Union Budget 2021: Key Highlights

The first paperless Union Budget announced by the Finance Minister Nirmala Sitharaman for 2021–22 was cheered by Dalal Street as indices posted the biggest Budget-day gain on Monday. The rally was mainly led by financials as Nifty Bank surged to record high on the government announcing recapitalization for banks as well as setting up asset reconstruction company (ARC) to manage bad debts.

Auto stocks also jumped in trade after the FM announced vehicle scrappage policy. No negative proposals like the expectation of imposition of Covid cess is said to have also boosted the investor sentiment.

Here is the fine print of the sectors prioritized in the Budget 2021–22 speech:

Healthcare:

• Finance Minister Nirmala Sitharaman announced a new scheme called Atmanirbhar Health Yojana with an outlay of ₹64,180 crore over six years to support health and wellness centres, setting up labs, critical care facilities
• ₹35,400 crore will be provided towards COVID-19 vaccines for FY22 and the government is committed to provide more if needed

Tax announcements:

• Senior citizens above 75 years of age need not file income tax returns, if their only income is through pension or interest, or both
• Foreign Portfolio Investors (FPIs) will be getting a deduction of tax on dividend at lower treaty rate
• The Finance Minister has proposed an extension of tax holiday for start-ups by one more year
• Tax exemption for aircraft leasing companies has also been proposed
• There has been no changes announced in the current income tax slabs

Autos:

• The government launches a voluntary vehicle scrapping policy to decrease pollution and oil import bills
• As per the policy, vehicles will undergo fitness tests after 20 years for personal vehicles and 15 years for commercial vehicles

Economy:

• The government has pegged the fiscal deficit at 9.5% of the GDP for FY21
• The Centre will be approaching the market for an additional ₹80,000 crore to fund FY21 fiscal deficit
• Fiscal deficit for FY22 is pegged at 6.8% of GDP

Infrastructure:

• The government will be spending ₹1.41 lakh crore for Urban Clean India Mission
• An outlay of ₹1.18 lakh crore has been announced for Ministry of Road Transport and Highways
• The Centre will spend ₹1.1 lakh crore for Railways in FY22

Agriculture:

• FM has increased agri credit target to ₹16.5 trillion for FY22
• Ms. Sitharman added that minimum wages will apply to all categories of workers

Divestment:

• The FM has proposed to take up two public sector banks and one general insurance company for stake sale in FY22.
• Life Insurance Corporation of India (LIC) will be going for an initial public offering in 2021–22

Insurance:

• The Centre has allowed foreign ownership in the insurance sector with safeguards
• The foreign direct investment (FDI) limit in insurance is increased to 74% from 49%

Financial sector:

• The government will be introducing a bill to set up a Development Financial Institution
• The Centre will put forth a proposal for New Rationalised Securities Markets Code
• ₹20,000 crore will be allocated for the recapitalisation of banks

MSMEs:

• The government will be doubling its MSME (Micro Small Medium Enterprises) allocation by setting aside ₹15,700 crore in FY22 for the sector

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