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Union Budget 2021: highlights, expectations, appreciations, reactions

EconomyUnion Budget 2021: highlights, expectations, appreciations, reactions

Union Finance Minister Nirmala Sitharaman presented the Union Budget for 2021-22 in Parliament claiming to be focused on health and economy, but the opposition has criticized it while corporates call it well-crafted

New Delhi: Union Finance Minister Nirmala Sitharaman on Monday presented the Union Budget for 2021-22 in Parliament, focused mainly on health and the economy affected by the Covid-19 crisis.

Ms. Sitharaman announced a new centrally sponsored health scheme PM Atma Nirbhar Swasth Bharat Yojana of Rs 64,180 crores. Under the new scheme, health and wellness centers, laboratories, research institutes, hospitals, and information portals would be setup. Moreover, Rs 35,000 crore was allocated to the nationwide immunization program of Covid-19 vaccines.

Over 137 percent more money was allocated to the Health sector as compared to the previous year. For reviving the economy, the government pushed infrastructure projects, created a “bad bank” for bad loans and financial institutions for financing projects, and also eased Foreign Direct Investments.

Production Linked Incentive scheme (PLI)

A total of Rs 1.97 lakh crore was allocated in the next five years for Production Linked Incentive scheme (PLI) schemes in 13 sectors of infrastructure. The main purpose is to enhance manufacturing and job creation.

The government earmarked Rs 20,000 crore to set up Development Financial Institution (DFI) for infrastructure financing. It aims to create a Rs 5 lakh crore lending portfolio to be created under the proposed DFI in three years.

Bad banks

Ms. Sitharaman announced the setting up of “bad banks”, a move to uplift the banking sector from bad loans. The idea was in discussion for years and has finally come into being.

The “bad bank” will take over the bad loans of various financial institutions which will help these institutions in cleaning their balance sheets.

New farm cess on petrol and diesel

The government also attempted to revive the agricultural sector by announcing a new farm cess on petrol and diesel. The new cess, to be called as agri infra cess, will be charged Rs 2.5 per liter on petrol and Rs 4 on diesel.

MSP regime

Ms. Sitharaman also put a light on the minimum support price (MSP regime) which, according to her, has undergone “sea change” in the last six years as it was now 1.5 times the cost price.

Agriculture sector has become crucial for the government as tens of thousands of farmers from several states have been protesting at the borders of Delhi against the new laws which they feel as anti-farmer and pro-corporate.

Tax slabs

The tax slabs were kept unchanged. In a respite to elderlies, the income from pensions and interests for people above 75 years of age was totally exempted from all taxes. The markets reacted enthusiastically. The Sensex bulled over 2,300 points and settled at 48,600.

Poll-bound states

Poll-bound states West Bengal, Tamil Nadu, Kerala, and Assam found an echo in the Budget. As per the announcements, Tamil Nadu will get Rs 1.03 lakh crore for building 3,500 km of roads, Kerala Rs 65,000 crore for 1,500 km of roads, West Bengal Rs 95,000 crore for 675 km road, and Assam will see 1,300 km roads being constructed.

One Nation One Ration Card

For the labor class, a “One Nation One Ration Card” was announced for providing benefits in unorganized sectors. Last year, the laborers and migrants were hardest hit by Covid-19 crisis and nationwide lockdown due to hardships in getting rationed food and jobs.

This scheme allows beneficiaries to claim their rations from anywhere in the country, especially the migrant workers.

The government will also implement the new labor codes for extending social security benefits with the application of minimum wages across all categories of workers.

National Rail Plan for India (2030)

The Budget proposed a National Rail Plan for India (2030) to create a ‘future-ready’ Railway system by 2030. It aims for 100 percent electrification of Broad-Gauge routes to be completed by December 2023.

The Budget also has an urban focus. The Finance Minister announced a Jal Jeevan Mission Urban will be launched with an outlay of Rs 2.87 lakh crore over 5 years which is aimed at a universal water supply in all 4,378 urban local bodies, with 2.86 crore household tap connections and liquid waste management in 500 AMRUT cities.

Urban Swachh Bharat Mission 2.0

She also announced Urban Swachh Bharat Mission 2.0 with an outlay of Rs1,41,678 crore over 5 years from 2021 focused on complete fecal sludge management, wastewater treatment, source segregation, management of waste from urban construction, bioremediation of legacy dump sites.

Ujjwala scheme

The Ujjwala scheme will be expanded to over one crore more beneficiaries. We will add 100 more districts in the next three years to the city gas distribution network. A gas pipeline project will be taken up in Jammu and Kashmir.

