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New Delhi : Union Finance & Corporate Affairs Minister Nirmala Sitharaman presented the Union Budget 2021-22 in Parliament on February 1, 2021, which is the first budget of this new decade and also a digital one in the backdrop of unprecedented COVID-19 crisis. Laying a vision for AatmaNirbhar Bharat, she said this is an expression of 130 crore Indians who have full confidence in their capabilities and skills.
She said that Budget proposals will further 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 among others, according to a PIB release.
The Budget proposals for 2021-22 rest on 6 pillars :
- Health and Wellbeing
- Physical & Financial Capital, and Infrastructure
- Inclusive Development for Aspirational India
- Reinvigorating Human Capital
- Innovation and R&D
- Minimum Government and Maximum Governance
- Health and Wellbeing
There is substantial increase in investment in Health Infrastructure and the Budget outlay for Health and Wellbeing is Rs 2,23,846 crore in BE 2021-22 as against this year’s BE of Rs 94,452 crore, an increase of 137 percentage.
The Finance Minister announced that a new centrally sponsored scheme, PM AatmaNirbhar Swasth Bharat Yojana, will be launched with an outlay of about Rs 64, 180 crore over 6 years. This will develop capacities of primary, secondary, and tertiary care Health Systems, strengthen existing national institutions, and create new institutions, to cater to detection and cure of new and emerging diseases. The main interventions under the scheme are:
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- Support for 17,788 rural and 11,024 urban Health and Wellness Centers
- Setting up integrated public health labs in all districts and 3,382 block public health units in 11 states;
- Establishing critical care hospital blocks in 602 districts and 12 central institutions;
- Strengthening of the National Centre for Disease Control (NCDC), its 5 regional branches and 20 metropolitan health surveillance units;
- Expansion of the Integrated Health Information Portal to all States/UTs to connect all public health labs;
- Operationalisation of 17 new Public Health Units and strengthening of 33 existing Public Health Units at Points of Entry, that is at 32 Airports, 11 Seaports and 7 land crossings;
- Setting up of 15 Health Emergency Operation Centers and 2 mobile hospitals; and
- Setting up of a national institution for One Health, a Regional Research Platform for WHO South East Asia Region, 9 Bio-Safety Level III laboratories and 4 regional National Institutes for Virology.
Vaccines
Provision of Rs 35,000 crore made for Covid-19 vaccine in BE 2021-22.
The Pneumococcal Vaccine, a Made in India product, presently limited to only 5 states, will be rolled out across the country aimed at averting 50,000 child deaths annually.
Nutrition
To strengthen nutritional content, delivery, outreach, and outcome, Government will merge the Supplementary Nutrition Programme and the PoshanAbhiyan and launch the Mission Poshan 2.0. The Government will adopt an intensified strategy to improve nutritional outcomes across 112 Aspirational Districts.
Universal Coverage of Water Supply and Swachch Bharat Mission
The Finance Minister announced that the Jal Jeevan Mission (Urban) will be launched for universal water supply in all 4,378 Urban Local Bodies with 2.86 crore household tap connections, as well as liquid waste management in 500 AMRUT cities. It will be implemented over 5 years, with an outlay of Rs. 2,87,000 crore. Moreover, the Urban Swachh Bharat Mission will be implemented with a total financial allocation of Rs 1,41,678 crore over a period of 5 years from 2021-2026.
A voluntary vehicle scrapping policy to phase out old and unfit vehicles was also announced. Fitness tests have been proposed in automated fitness centres after 20 years in case of personal vehicles, and after 15 years in case of commercial vehicles
- Physical and Financial Capital and Infrastructure
AatmaNirbhar Bharat-Production Linked Incentive Scheme
The Finance Minister said that for a USD 5 trillion economy, our manufacturing sector has to grow in double digits on a sustained basis. Our manufacturing companies need to become an integral part of global supply chains, possess core competence and cutting-edge technology. To achieve all of the above, PLI schemes to create manufacturing global champions for an AatmaNirbhar Bharat have been announced for 13 sectors. For this, the government has committed nearly Rs .1.97 lakh crore in the next 5 years starting FY 2021-22.
Textiles
Similarly, to enable the textile industry to become globally competitive, attract large investments and boost employment generation, a scheme of Mega Investment Textiles Parks (MITRA) will be launched in addition to the PLI scheme. This will create world class infrastructure with plug and play facilities to enable create global champions in exports. 7 Textile Parks will be established over 3 years.
Infrastructure financing – Development Financial Institution (DFI)
Dwelling on the infrastructure sector, Sitharaman said that infrastructure needs long term debt financing. Accordingly, a Bill to set up a DFI will be introduced. Government has provided a sum of Rs 20,000 crore to capitalise this institution and the ambition is to have a lending portfolio of at least Rs 5 lakh crore for this DFI in three years time.
Asset Monetisation
Monetising operating public infrastructure assets is a very important financing option for new infrastructure construction. A “National Monetisation Pipeline” of potential Brownfield infrastructure assets will be launched. An Asset Monetisation dashboard will also be created for tracking the progress and to provide visibility to investors.
Some important measures in the direction of monetisation are:
- National Highways Authority of India and PGCIL each have sponsored one InvIT that will attract international and domestic institutional investors. Five operational roads with an estimated enterprise value of Rs 5,000 crore are being transferred to the NHAIInvIT. Similarily, transmission assets of a value of Rs 7,000 crore will be transferred to the PGCIL InvIT.
