Union Budget FY 2021-2022: Highlights

Profile of the Author - Simran is a first year B.A. LL.B. student at University School of Law and Legal Studies, Guru Gobind Singh Indraprastha University.

DEFINITION AND SIGNIFICANCE OF UNION BUDGET

According to Article 112 of the Indian Constitution, the Union Budget of a year is a statement of the estimated receipts and expenditure of the government for that particular year. 

The Budget is first presented in the form of a speech by the Finance Minister and is then tabled in the Rajya Sabha. A general discussion is held between both the houses of the Parliament on what is to be done next. The speech is in two parts- Part A deals with the various schemes that are announced for the economic growth of the country and Part B contains tax proposals. 

The Government presents it on the first day of February with the goal that it could be materialised before the start of the new financial year in April. On the off chance that the budget isn't passed inside the declared date, Article 116 of the Constitution enables the Lok Sabha to pass the Vote-On-Account, a record which covers the expenditure incurred. [1]

Union Budget keeps the account of the government's finances for the fiscal year that runs from 1st April to 31st March. Union Budget is classified into Revenue Budget and Capital Budget. It shows receipts and expenditure as well as the Fiscal Deficit (FD), Revenue Deficit (RD, Effective Revenue Deficit (ERD) and the Primary Deficit (PD) of the Government of India. It gives an illustrative account of sources of receipts and their expenditure. The budget also contains extracts of allocations for programmes and schemes and giving insights on sources of deficit financing and composition of important budgetary variables. [2]

HIGHLIGHTS

HEALTH AND WELLBEING

With an increase of 137%, the Budget outlay for Health and Wellbeing is Rs. 2,23,846 crores in BE 2021-22 as against this year’s BE of Rs. 94,452 crores. Significant announcements are as follows:

• Rs. 35,000 crores assigned for the vaccines. The Pneumococcal Vaccine, a made in India product will be rolled out across the country. 
• Taking a holistic approach to Health, focus will be on strengthening three areas: Preventive, Curative, and Wellbeing.
• PM Atmanirbhar Swasth Bharat Yojana will be dispatched to develop primary, secondary and tertiary healthcare with a cost of about 64,180 crores over 6 years.
• Poshan 2.0 to be launched after merging supplementary nutrition programme and the poshan abhiyan to improve the nutritional outcomes across 112 aspirational Districts.
• The Jal Jeevan Mission (Urban) to focus on better water supply across the country with an outlay of Rs. 2,87,000 crores over 5 years.
• The Urban Swachh Bharat Mission 2.0 will be implemented over a time of 5 years.
• Voluntary vehicle scrapping policy to phase out old and unfit vehicles at fitness centres every 20 years (personal vehicles) and 15 years (commercial vehicles).

PHYSICAL & FINANCIAL CAPITAL AND INFRASTRUCTURE

The finance Minister, in her speech stated that the Indian economy is projected to contract 7.7 percent in the current year, albeit the public authority speculates development of 11 percent for the coming financial year, after an enormous COVID-19 vaccination drive and a bounce back in consumer demand and investments.

• Production Linked Incentive (PLI) programs to create Global Champions for making an Atmanirbhar Bharat for 13 sectors have been announced. This initiative will create and nurture global champions and provide jobs to our youth.
• A scheme of Mega Investment Textiles Parks (MITRA) will be launched in addition to the PLI scheme for textile industries; 7 textile parks to be established.
• The recommendation of a sharp expansion in capital use and Rs. 5.54 lakh crores dispensed, which is 34.5 percent more than the BE 2020-21.
• National Highway works to get started at Tamil Nadu (3500km) including Madurai-Kollam corridor, Chittoor-Thatcher corridor and Kerala (1500 km) including sections of Mumbai-Kanyakumari corridor.
• The National Infrastructure Pipeline (NIP) expanded to 7,400 projects from 6835 projects.
• The measures in three push regions to expand financing for NIP. First being Creation of Institutional Sectors under which Rs. 20,000 crores has been allocated for setting up and capitalising a Development Financial Institution (DIP) and the Debt Financing by foreign portfolio investors is also to be enabled by amending Infrastructure Investment Trust (InvIT’s) and Real Estate Investments Trust (REITs’). The National Monetized Pipeline to be launched and under monetisation of assets, five operational roads will be transferred to National Authority of India (NHAI) InvIT and transmission assets being transferred to the Power Grid Corporation of India (PGCIL) InvIT. Pipelines of Gas Authority of India Ltd(GAIL), Indian oil corporation and Home Hindustan Petroleum Corporation Limited (HAIL) to be monetized along with monetization of Dedicated Freight Corridor assets by railways. Thirdly, there will be an increase of 34.5% in Capital expenditure compared to last year’s budget, FM said.

