Union Budget of 2021

Budget Highlights

• Expenditure and receipts :  The government proposes to spend Rs 34,83,236 crore in 2021-22 and the receipts (other than borrowings) are expected to be Rs 19,76,424 crore in 2021-22.
•  GDP growth:  Nominal GDP is expected to grow at of 14.4% (i.e., real growth plus inflation) in 2021-22.  
•  Deficits:  Revenue deficit is targeted at 5.1% of GDP in 2021-22, which is lower than the revised estimate of 7.5% in 2020-21.  Fiscal deficit is targeted at 6.8% of GDP in 2021-22.

Disinvestment and FDI

• FDI limits in insurance companies will be increased from 49% to 74% and allow foreign ownership and control with safeguards. 
• Disinvestment: Disinvestment of Air India, IDBI Bank, and Pawan Hans will be completed in 2021-22. 
• Legislative amendments will be introduced to privatise two public sector banks and a General Insurance company. 
• The IPO for LIC will also be completed in 2021-22. 
• The government has approved a strategic disinvestment policy under which CPSEs will be maintained only in four sectors, with the rest being privatised. 
• States will be incentivised to disinvest their public sector companies.  A Special Purpose Vehicle will be used to monetise government owned land. 

New tax proposals:

• Agriculture and Infrastructure Development Cess: The cess will be levied on some imported items including gold, silver, alcoholic beverages, coal, and cotton, and basic customs duty will be reduced by an equal amount.   The cess will be levied on petrol and diesel at the rate of Rs 2.5 and Rs 4 per litre respectively, with equivalent cuts in excise duty.  As the cess is not part of the divisible pool of revenue shared with states, their revenue receipts will be adversely affected.
•  Changes in customs duty: The duty has been increased on some items such as cotton, silk, some auto and mobile parts.

 Legislative Changes: 

• Securities Markets Code: It will be introduced to consolidate four Acts including the SEBI Act, 1992 and the Government Securities Act, 2007. 
• The Companies Act, 2013: It will be amended to revise the definition of small companies by increasing threshold for paid up capital and annual turnover. 
• The Deposit Insurance and Credit Guarantee Corporation Act, 1961 will be amended to ensure that depositors get time-bound and easy access to their deposits to the extent of their insurance cover.  The minimum loan size for NBFCs to be eligible for debt recovery under the SARFAESI Act, 2002 will be reduced from Rs 50 lakh to Rs 20 lakh. 

Proposals related to Industry, Banking, Corporates etc.

• Corporate Affairs: Alternate methods of debt resolution and special frameworks for MSMEs will be introduced.  A Conciliation Mechanism will be set up for quick resolution of contractual disputes.  
•  Finance:  An Asset Reconstruction Company Limited and Asset Management Company will be set up to consolidate and take over existing stressed debt and manage and dispose assets. 
• An institutional framework will be created for the corporate bond market to instil confidence among participants and enhance liquidity of secondary markets. 
• Commerce and Industry:  Seven textile parks will be established over three years to create infrastructure and increase exports. 
• Agriculture and allied sectors:  Operation Green Scheme, currently applicable to tomatoes, onions, and potatoes, will be enlarged to include 22 perishable products.  The Agriculture Infrastructure Fund will be made available to APMCs to improve infrastructure facilities. 

Social Welfare

•  Labour and Employment: A portal to collect information on gig workers, and construction workers, among others will be launched to help frame schemes on health, housing, insurance, and others for migrant unorganised workers.  The Apprenticeship Act will be amended to enhance apprenticeship opportunities. 
• Health and Nutrition:  PM Atma Nirbhar Swasth Bharat Yojana will be launched to develop capacity of health systems, strengthen national institutions, and create institutions to detect and cure new and emerging diseases. 
•  Education: Legislation to set-up a Higher Education Commission of India will be introduced, having vehicles for standard-setting, accreditation, regulation, and funding. A grant to create formal umbrella structures for institutes of higher education in nine cities will be created.   More than 15,000 schools will be strengthened to include all components of the National Education Policy and subsequently mentor other schools to achieve ideals of Policy.
• Social Justice: To facilitate credit flow for SCs, STs, and women, margin money requirement under Stand Up India scheme will be reduced from 25% to 15%.   750 Eklavya model residential schools will be established in tribal areas.

Infrastructure

• Infrastructure and Real Estate:  A Bill to establish a Development Financial Institution for infrastructure financing will be introduced.  The DFI will be used to establish a lending portfolio of at least five lakh crore rupees for financing infrastructure projects.
• A National Monetisation Pipeline of potential infrastructure assets such as dedicated freight corridor assets of the railways will be launched.  Debt financing of real estate and infrastructure investment trusts by foreign portfolio investors will be enabled to ease access of finance in the infrastructure and real estate sectors.
• Road Transport: Economic corridors to augment road infrastructure are being planned in Tamil Nadu, Kerala, West Bengal, and Assam. 
• Public Transport: New technologies including MetroLite and MetroNeo will be used to develop metro rail systems in Tier-1 and Tier-2 cities. 
• A voluntary vehicle scrapping policy to phase out old and unfit vehicles was also announced.  
•  Energy:  A reforms-based scheme to provide assistance to power distribution companies for infrastructure creation will be launched to address concerns over viability.  A framework to provide choice to consumers among distribution companies will be launched.  Ujjwala scheme will be extended to cover one crore more beneficiaries.
• A Hydrogen Energy Mission to generate hydrogen from green power sources will be launched.

Science and Technology: 

• A scheme to provide financial incentives for digital modes of payments has been proposed. 
• The Deep Ocean Mission will be launched, covering survey explorations and projects for conservation of biodiversity.  
•  Water and Sanitation:  The Jal Jeevan Mission (Urban) will be implemented to enable universal water supply and liquid waste management in urban areas.  The Urban Swachh Bharat Mission 2.0 will focus on sludge and wastewater management, and on ensuring a reduction in single-use plastic and air pollution. 

PRELIMS QUESTION

Consider the following statements regarding Union Budget of 2021:
1.Atma Nirbhar Swasth Bharat Yojana, announced in the budget will aim primarily to improve insurance coverage in health sector.
2.It has announced the winding up of Operation Greens meant for price interventions in agricultural sector.
Which of the statements given above is/are correct?
(a)1 only
(b)2 only
(c)Both 1 and 2
(d)Neither 1 nor 2

Answer to Prelims Question