6 Pillars of Union Budget 2021 and Their Inclusions

01 Feb 2021 // 60 min read // #mmm news
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Finance minister (FM) Nirmala Sitharaman presented the Union Budget 2021-22 in Parliament today. It is the first digital budget of India that lays a vision for Aatmanirbhar Bharat. According to her this Budget proposals will strengthen the Sankalp of Nation First, Doubling Farmer’s Income, Strong Infrastructure, Healthy India, Good Governance, Opportunities for Youth, Education for All, Women Empowerment, and Inclusive Development. While announcing the Union Budget 2021 in the parliament today, she said that the Budget proposal 2021-22 rests on 6 different pillars, which are:

  1. Health and wellbeing
  2. Physical & financial capital and infrastructure
  3. Inclusive development for aspirational India
  4. Reinvigorating human capital
  5. Innovation and R&D
  6. Minimum government and maximum governance

Pillar 1 of the Budget2021: Healthcare & wellbeing

The budget outlay for Health and Wellbeing is Rs. 2,23,846 crore in 2021-22, an increase of 137 percentage.

The key announcements under this Pillar are:

  • Increase in spending.
  • A new central-sponsored scheme will be launched named PM AatmaNirbhar Swasth Bharat Yojana with an outlay of about Rs. 64,180 crores over 6 years.
  • Support to 17,788 rural and 11,024 urban health & wellness centres.
  • Jal Jeevan Mission announced with an outlay of Rs. 2.87 lakh crores aiming to provide full-fledged water supply to all urban local bodies having household tap connections.
  • 1.41 lakh crores proposed by FM over a period of 5 Years for the Urban Swacch Bharath 2.0.
  • An amount of Rs.1.47 lakh crores has been assigned for over a 5-year period, from 2021 for initiatives such as wastewater treatment, reduction in plastic waster, reduction in pollution, etc.
  • The voluntary vehicle scrapping policy is announced in the Budget2021 that aims to remove inefficient vehicles to reduce vehicular pollution and oil import bills.
  • 35000 crores announced to manufacture and make the COVID19 vaccine accessible.
  • Integrated public health labs will be set up in all districts and 3382 block public health units in 11 states.
  • Critical care hospital blocks will be established in 602 districts & 12 central institutions.
  • The National Centre for Disease Control (NCDC), its 5 regional branches & 20 metropolitan health surveillance units will be strengthened.
  • 17 new Public Health Units will be operationalized and 33 existing Public Health Units will be strengthened at Points of Entry (32 Airports, 11 Seaports, & 7 land crossings).
  • 15 Health Emergency Operation Centers & 2 mobile hospitals will be set up.
  • A national institution will be set up for One Health, which is a Regional Research Platform for WHO South East Asia Region, 9 Bio-Safety Level 3 laboratories, and 4 regional National Institutes for Virology.
  • 35,000 crore allocated for Covid-19 vaccine in 2021-22.
  • The Pneumococcal Vaccine (Made in India product) will be rolled out across the country focused on averting 50,000 child deaths annually.
  • The Supplementary Nutrition Programme will be merged with PoshanAbhiyan and the government will launch the Mission Poshan 2.0.
  • An intensified strategy will be adopted to improve nutritional outcomes across 112 Aspirational Districts.

Pillar 2 of the Budget2021: Focus on Physical, Financial Capital, & Infrastructure

The government has allocated Rs. 1.97 lakh crore in the next 5 years for this category. It will help bring scale & size in key sectors and provide jobs to the youth.

The key announcements under this Pillar are:

