Key highlights of Nirmala Sitharaman’s Paperless Budget 2021-22

In her speech, the finance minister mentioned that this year’s budget proposals rest on six pillars – I. Health and Well-being, II. Physical and Financial Capital and Infrastructure, III. Inclusive Development for Aspirational India, IV. Reinvigorating Human Capital, V. Innovation & Research and Development, and VI.  Minimum Government and Maximum Governance.

I. Health and Well-Being

1. Since the healthcare sector’s improvement is the need-of-the-hour, FM proposed a new centrally sponsored scheme, PM Aatmanirbhar Swasth Bharat Yojana, with an outlay of about ₹64,180 crore over six years.
2. The increased allocation is expected to expand and strengthen existing national health institutions, National Centre for Disease Control (NCDC), Health Emergency Operation Centers, and mobile hospitals.
3. The Jal Jeevan Mission (Urban), will be launched. It aims at a universal water supply in all 4,378 Urban Local Bodies with 2.86 crores household tap connections, as well as liquid waste management in 500 AMRUT cities. It will be implemented over 5 years, with an outlay of ₹2,83,000 crores – a 137% increase in health budget.
4. To tackle the burgeoning problem of air pollution, a proposal to provide an amount of ₹2,217 crores for 42 urban centers with a million-plus population in this budget.
5. The Pneumococcal Vaccine, a Made in India product, is presently limited to only 5 states will be rolled out across the country. This will avert more than 50,000 child deaths annually.

II. Physical and Financial Capital and Infrastructure

1. With an aim to create jobs for youth, FM Sitharaman announced ₹1.97 lakh crore over 5 years starting this FY, for Production Linked Incentive Schemes to create manufacturing global champions for an Aatmanirbhar Bharat.
2. FM also announced a sharp increase of 34.5% in capital expenditure as compared to previous budget estimates – resulting in allocation of ₹5.54 lakh crore.
3. In a first, the FM announced a record allocation of ₹1,10,055 crore to be provided for Indian Railways. She also announced that the definition of small companies under Companies Act 2013 will be revised so to Companies with paid-up capital up to ₹2 crore & turnover up to ₹20 crore.
4. Scheme of Mega Investment Textile Parks to be launched.
5. PLI scheme to be launched.
6. 7 textile parks to be set up over 3 years.
7. Development Financial Institution to be set up, to provide, enable & catalyze infra financing. ₹20,000 crore allocated to capitalize this institution.
8. National Monetization Pipeline of potential brownfield infrastructure assets to be launched.
9. Railways to monetize dedicated freight corridor assets for O&M.
10. Western Dedicated Freight Corridor and Eastern Dedicated Freight Corridor to be commissioned by June 2022.
11. 100% electrification of rail broad gauge routes to be completed by December 2023.
12. Scheme at a cost of ₹18,000 crore for augmentation of public bus transport services to be launched.
13. MetroLite and Metro New Technologies to be deployed to provide metro rail systems.
14. Comprehensive National Hydrogen Energy Mission to be launched.
15. Seven port projects worth more than ₹2,000 crore to be offered by major ports in PPP Mode.
16. Ship Recycling Capacities of around 4.5 million Light Displacement Tonnage to be doubled by 2024.
17. 100 more districts to be added in next 3 years, to City Gas Distribution Network.
18. A single and rationalized Securities Markets Code to be set up, by consolidating provisions of SEBI Act 1992, Depositories Act 1996, Securities Contracts Regulation 1956 and Govt. Securities Act 2007.
19. Insurance Act 1938 to be amended, to increase permissible FDI limit in insurance companies from 49% to 74%.
20. Asset Reconstruction Company Ltd. to be set up to consolidate and take over existing stressed debts.
21. Deposit Insurance Cover for bank customers to be increased from ₹1 lakh to ₹5 lakh.
22. NCLT framework will be strengthened, e-court system to be implemented, alternate debt resolution mechanism and special framework for MSMEs to be introduced, Data Analytics and AI driven MCA 21 version 3.0 to be introduced.
23. IPO of LIC also to be brought in. Disinvestment of IDBI Bank, Air India etc would also be completed in 2021-22.
24. Fintech Hub was also proposed to instill confidence in participants among the corporate bond market. The body will help in the development of bond markets.

III. Inclusive Development for Aspirational India

1. In case of wheat, the total amount paid to farmers in 2013-2014 was ₹33,874 crore. In 2019-2020 it was ₹62,802 crore, and even better, in 2020-2021, this amount, paid to farmers, was ₹75,060 crore. The number of wheat growing farmers that were benefitted increased in 2020-21 to 43.36 lakhs as compared to 35.57 lakhs in 2019-20.
2. To provide adequate credit to our farmers, Government has enhanced the agricultural credit target to ₹16.5 lakh crore in FY22. Similarly, the allocation to the Rural Infrastructure Development Fund increased from ₹30,000 crore to ₹40,000 crore. The Micro Irrigation Fund, with a corpus of ₹5,000 crore has been created under NABARD will be doubled.
3. Around 1.68 crore farmers are registered and ₹1.14 lakh crore of trade value has been carried out through e-NAMs. Keeping in view the transparency and competitiveness that e-NAM has brought into the agricultural market, 1,000 more mandis will be integrated with e-NAM.
4. Finance Minister proposed substantial investments in the development of modern fishing harbours and fish landing centres. To start with, 5 major fishing harbours – Kochi, Chennai, Visakhapatnam, Paradip, and Petuaghat – will be developed as hubs of economic activity.
5. Government has launched the One Nation One Ration Card scheme through which beneficiaries can claim their rations anywhere in the country.
6. To further facilitate credit flow under the scheme of Stand Up India for SCs, STs, and women, the Finance Minister proposed to reduce the margin money requirement from 25% to 15%, and to also include loans for activities allied to agriculture.
7. Scope of Operation Greens Scheme to be extended from tomatoes, onions and potatoes to 22 perishable crops.
8. Multipurpose Seaweed Park to be established in Tamil Nadu.
9. Minimum wages will apply to all categories of workers, and they will all be covered by the Employees State Insurance Corporation.
10. ₹15,700 crores to MSME sector.