Roads and Highway Infrastructure

• 13,000 km length of roads awarded for construction under the Bharatmala Pariyojana.
• Additional 11,000 km of national highway corridors to be completed by March.
• Advanced Traffic management systems will be installed in all new four and six lane highways.

Railway Infrastructure

• National Rail Plan for India (2030): to create a ‘future ready’ Railway system by 2030.
• Eastern and western dedicated freight corridors to be commissioned by June 2022 to enable ‘Make In India’.
• 100% electrification of Broad-Gauge routes.
• Vista Dome LHB coaches to be launched for passenger safety and convenience.

Urban Infrastructure

• 18,000 crores to support augmentation of public bus transport services.
• ‘MetroNeo’ and ‘MetroLite’ technologies provide metro rail systems at much lesser cost.

Power Infrastructure

• 139 Giga Watts of installed capacity added.
• a comprehensive National Hydrogen Energy Mission to be launched.

Petroleum and Natural Gas

• Ujjwala Scheme will be extended to cover 1 crore more beneficiaries.
• A gas pipeline project will be taken up in Union Territory of Jammu and Kashmir.
• An independent Gas Transport System Operator to be set up.

DEVELOPMENT OF ASPIRATIONAL INDIA

Agriculture

• Ensured Minimum Support Price (MSP) at minimum 1.5 times the cost of production across all commodities.
• SWAMITVA Scheme to be extended to all States/UTs.
• Operation Green Scheme to be extended to 22 perishable products, to boost value addition in agriculture and allied products.
• 1,000 more mandis to be combined with the National Agricultural Market (e-NAM) to bring transparency and competitiveness. APMCs (agricultural produce market committee) to get access to the Agriculture Infrastructure Funds for augmenting infrastructure facilities.

Fisheries

• Kochi, Chennai, Visakhapatnam, Paradip, and Petuaghat to be developed as hubs of economic activity.
• Multipurpose Seaweed Park in Tamil Nadu to promote seaweed cultivation.

Migrant workers and Labourers

• One Nation One Ration Card for migrant workers to benefit from the most.
• Portal to collect information on unorganized labour force.
• Implementation of 4 labour codes underway:

1. Social security benefits for gig and platform workers.
2. Minimum wages and coverage under the Employees State Insurance Corporation applicable for all categories of workers.
3. Women workers allowed in all categories, including night-shifts with adequate protection.
4. Compliance burden on employers reduced with single registration and licensing, and online returns.

REINVIGORATING HUMAN CAPITAL

• The National Education Policy (NEP) was recently announced.

1. 15,000 schools shall be strengthened by executing the policy.
2. 100 new Sainik Schools to be set up in partnership with NGOs/private schools/states.
3. Legislation to be introduced to set up the Higher Education Commission of India as an umbrella body with 4 separate vehicles for standard-setting, accreditation, regulation, and funding.
4. Central University to come up in Leh for accessibility of higher education in Ladakh.
5. 750 Eklavya model residential schools in tribal areas.
6. Revamped Post Matric Scholarship Scheme for welfare of SCs.
7. Rs. 3000 crores for realignment of existing National Apprenticeship Training Scheme (NATS) towards post-education apprenticeship, training of graduates and diploma holders in Engineering.

INNOVATION AND R&D

• The National Research Foundation has been allocated a budget of Rs. 50,000 crores to be spent over a period of 5 years.
• National Language Translation Mission was announced to enable the wealth of governance-and-policy related knowledge on the Internet.
• PSLV-CS51 to be launched by New Space India Limited (NSIL) carrying Brazil’s Amazonia Satellite and some Indian satellites.
• First unmanned satellite to be launched and 4 astronauts are being trained on Generic Space Flight aspects as parts of Gaganyaan activities.
• Rs. 4,000 crore over five years for Deep Ocean Mission survey exploration and conservation of deep sea biodiversity.