  • 1.97 lakh crores proposed, over 5 years, starting this Financial Year (FY) to nurture global manufacturing champions & increase jobs for the youth.
  • A mega-investment textile park to be launched and 7 more textile parks to be established in the next 3 years.
  • The FM proposed to set up a Development Financial Institution (DFI) with an amount of Rs. 5 lakh crores.
  • Budget2021 to focus on the NHAI operational toll roads, airports in tier-2 & 3 cities, and sports stadiums.
  • 5.54 lakh crore proposed for capital expenditure for the year 2021-22 with a 34.5% Y-o-Y growth rate.
  • More than Rs. 2 lakh crores will be allocated for capital expenditure in the states & other autonomous bodies.
  • According to FM, till date, 3,800 km highway-stretch has already been constructed & more will be constructed under Bharat Mala project.
  • The following National Highway budget proposed for the below states:
    • Tamil Nadu: Rs. 1.03 lakh crores allocated for 3500km
    • Kerala: Rs.65,000 crores allocated for 1100km
    • West Bengal: Rs.25,000 crores allocated for 675km
  • Also, a national highway project of approx. 19,000 crores is in progress in Assam.
  • Overall, a total of Rs. 1,18,101 lakh crore has been proposed for Ministry of Road Transport & Highways.
  • An Infra-National Rail plan will be introduced to prepare a future rail system in India by 2030 to bring down logistics cost.
  • Metro cities will witness the next few phases of metro projects, and Metro Lite & Metro New concepts for tier 1& 2 cities will be introduced.
  • Ujjwala Scheme up to 1 crore to be extended to beneficiaries from the existing 8 crore beneficiaries.
  • There will be a focus on the various allied laws of the securities market to be merged to the Securities Market Code.
  • SEBI will be notified to regulate the setting up & arrangement of the commodity market system.
  • 1,000 crores granted to the Solar Energy Corporation of India.
  • Insurance Act to be amended to introduce additional FDI to insurance companies from the existing 49% to 74%.
  • A new Asset Reconstruction Company will be set up to provide resolution to stressed assets in PSUs.
  • DICGC Act, 1961 will be amended to streamline its provision where the depositors of the bank can get easy access to deposits via insurance in the case of a stressed bank.
  • Decriminalization under the Companies Act, 2013 is complete and the decriminalization of LLP Act, 2008 will be in force now.
  • The definition of small companies is modified: Companies with a paid-up capital not exceeding 2 crores & a turnover not exceeding 20 crores are to be considered small companies. Over 2 lakh companies benefit from this provision.
  • For Startups and Innovators, the OPC can be incorporated without a limit for turnover/ paid-up capital. This will also allow NRIs to incorporate OPC in India.
  • A special framework proposed for MSME.
  • MCA 21 V3.0 to be introduced with additional modules for e-scrutiny & e-adjudication.
  • The IPO of the LIC will be carried out in FY 2021-22. For the disinvestment strategy, 2 PSUs and 1 insurance company will be considered.
  • The 15th Finance Commission’s recommendation is to rationalize & reduce centrally sponsored schemes.
  • The FM has proposed to launch a revamped reforms-based result-linked power distribution sector scheme with an outlay of Rs. 3,05,984 crores over 5 years.
  • Above Rs. 2,000 crore allocated by Major Ports on Public Private Partnership mode in FY21-22.
  • Petroleum & Natural Gas
  • Ujjwala Scheme will be extended to cover 1 crore more beneficiaries.
  • 100 more districts will be added in the next 3 years to the City Gas Distribution network.
  • A gas pipeline project to be taken up in Jammu & Kashmir.
  • An independent Gas Transport System Operator to be set up for facilitation & coordination of booking of common carrier capacity in all-natural gas pipelines on a non-discriminatory open access basis.

Pillar 3 of the Budget2021: Inclusive Development for Aspirational India

The key announcements under this Pillar are:

  • The MSP regime has undergone a change in the Agriculture sector to provide 1.5 times the product cost across all commodities.
  • The agricultural credit will be increased to 16.5 lakh crores.
  • For paddy, the amount paid in 2020-2021 is estimated to increase to Rs. 1,72,752 crore.
  • For pulses, the amount paid in 2020-2021 is estimated to increase to Rs. 10,530 crore.
  • The receipts to cotton farmers have increased from Rs. 90 crore in 2013-14 to Rs. 25,974 crore as on 27 January 2021.
  • The scope of the ‘Operation Green Scheme’ to be enhanced to include 22 perishable crops, and 1.68 crore farmers have registered. It will also integrate 1,000 mandis.
  • 5 major fishing harbours will be developed in Kochi, Chennai, Visakhapatnam, Paradip, & Petuaghat as hubs of economic activity.
  • 1 nation-1 ration card plan has been implemented by 32 States & UTs. Migrant workers will be benefitted from this scheme as they can claim ration from anywhere in the country.
  • Under the Stand Up India scheme for SCs, STs, & women, the FM has proposed to reduce the margin money requirement from 25% to 15%, and include loans for activities allied to agriculture.

Pillar 4 of the Budget2021: Reinvigorating Human Capital

The key announcements under this Pillar are:

  • More than 15,000 schools will be strengthened qualitatively to include all components of the National Education Policy.
  • 100 new Sainik Schools will be set up in partnership with NGOs, private schools, and states.
  • A Higher Education Commission of India will be set up, as an umbrella body having four separate vehicles for standard-setting, accreditation, regulation, & funding.
  • A Central University will be set up in Leh.
  • 750 Eklavya model residential schools will be established in tribal, hilly, and difficult areas.
  • Under the revamped Post Matric Scholarship Scheme for the welfare of SCs, the Central Assistance was enhanced & allocated Rs. 35,219 crore for 6 years till 2025-2026, to benefit 4 crore SC students.
  • An initiative in partnership with the United Arab Emirates is underway to benchmark skill qualifications, assessment, & certification, along with the deployment of certified workforce.
  • There is a collaborative Training Inter Training Programme between India and Japan to facilitate transfer of Japanese industrial & vocational skills, technique, & knowledge. The same will be taken forward with many other countries.

