Union budget is of paramount importance to any country because it presents an account of the expected annual receipts and expenditure of the Government. It outlines the major schemes that the Government plans to implement and the objectives it wishes to achieve. Therefore it becomes imperative to look at the key provisions of the Union budget 2021 presented by the Finance Minister, Nirmala Sitharaman on 1st February 2021 for the financial year 2021-22. The theme for this year’s budget was: ‘Reinvograting Human Capital’.
The budget this time, witnessed unexpected changes due to the pandemic. This time the budget was unique in the sense that it was ‘first paperless budget’. The finance minister replaced the ‘Swadeshi Bahi khata’ with a ‘Made in India’ tablet with the national emblem embedded upon it. This marked a significant step towards Digital India. Also it was the first time that the traditional Halwa ceremony (where a sweet dish is prepared and served to those associated with budget process) was not performed.
ECONOMIC SURVEY 2021
The union budget is preceded by Economic survey that presents a detailed report of country’s economic performance in the ongoing fiscal year and sets the tone for coming fiscal year’s budget. It is prepared by Department of Economic Affairs under guidance of Chief Economic Advisor, currently Mr. Krishanmurthy Subramaniam. The survey projected a growth of 11% in year 2021-22, after a V-shaped recovery. It also recommended an increase in public spending and investment in research and development and pointed towards the sharp contraction in exports and imports, rising unemployement and possibility of COVID levy on rich people.
SCHEMES & EXPENDITURE FOR DIFFERENT SECTORS IN UNION BUDGET:
|Sector||Expected expenditure (in lakh crores) approx.|
|Swacchh Bharat Abhiyan||1.42|
|Jal Jeevan Mission||2.87|
The budget 2021 presents 6 key areas:
- Health & wellbeing:
- PM Aatma Nirbhar Swasth Bharat Yojna: for supporting health centres, setting up public health labs, strengthening NCDC (National Centre for Disease Control ) in every district, Integrated health information portal, 2 mobile hospitals etc.with an outlay of Rs. 64180 crores over 6 years
- Pneumococcal Vaccines for children and COVID vaccines
- Mission Poshan 2.0: supplementary nutritional programme merged with Poshan Abhiyan for nutrition delivery.
- Jal Jeevan Mission for universal water supply
- Vehicle scrapping policy: For curbing air pollution, fitness test after 20 years for personal vehicles and after 15 years for commercial vehicles is proposed. Also old and unfit vehicles will be phased out.
- Physical & financial capital and Infrastructure:
- Atma Nirbhar Bharat PLI scheme: Production Linked Incentive (PLI) means financial incentive for boosting domestic manufacturing for achieving 5 trillion USD economy by 2025.
- MITRA for textiles : to become globally competitive, boost employement and investment, Mega Investment Textile Parks (MITRA) will be set up . 7 such parks will be made within 3 years.
- National Infrastructure Pipeline: A group of social and economic infrastructure projects to provide world class infrastructure and boost investments.
- Asset Monetization (converting assets into money) : Dedicated Freight corridor by Railways and next lot of airports will be monetized.
- Road, Highway & Railway Infrastructure: More roads under Bharat Parimala Yojana and future ready rail project by 2030. Economic corridors will be made in Tamil Nadu, Kerala, west bengal and Assam.
Vista Dome LHB coach for better travel experience to tourists
Indigeneously developed automated train protection system for wiping out the possiblity of collison due to human error.
- Urban Infrastructure: Metro Lite and Metro Neo for cheaper metro rail systems
- Power infrastructure: for giving assistance to DISCOMS, pre paid smart metering, upgradation of system etc. are planned. 100% electrification by 2023.
- Ports, shipping and waterways: Public-private partnership for management of ports and scheme for flagging of Merchant ships in India (whereby a ship is given the nationality of that country)
- Petroleum & Natural Gas: extension of Ujjwala scheme (for providing LPG connections to BPL families), Gas pipeline project in UT of Jammu & Kashmir and setting up of Independent Gas Transport System operator for bookings of natural gas.
- National Hydrogen Mission: For generating hydrogen from green power source.
Financial capital :
- A single Securities Market code after combining provisions of SEBI act, 1992, Depositories act, 1996, Securities Contracts (Regulation) Act, 1956 and Government Securities Act, 2007
- Support to Financial technology hub at GIFT-IFSC
- FDI in Insurance sector raised from 49% to 74% by amending Insurance act, 1931.
- Disinvestment: According to new PSU policy of government, public sector will operate in strategic and all other sectors will be disinvested. Estimated receipts from disinvestment is 1,75,000 crore. Stocks of LIC will also be sold this year.
- Taxes: The new rate for those earning 5-7.5 lakhs is 10% and for those earning 7.5-10 lakhs per annum the rate is 15% instead of present 20% if they don’t get any deduction and exemption in personal income tax payment. Senior citizens above 75 years who have no source of income other than pension money and interest on their investment exempted from filing income tax returns.
- Fiscal deficit (difference between expenditure and revenues of government) for year 2020-21 was 9.5% of GDP and for year 2021-22 it will be 6.8%.
