Budget 2021: Key Highlights of the Reforms Introduced

By: WE STAFF | Monday, 1 February 2021

Finance Minister Nirmala Sitharaman has presented the Union Budget 2021. The Finance minister in her speech announced a slew of taxation reforms along with an increased spending on healthcare with Rs. 35,000 crore on COVID-19 vaccine development.

Let’s have a look at the highlights of the Union Budget 2021:

Amendments - FM Sitharaman proposed to consolidate provisions of the SEBI Act, Depositories Act, Securities Contracts Regulation Act, and the Government Securities Act. Government aims to amend Insurance Act to allow higher FDI, increasing FDI limit in insurance to 74 percent from 49 percent and allowing foreign ownership.

Fiscal deficit for FY21 - The Government sees FY22 fiscal deficit at 6.8 percent, according to the FM, while she had pegged deficit at 3.5 percent for FY21 in the last Budget. Government aims to get Rs. 1.75 lakh crore through divestments in 2021-22, according to Budget documents. In FY21, it planned to raise Rs. 2.1 lakh crore through divestments, falling short.

Rs. 16.5 lakh crore agricultural credit target this year - The Budget set agriculture credit target of Rs. 16.5 lakh crore for FY22, and will further increase provision to rural infra development fund to Rs. 40,000 crore from earlier Rs. 30,000 crore. FM Sitharaman said the Government is committed to welfare of farmers, pointing at how 1.54 crore farmers benefited from MSP in paddy and wheat in FY21. Furthermore, underlined that Rs. 75,060 crore was paid to farmers for wheat in FY21 versus Rs. 62,802 crore in FY20.

India's Tax Revenue Estimate - India FY21 gross tax revenue estimate said to be reduced by about Rs. 5 lakh crore. India Is said to estimate FY22 expenditure at about Rs. 35 lakh crore. India is said to target FY22 disinvestment revenue at Rs. 1.75 lakh crore.

Banking and companies - The Government plans to allot Rs. 20,000 crore for bank recapitalization of PSBs. The FM also proposed to revise definition under Companies Act, 2013 for small companies by increasing their threshold for capitalization.

Healthcare - The FM announced a new centrally-sponsored scheme PM Atmanirbhar Swast Bharat Yojana launching with an outlay of Rs. 64,180 crore crore over six years. This will be an addition to the National Health Mission. The FM said Government will merge the supplementary Nutrition program and the Poshan Abhiyaan, launching the mission.

Poshan 2.0 - Along with this, Jal Jeevan Mission Urban will be launched for urban local bodies over 5 years with outlay of Rs. 2,87,000 crore, and the Urban Swachh Bharat Mission with Rs. 1,41,678 crore over five years from 2021. The Budget has further provided Rs. 35,000 crore for COVID-19 vaccines in 2021-22, and committed to provide further funds if required.

All these bring the Budget outlay for health and wellbeing to Rs. 2,23,846 crore for 2021-22, said FM Sitharaman. The FM outlined six pillars of proposals to strengthen the vision of Atmanirbharta, namely health and wellbeing, capital and infrastructure, inclusive development, reinvigorating human capital, innovation and R&D and minimum government and maximum governance.

Financial capital and infrastructure reforms - The Government is set to introduce a Development Financial Institution (DFI). Rs. 20,000 crore will be provided to capitalize the new DFI, with an aim to have a lending portfolio of Rs. 5 lakh crore in 3 years. National Monetization Pipeline for brownfield projects will be launched, the FM announced with NHAI and PGCIL having sponsored one InvIT each. She also added that vehicles will undergo fitness tests after 20 years for PVs, 15 years for CVs, announcing a voluntary vehicle scrapping policy.

Further FM Sitharaman gave an outlay Of Rs. 1.18 lakh crore for the Ministry of Road Transport and Highways, and added that India plans to Spend Rs. 1.1 lakh crore for railways in FY22. FY22 capital expenditure provided is up 34.5 percent (vs FY21 BE) at Rs. 5.54 lakh crore, said the Finance Minister. Rs. 44,000 crore under capital expenditure will be given to Department of Economic Affairs in FY22, she added. FY21 capital expenditure is seen at Rs. 4.39 lakh crore.