National Education Policy

To further the National Education Policy under the reinvigorating human capital under the Atma Nirbhar Bharat mission, the Minister said a central university will also be established in Leh for accessible higher education at Ladakh.

Data Analytics, AI, ML, MCA 21 version 3.0 will be launched to have additional modules for e-adjudication, consultation, compliance management will be launched.

Non-Resident Indians TDS

Among other announcements, the Budget proposes to exempt Non-Resident Indians from TDS. It also lowers the tax of dividends for Foreign Portfolio Investors.

Loan interest

The interest of Rs 1.5 lakh on loans for affordable houses has been read down. Moreover, the tax benefit for taking loans for affordable houses has been extended till March 31, 2022.

Startups

For startups, the government extended the tax holiday till March 31, 2022. The Defence sector got around seven percent more in Union Budget 2021 compared to last year.

The government said there was a sharp increase in the capital budget. The capital expenditure increased to Rs 5.54 lakh crore from 4.12 lakh crore in the previous year. The rise was nearly 34 percent.

Railway gets an allocation of Rs 1,10055 Cr for 2021-22

Presenting the Union Budget for 2021-22 in the Lok Sabha, the Finance Minister has given an outlay of Rs 1,07,100 crore for capital expenditure.

Noting that the Government is to create a future-ready Railway System by 2030, Ms. Sitharaman said, “ Indian Railways had prepared a National Rail Plan for India 2030. This plan is to create a future-ready railway system by 2030, bringing down the logistic cost of the industry which is at the core of s strategy to enable ‘Make in India’. I am Providing a record of Rs 1,10,055 crore for Indian Railway out of which Rs. 1,07,100 crore has been provided for capital expenditure.”

Ms. Sitharaman also said that in view of strengthening the higher density routes will be provided with indigenously designed and built automatic train operation system will be installed to eliminate train collision due to human error.

Prime Minister Narendra Modi on Union Budget 2021-22

Hailing the Union Budget 2021-22, Prime Minister Narendra Modi said it will enhance India’s self-confidence amid Covid 19 pandemic while asserting that the budget envisions self-reliance.

“The Union Budget 2021-22 has been presented amid unprecedented circumstances…. Amid the situation created by COVID-19. Today’s budget will enhance India’s self-confidence and will instill self-confidence in the world. The budget has the vision of self-reliance and takes along every section of the society,” PM Modi said after the Union Budget was tabled in the Parliament.

The Prime Minister said that the budget focuses on sectors that are related to both wealth and wellness whereas a special impetus is also given on infrastructure and MSME sectors.

Corporates term the budget well-crafted

Industry heads and leaders called the budget “well-crafted”. SBI Chairman Dinesh Kumar Khara said the Union Budget has unveiled a set of well-crafted and robust policies that encompass the vision of an Atmanirbhar Bharat.

Aditya Birla Capital CEO Ajay Srinivasan said the Government has clearly indicated its focus on sustainable and inclusive growth through a strongly expansionary budget.

Indian National Congress (INC) reacts

However, Indian National Congress (INC) reacted sharply, describing the imposition of cess on petrol and diesel in the budget as a “vengeful act” against farmers who took out the tractor rally.

The opposition party said it was a case of “wrong diagnosis and prescription”, and that Finance Minister Nirmala Sitharaman could have been “brave” by extending help to the poor, but chose to be “timid”.

“As expected, the FM has paid special attention to election-bound states. She announced large capital outlays for Kerala, Tamil Nadu, West Bengal and Assam,” former Union Minister for Finance and Home Affairs, P Chidambaram said.

“They know that the proposals are only outlaid and the actual expenditure will happen only after the schemes are approved and over a period of several years depending upon the pace of implementation,” he added.

Aam Aadmi Party (AAP) reacts

The Aam Aadmi Party too expressed disappointment. “The BJP-ruled Central government has again disappointed Delhi in the budget. Delhi has been allocated only Rs 325 crores in the budget while it pays Rs 1.5 lakh crores to the Centre,” Deputy Chief Minister Manish Sisodia tweeted.

Ms. Sitharaman again carried “Bahi-Khata”, a traditional ledger of records, instead of a colonial briefcase to present General Budget in Parliament.

The colonial legacy of carrying the Budget papers in the briefcase was dropped last year by Ms. Sitharaman when she, for the first time in the history of Independent India, carried the Budget in a “Bahi-Khata”, wrapped in a red cloth.

This was the third consecutive Budget to be presented by Ms. Sitharaman and the ninth straight Budget of the NDA government which had come to power in 2014.

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