IV. Reinvigorating Human Capital

1. Government has set a target of establishing 750 Eklavya model residential schools in tribal areas with increase in unit cost of each such school from ₹20 crore to ₹38 crore
2. An initiative is underway, in partnership with the United Arab Emirates (UAE), to benchmark skill qualifications, assessment, and certification, accompanied by the deployment of certified workforce.
3. Over 15000 schools will be qualitatively strengthened, 100 new Sainik Schools and Central University in Leh.

V. Innovation and R&D

1. National Language Translation Mission (NTLM) will be launched. This will enable the wealth of governance-and-policy related knowledge on the Internet being made available in major Indian languages.
2. 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.
3. National Research Foundation ₹50,000 crores outlay for over 5 years.
4. ₹1,500 crores for a proposed scheme that will provide financial incentives to promote digital modes of payment.
5. ₹4,000 crores outlay for deep ocean survey spread across five years for the conservation of deep ocean biodiversity.

VI. Minimum Government, Maximum Governance

1. National Nursing and Midwifery Commission Bill will be introduced by the government.
2. ₹3,768 crores in the year 2021-2022 allocated for first ever digital census.
3. ₹300 crores for Goa to celebrate its diamond jubilee of the state’s liberation from Portuguese rule.
4. ₹1,000 crores for the welfare of Tea workers especially women and their children in Assam and West Bengal.
5. NSSF Loan to FCI for Food Subsidy discontinued.
6. The Finance Minister said fiscal deficit in RE 2020-21 is pegged at 9.5% of GDP and it has been funded through Government borrowings, multilateral borrowings, Small Saving Funds and short term borrowings. She added that the Government would need another ₹80,000 crore for which it would be approaching the markets in these 2 months.
7. The FRBM Act mandates fiscal deficit of 3% of GDP to be achieved by 31st March 2022.

Part B (I). DIRECT TAX PROPOSALS

1. The Budget seeks to reduce compliance burden on senior citizens who are of 75 years of age and above. Such senior citizens 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.
2. She also announced steps to attract foreign investment into infrastructure, relief to affordable housing and rental housing, tax incentives to IFSC, relief to small charitable trusts, and steps for incentivizing Start-ups in the country.
3. The Finance Minister proposed to extend the eligibility period for claim of additional deduction for interest of ₹1.5 lakh paid for loan taken for purchase of an affordable house to 31st March, 2022
4. In order to incentivize funding of start ups, she proposed extending the Capital Gains exemption for investment in start ups by one more year till 31st March, 2022
5. In order to reduce compliance burden, the Budget provides reduction in the time-limit for reopening of income tax proceeding for three years from the present six years. In serious tax evasion cases, where there is evidence of concealment of income of ₹50 lakh or more in a year, the assessment can be reopened upto 10 years but only after the approval of the Principal Chief Commissioner.
6. The Finance Minister said that delay in deposit of the contribution of employees towards various welfare funds results in permanent loss of interest/income for the employees. In order to ensure timely deposit of employee’s contribution to these funds by the employers, she announced that late deposit of employee’s contribution shall never be allowed as deduction to the employer.
7. NRIs to be exempted from double taxation.
8. Increase in limit for tax audit of individuals from ₹5 crore to ₹10 crore.
9. Tax exemption for small charitable trusts running educational institutions and hospitals less than 5 crore.
10. National Faceless Income Tax Appellate Tribunal Centre and Dispute Resolution Committee to be set up.

Part B(II). INDIRECT TAX PROPOSALS

1. Deep analytics and artificial intelligence have been deployed to identity tax evaders and fake billers, launching special drives against them. The Finance Minister assured the House that every possible measure shall be taken to smoothen the GST further and remove anomalies such as the inverted duty structure.
2. The Finance Minister announced withdrawal of a few exemptions on parts of chargers and sub-parts of mobile phones further some parts of mobiles will move from “NIL” rate to a moderate 2.5 per cent.
3. She also announced reducing custom duty uniformly to 7.5 per cent on semis, flat, and long products of non-alloy and stainless steel. She also announced exempting duty on steel scrap for a period upto 31st March 2022.
4. Stressing on the need to rationalize duty on raw material inputs to man-made textile, the Finance Minister announced bringing nylon chain on par with polyester and other man-made fibers.
5. She announced raising duty on solar inverter from 5 per cent to 20 percent and on solar lanterns from 5 per cent to 15 per cent.
6. The Budget proposes certain changes to benefit MSMEs which include increasing duty on steel screws, plastic builder wares and prawn feed.
7. To benefit farmers, the Finance Minister announced raising custom duty on cotton, raw silk and silk yarn.
8. It also provides withdrawing exemption on imports of certain kind of leather and raising custom duty on finished synthetic gem stones.