a government’s expenditure is more than its receipts.

Fiscal Deficit = Total expenditure of the government (capital and revenue expenditure) – Total income of the government (Revenue receipts + recovery of loans + other receipts)

Fiscal deficit = Total Expenditure (Revenue Expenditure + Capital Expenditure) – Revenue Receipts – Non-Debt Capital Receipts (Recovery of Loans + Dis-investment Proceeds)

*Non-debt receipts are those which do not incur any future repayment burden for the government.

Fiscal deficit = Revenue Deficit + Capital Deficit (excluding Borrowing) – Borrowing

• Revenue Expenditure

Revenue Expenditure is that part of government expenditure that does not result in the creation of assets. Payment of salaries, wages, pensions, subsidies and interest fall in this category as revenue expenditure

• Capital Expenditure

capital expenditure as the money spent on the acquisition of assets like land, buildings, machinery, equipment, as well as investment in shares.

• Revenue Receipts

Government receipts which neither create asset nor reduce any liability are called Revenue Receipts. Revenue Receipts are further classified into tax revenue and non-tax revenue.

• Capital Receipts

Capital receipts are receipts that create liabilities or reduce financial assets. They also refer to incoming cash flows. Capital receipts can be both non-debt and debt receipts. Loans from the general public, foreign governments and the Reserve Bank of India (RBI) form a crucial part of capital receipts.

Revenue Deficit is the excess of its total revenue expenditure to its total revenue receipts.

Capital Deficit is the excess of its total capital expenditure to its total capital receipts

Primary Deficit

Primary deficit refers to the difference between the current year’s fiscal deficit and interest payment on previous borrowings. primary deficit shows the borrowing requirements needed for meeting the expenditure of the government.

Green Tax

Green Tax is a tax imposed for old polluting vehicles to protect environment and to curb pollution. It is exempted for vehicles include strong hybrids, electric vehicles and those running on alternate fuels like CNG, ethanol, LPG vehicles, tractors, tillers, etc

• Green Tax on transport vehicles older than 8 years charged at the rate of 10-25% of road tax.
• Personal vehicles to be charged at the time of renewal of Registration Certification after 15 years
• Higher Green Tax of up to 50% of road tax for vehicles being registered in highly polluted cities like Delhi-NCR

Zero Coupon Bond

Zero-Coupon Bond, also known as the pure discount bond or deep discount bond, is purchased at a discounted price and does not pay any coupons or periodic interests to the fundholders. The Zero-Coupon bonds generally come with a time horizon of 10 to 15 years.

Tax Holiday

A tax holiday is an incentive program run by the government. It helps to stimulate foreign investment by reducing taxes on businesses. The objective is to encourage economic activity and foster growth

Foreign Direct Investment (FDI)

A foreign direct investment (FDI) is an investment made by a firm or individual in one country into business interests located in another country. horizontal, vertical and conglomerate are the types of FDI

Foreign Portfolio Investment (FPI)

Foreign portfolio investment (FPI) refers to the purchase of securities and other financial assets by investors from another country.

Foreign Institutional Investor (FII)

A foreign institutional investor is an investor in a financial market outside its official home country

Asset Reconstruction Company (ARC)

An Asset Reconstruction Company is a specialized financial institution that buys the NPAs or bad assets from banks and financial institutions at a mutually agreed value and attempts to recover the debts or associated securities by itself.

Asset Management Company (AMC)

An asset management company (AMC) also referred as money management firms that invests pooled funds from clients, putting the capital to work through different investments including stocks, bonds, real estate, master limited partnerships, and more. the asset management companies have professionals called fund managers who decide where the pooled money is invested

Some Important Abbreviations:

FBRM – Fiscal Responsibility and Budget Management

NIP – National Infrastructure Pipeline

InvIT – Infrastructure Investment Trust

PGCIL – Power Grid Corporation of India Ltd

NAFED – National Agricultural Cooperative Federation of India Ltd.

DICGC – Deposit Insurance and Credit Guarantee Corporation

NABARD – National Bank for Agriculture and Rural Development

e-NAM – electronic National Agriculture Market

PSLV – Polar Satellite Launch Vehicle

GSDP – Gross State Domestic Product

Reits – Real estate investment trust

IFSC – Indian Financial System Code

Penned By-
Sowba, Cheif Editor
Puneet, Senior Writer