MINIMUM GOVERNMENT, MAXIMUM GOVERNANCE

• Measures being undertaken to bring reforms in Tribunals to ensure speedy justice.
• National Commission for Allied Healthcare Professionals introduced to ensure transparent and efficient regulation of the allied healthcare professions.
• The National Nursing and Midwifery Commission Bill introduced for the same in nursing profession.
• Proposed Conciliation Mechanism with mandate for quick resolution of contractual disputes with CPSEs.
• Rs. 3,768 crore allocated for first digital census in the history of India.
• Rs. 300 crore grant to the Government of Goa for the diamond jubilee celebrations of the state’s liberation from Portuguese.
• Rs. 1,000 crores for the welfare of Tea workers especially women and their children in Assam and West Bengal through a special scheme.

DIRECT AND INDIRECT TAX PROPOSALS

• Corporate tax rate slashed to make it among the lowest in the world
• Return filers almost doubled to 6.48 crore in 2020 from 31 crores in 2014.
• Faceless Assessment and Faceless Appeal introduced.
• Exemption from filing tax returns for senior citizens over 75 years of age and having only pension and interest income.
• Time limit for reopening cases reduced to 3 years from 6 years
• Dispute Resolution Committee to be set up for taxpayers with taxable income up to Rs. 50 lakh and disputed income up to Rs. 10 lakh
• National Faceless Income Tax Appellate Tribunal Centre to be established.
• over 1 lakh ten thousand taxpayers have already opted to settle tax disputes of over Rs. 85,000 crores under Vivaad Se Vishwaas Scheme.
• National Faceless Income Tax Appellate Tribunal Centre to be established.
• Rules to be notified for removing hardships faced by NRIs regarding their foreign retirement accounts.
• Limit of turnover for tax audit increased to Rs10 crore from Rs. 5 crores.
• Infrastructure Debt Funds made eligible to raise funds by issuing Zero Coupon Bonds
• Dividend payment to REIT/ InvIT exempt from Tax Deduction at Source (TDS).
• Sitharaman declared that Tax holiday for Affordable Housing projects extended has been extended till March 2022 and has also introduced Tax Holiday for capital gains from incomes of aircraft leasing companies. 
• Capital gains exemption for investment in start-ups extended till 31st March, 2022.
• Revised, distortion-free customs duty structure to be put in place from 1st October 2021 by reviewing more than 400 old exemptions.
• New customs duty exemptions to have validity up to the 31st March following two years from its issue date
• Duty on some parts of mobiles revised to 2.5% from ‘nil’ rate.
• Customs duty reduced uniformly to 7.5% on iron and steel and their alloys.
• Anti-Dumping Duty (ADD) and Counterveiling Duty (CVD) revoked on certain steel products.
• Duty on naphtha and copper scrap is reduced to 2.5%.
• Phased manufacturing plan for solar cells and solar panels to be notified.
• Duty on solar inverters raised from 5% to 20%, and on solar lanterns from 5% to 15% to encourage domestic production. [3]

OPINIONS

PROS: This budget is advantageous for the healthcare sector in light of the fact that there’s a boost in spending by 137% which led to extended shares of the different health centres. Real estate developers will also benefit from the plans for new development of finance institutions to meet financing necessities for infrastructure projects. The establishment of 7 mega textile parks in 3 years could lift the textile industries.

CONS: IT firms are India’s biggest services export contributors but received less attention in the financial plan and no remarkable announcements were made to boost the future of Information. India’s raised important tariffs on solar and mobile phone equipment to uplift local manufacturing in line with government’s self-reliance, this move may raise concerns about India’s trade policies that are viewed as protectionist.

FREQUENTLY ASKED QUESTIONS

Why is the Union Budget Important?

Union Budget holds importance because it ensures efficient allocation of resources, changes tax slabs, keeps a check on prices of essential commodities, helps reduce employment and poverty among other things.

What is a Vote on Account?

A vote on account, as defined by Article 116 of the Indian Constitution, is a grant in advance for the central government to meet short-term expenditure needs from the Consolidated Fund of India, generally lasting for a few months till the new financial year kicks in.

Endnotes :

[1] 'What Is Union Budget? Definition of Union Budget, Union Budget Meaning - The Economic Times' (The Economic Times, 2021) <https://economictimes.indiatimes.com/definition/Union-Budget> 

[2] BUDGET AT A GLANCE (2021) <http://www.indiabudget.gov.in> 

[3 ]'Key Highlights of Union Budget 2021-22' (Pib.gov.in, 2021) <https://pib.gov.in/PressReleasePage.aspx?PRID=1693907> 

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