Pillar 5 of the Budget2021: Innovation and R&D

The key announcements under this Pillar are:

  • A National Research Foundation is announced by the FM in the Budget 2021 and a NRF outlay will be of Rs. 50,000 crores, over 5 years.
  • A new initiative called National Language Translation Mission will be taken by the government.
  • The New Space India Limited, a PSU under the Department of Space will execute the PSLV-CS51 launch, which will carry the Amazonia Satellite from Brazil with a few smaller Indian satellites.
  • Four Indian astronauts are being trained in Russia for the Gaganyaan mission. The first unmanned launch is slated for December 2021.

Pillar 6 of the Budget2021: Minimum Government, Maximum Governance

The key announcements under this Pillar are:

Measures will be taken to rationalise the functioning of Tribunals.

The National Commission for Allied Healthcare Professionals Bill is introduced by the Government in Parliament to ensure transparent and efficient regulation of the 56 allied healthcare professions.

The forthcoming Census can be the first digital census in the history of India and for this task, Rs. 3,768 crore allocated in the year 2021-2022.

  • The total fiscal deficit has been pegged at 9.5 % of GDP & it is funded through government borrowing. An additional of 80,000 crore is needed to ensure India’s economy is given the needed push.
  • The borrowings from the market will be at 12 lakh crores for next year.

Part B of the Union Budget 2021 simplifies the Tax Administration, Litigation Management, and ease the compliance of Direct Tax Administration. The indirect proposal aims at custom duty rationalisation and also the rationalisation of procedures and easing of compliance.

Direct Tax Proposals

  • Senior citizens aged above 75 years, who only have a pension and interest income, will be exempted from filing of income tax returns.
  • NRIs will be exempted from double taxation.
  • NRIs are allowed to operate One Person Companies (OPCs) in India.
  • Startups will get an extension of 1 more year in their tax holiday till March 31, 2022.
  • Late deposit of employee’s contribution to PF/pension/gratuity by employers will not be allowed as a deduction to the employer.
  • In serious tax evasion cases, reassessment can be opened for 10 years only if there is any evidence of concealment of income of Rs. 50 lakhs or above in a year.
  • For others, reopening of tax assessments brought down from 6 to 3 years.
  • The ‘Faceless dispute resolution committee & mechanism’ to be set up to reduce litigations for small taxpayers. A taxpayer with taxable income up to Rs. 50 lakhs and disputed income up to Rs. 10 lakhs can approach the committee.
  • A faceless Income Tax Appellate Tribunal (ITAT) to be set up for providing online resolution.
  • Tax audit limit is increased from Rs. 5 crores to Rs. 10 crores.
  • ITR, details of capital gains, income from list securities, dividend income, and income from interest on bank deposits to come pre-filled in ITR.
  • The advance tax liability on dividend income shall arise after the declaration of payment of dividend. The eligibility period for claiming the additional deduction for interest of Rs. 1.5 lakh paid for loan taken for the purchase of an affordable house extended to 31st March, 2022.
  • For promoting the supply of affordable rental housing to the migrant workers, a new tax exemption announced for the notified affordable rental housing projects.

Indirect Tax Proposals

  • The finance minister also proposed to provide GST relief by reducing inverted GST structures and for this, the Government will take the necessary steps.
  • The Government proposed to review over 400 old exemptions in indirect taxes and it will begin extensive consultation from October 2021.
  • Tax incentives for the IFSC & tax holiday for aircraft leasing & rental companies.
  • Under Indirect Taxation, 400 old exemptions will be reviewed this year through extensive consultations. After that a revised customs duty structure will be introduced.
  • Customs duty on copper, textile, gold & silver has been rationalized.
  • Customs duty on solar inverters increased from 5% to 20% & solar lanterns from 5% to 15%.
  • Exemption on import of leather is withdrawn as they are domestically produced.
  • ‘Turant Customs’ initiative proposed for faceless, paperless, & contactless customs measures.

Also Read: PM Aatmnirbhar Swastha Bharat Yojna – Rs. 64,180 Investment Details