- One person companies will be allowed to get incorporated.
- Under Banking sector, deposit insurance has been increased from 1 lakh to 5 lakh: it means that if a bank fails then DICGC will provide atleast 5 lakh to those who have deposited more than 5 lakh in the bank. Earlier this limit was 1 lakh.
- Inclusive development for aspirational India:
- RIDF (Rural Infra Development fund)
- Micro Irrigation fund : for increasing more crop per drop
- Swamitava scheme for property registration has been extended to all States and Union Territories.
- Operation Greens: launched to stabilize supply of food crops and ensure their availability is extended to 22 perishable goods.
- 73000 Crore allocated for MGNREGA.
- Agri Infra fund of Rs. 1 lakh crore to support APMC (Agriculture Produce Market Committee)
- Fisheries: 5 major fishing harbours at Kochi, Chennai, Paradip, Vishakhapatnam and Petuaghat.
- Portal for gig and platform workers
- One Nation One Ration card scheme launched to help beneficiaries get ration anywhere.
- Minimum wages will apply to all sector workers
- Single registration and licensing for reducing burden on employers.
- Financial inclusion: Marginal money requirement reduced from 25% to 15%
- Setting up more than 15000 schools and 100 new Sainik schools,
- Achieving ideals of New Education Policy and establishing Higher Education commission.
- Foundation of Central University in Leh, Ladakh
- Opening ‘Eklavya Model residential schools’ in Tribal areas
- Focus on skilling by amending ‘Apprenticeship act’ and collaborating with UAE for skilled qualifications and Japan for training programmes.
- Innovation and Research & development:
- National Language Translation Mission: to make available knowledge on Internet in major Indian languages.
- National Research foundation : to strengthen overall research ecosystem of country.
- Launch of PSLV-CS51 carrying Brazilian satellite, Amazonia along with few small satellites
- Gaganyaan Mission (Indian’s manned space mission by Dec 2021)
- Minimum government, Maximum governance:
- Allocation for first digital census
- Review of 400 old exemptions in custom duty
- Tax exemption for rental houses of migrant workers.
- Tax holiday for startups
- Dispute resolution committee and National Faceless Income tax appellate Tribunal centre
- Duty on solar inverters raised from 5% to 20% and on solar lanterns from 5% to 15%
- Custom duty on cotton, raw silk and silk yarn raised for benefitting farmers. 
The budget 2021 was noteworthy in many ways. First of all, a paperless budget marked a transition towards digitalisation. It also saved a significant cost on printing. Reliance on Indian made vaccines is a step forward towards Atma Nirbhar Bharat. The announcement by the government to open more schools can help in achieving the goal of education to all. Imposing duties on certain products can help reduce imports. Fund for APMCs (Agriculture Produce Market Committees) can help to reduce the fear of farmers that farm bills will destroy the APMCs in a few years. Increasing the insured limit in banks from 1 lakh to 5 lakhs can help people to rely on banking network and deposit their surplus in banks. The reduction in tax rates might help middle class people in recovering from the effects of COVID-19 pandemic. The assured minimum wages to all sector workers can help in economic security.
But there were certain issues that it lacked to address. First of all, there is uncertainity about the spendings on education as per NEP (6% of GDP) . Additionally, no concrete step was taken to bring back those students who dropped out due to pandemic or those students who were not able to pay their fees.
Another bone of contention is focus on election bound states. The budget by announcing economic corridors in only a few selective states, seems more or less designed to attract people in election bound states like Kerala, Tamil Nadu, Assam and West Bengal. These types of political agendas surely need to be discarded.
Additionally, the budget lacked a strong initiative to employ those who lost their jobs due to lockdown.
The budget seemed more oriented towards growth than stability. High goals might exaggerate the situation. The government itself recognises the high fiscal deficit in the economy but has not devised any plan to control the consequential inflation in the economy.
Further, more reliance on FDI ( Foreign Direct Investment) seems to deviate from the slogan of “Atma Nirbhar Bharat” announced by Honourable Prime Minister.
Moreover, the huge disinvestment target and the government decision to privatise all sectors other than 4 strategic sectors comes like a blow. It is true that the government needs money but privatising almost everything can backfire on economy. Selling stakes of LIC and other important PSUs to private players creates speculations about government’s welfare approach.
Annual Budget is an important responsibilty on the shoulders of government vested under Article 112 of Indian Constitution. Accordingly, the Government must try to ensure a holistic development through annual budget. Many of the policies of the Government in this budget are no doubt, progressive. But an effective implementation of all the schemes will remain a crucial factor. For instance, the opening of more schools can bring change only if it is backed by quality education and dedicated teachers. Also, lack of awareness among poor people about education could be a hurdle in achieving 100% literacy.
As we proceed to celebrate Amrut Mahotsava (75th Independence day celebrations) the whole nation will be eager to see what key changes does this budget 2021-22 bring in Indian economy and how the government addresses the lacunaes in the budget through other schemes. To sum up, the government must ensure that all it’s far fetching promises don’t remain just on paper and effective measures are taken to fill up the gaps that the bill failed to address.