The Union Budget for 2021-22, presented to Lok Sabha by Finance Minister Nirmala Sitharaman today, seeks to give the Covid-19 beaten economy a big push, proposing an expenditure of Rs 34.83 lakh crore, to be financed heavily through borrowings from the market and disinvestment.
The expenditure for the coming year includes Rs 5.54 lakh crore capital expenditure, signifying an increase of 34.5 per cent over the budget estimate (BE) figure of 2020-2021.
As a result of the large Government expenditure, the fiscal deficit in the coming financial year is likely to be 6.8 per cent of GDP. The gross borrowing from the market for the next year would be around Rs 12 lakh crores, the Finance Minister said. The fiscal deficit for the financial year now concluding (2020-21) was pegged at 9.5 per cent of GDP, the Finance Minister said.
“We would need another Rs 80,000 crores for which we would be approaching the markets in these two months,” she said. “We plan to continue with our path of fiscal consolidation, and intend to reach a fiscal deficit level below 4.5 per cent of GDP by 2025-2026 with a fairly steady decline over the period,” the Finance Minister said.
The pandemic forced the Government to announce several packages, as a result of which the original budget estimated (BE) expenditure of Rs 30.42 lakh crores for 2020-2021, shot up to Rs 34.50 lakh crore in the revised estimate (RE) of the expenditure for the year. Assuring the House that the additional money was well-spent, Sitharaman said “We have maintained the quality of expenditure.”
The capital expenditure, is estimated in RE at Rs 4.39 lakh crores during the financial year, now concluding, as against Rs 4.12 lakh crores in the budget estimates. “We know that the FRBM Act mandates fiscal deficit of 3 per cent of GDP to be achieved by 31 March 2020- 2021,” she said, and presented a statement explaining the deviation.
Coming in the midst of the farmers’ agitation for the abrogation of the three contentious farm laws, the Budget had several proposals for the agriculture sector. But every time the Minister referred to them, there were protests from the Opposition which wanted the farm laws to be abolished. Sitharaman said she proposed an Agriculture Infrastructure and Development Cess (AIDC) on a small number of items to improve agricultural infrastructure. For migrant workers, she said the One Nation One Ration Card scheme was launched through which beneficiaries can claim their rations anywhere in the country.
The Budget proposals for 2021-22, she said, rest on six pillars~ Health and Wellbeing, Physical & Financial Capital and Infrastructure, Inclusive Development for Aspirational India, Reinvigorating Human Capital, Innovation and R&D, and Minimum Government and Maximum Governance.
The Budget has provided substantial increase in investment in Health Infrastructure and the Budget outlay for Health and Wellbeing is Rs 2,23,846 crore in BE 2021-22 as against this year’s BE of Rs 94,452 crore, an increase of 137 percentage. The Finance Minister said “I have provided Rs 35,000 crores for Covid-19 vaccine in BE 2021-22. I am committed to provide further funds if required.” This will develop capacities of primary, secondary, and tertiary care Health Systems, strengthen existing national institutions, and create new institutions, to cater to detection and cure of new and emerging diseases.
The Minister said “I have estimated Rs 1,75,000 crore as receipts from disinvestment in BE 2021-22.” She said “we have kept four areas that are strategic where bare minimum CPSEs will be maintained and rest privatized. In the remaining sectors all CPSEs will be privatized.”
Monetizing operating public infrastructure assets is a very important financing option for new infrastructure construction, she said.
The Railways will monetise Dedicated Freight Corridor assets for operations and maintenance, after commissioning. Indian Railways have prepared a National Rail Plan for India – 2030. The Plan is to create a ‘future ready’ Railway system by 2030.
Announcing reliefs in direct taxes for senior citizens, she said the compliance burden of those 75 years of age and above will be reduced.
“For senior citizens who only have pension and interest income, I propose exemption from filing their income tax returns. The paying bank will deduct the necessary tax on their income,” she said.
At present, an IT assessment can be re-opened up to six years and in serious tax fraud cases for up to 10 years.
The Minister said the time-limit for re-opening of assessment will be reduced to three years from the present six years. In serious tax evasion cases too, only where there is evidence of concealment of income of Rs 50 lakh or more in a year, can the assessment be re-opened up to 10 years. Even this reopening can be done only after the approval of the Principal Chief Commissioner, the highest level of the Income Tax Department.
“We shall establish a National Faceless Income Tax Appellate Tribunal Centre,” she said. In the housing sector, the additional deduction of interest amounting to Rs 1.5 lakh, for loan taken to purchase an affordable house was being extended by one more year. Further, to keep up the supply of affordable houses, the affordable housing projects can avail a tax holiday for one more year ~ till 31st March, 2022. The capital gains exemption for investment in startups is extended by one more year till 31 March, 2022.
Measures to make the GST administration work better yielded results and there were record collections in the last few months, the Budget said. For depositors, the Deposit Insurance cover was raised from Rs 1 lakh to Rs 5 lakh last year. This will be amended to allow depositors to access their accounts to the extent of the insurance, if the bank has any temporary difficulty.