- Railways will monetise Dedicated Freight Corridor assets for operations and maintenance, after commissioning.
- The next lot of Airports will be monetised for operations and management concession.
- Other core infrastructure assets that will be rolled out under the Asset Monetisation Programme are: (i) NHAI Operational Toll Roads (ii) Transmission Assets of PGCIL (iii) Oil and Gas Pipelines of GAIL, IOCL and HPCL (iv) AAI Airports in Tier II and III cities, (v) Other Railway Infrastructure Assets (vi) Warehousing Assets of CPSEs such as Central Warehousing Corporation and NAFED among others and (vii) Sports Stadiums.
Roads and Highways Infrastructure
Finance Minister announced that more than 13,000 km length of roads, at a cost of Rs 3.3 lakh crore, has already been awarded under the Rs 5.35 lakh crore Bharatmala Pariyojana project of which 3,800 kms have been constructed. By March 2022, Government would be awarding another 8,500 km and complete an additional 11,000 kms of national highway corridors.
Railway Infrastructure
Indian Railways have prepared a National Rail Plan for India – 2030. The Plan is to create a ‘future ready’ Railway system by 2030. Bringing down the logistic costs for our industry is at the core of our strategy to enable ‘Make in India’. It is expected that Western Dedicated Freight Corridor (DFC) and Eastern DFC will be commissioned by June 2022.
- Urban Infrastructure
Government will work towards raising the share of public transport in urban areas through expansion of metro rail network and augmentation of city bus service. A new scheme will be launched at a cost of Rs. 18,000 crore to support augmentation of public bus transport services.
A total of 702 km of conventional metro is operational and another 1,016 km of metro and RRTS is under construction in 27 cities. Two new technologies i.e., ‘MetroLite’ and ‘MetroNeo’ will be deployed to provide metro rail systems at much lesser cost with same experience, convenience and safety in Tier-2 cities and peripheral areas of Tier-1 cities.
Power Infrastructure
The past 6 years have seen a number of reforms and achievements in the power sector with the addition of 139 Giga Watts of installed capacity, connecting an additional 2.8 crore households and addition of 1.41 lakh circuit km of transmission lines.
Expressing a serious concern over the viability of Distribution Companies, the Finance Minister proposed to launch a revamped reforms-based result-linked power distribution sector scheme with an outlay of Rs. 3,05,984 crore over 5 years. The scheme will provide assistance to DISCOMS for Infrastructure creation including pre-paid smart metering and feeder separation, upgradation of systems, etc., tied to financial improvements.
Ports, Shipping, Waterways
Major Ports will be moving from managing their operational services on their own to a model where a private partner will manage it for them.
Petroleum & Natural Gas
Sitharaman said that the government has kept fuel supplies running across the country without interruption during the COVID-19 lockdown period. Taking note of the crucial nature of this sector in people’s lives, the following key initiatives are being announced:
- Ujjwala Scheme, which has benefited 8 crore households, will be extended to cover 1 crore more beneficiaries.
- Government will add 100 more districts in next 3 years to the City Gas Distribution network.
- A gas pipeline project will be taken up in Union Territory of Jammu & Kashmir.
- An independent Gas Transport System Operator will be set up for facilitation and coordination of booking of common carrier capacity in all-natural gas pipelines on a non-discriminatory open access basis.
Financial Capital
The Finance Minister proposed to consolidate the provisions of SEBI Act, 1992, Depositories Act, 1996, Securities Contracts (Regulation) Act, 1956 and Government Securities Act, 2007 into a rationalised single Securities Markets Code. The Government would support the development of a world class Fin-Tech hub at the GIFT-IFSC.
Increasing FDI in Insurance Sector
She also proposed to amend the Insurance Act, 1938 to increase the permissible FDI limit from 49% to 74% and allow foreign ownership and control with safeguards. Under the new structure, the majority of Directors on the Board and key management persons would be resident Indians, with at least 50% of Directors being Independent Directors, and specified percentage of profits being retained as general reserve.
Disinvestment and Strategic Sale
In spite of COVID-19, Government has kept working towards strategic disinvestment. The Finance Minister said a number of transactions namely BPCL, Air India, Shipping Corporation of India, Container Corporation of India, IDBI Bank, BEML, Pawan Hans, NeelachalIspat Nigam limited among others would be completed in 2021-22. Other than IDBI Bank, Government propose to take up the privatisation of two Public Sector Banks and one General Insurance company in the year 2021-22.
In a very important announcement, the Finance Minister said that in the AtmaNirbhar Package, she had announced to come out with a policy of strategic disinvestment of public sector enterprises and said that the Government has approved the said policy. The policy provides a clear roadmap for disinvestment in all non-strategic and strategic sectors.
Government has kept four areas that are strategic where bare minimum CPSEs will be maintained and rest privatised. In the non-strategic sectors, CPSEs will be privatised, otherwise shall be closed. She said that to fast forward the disinvestment policy, NITI Aayog will work out on the next list of Central Public Sector companies that would be taken up for strategic disinvestment.
3. Inclusive Development for Aspirational India
Under the pillar of Inclusive Development for Aspirational India, the Finance Minister announced to cover Agriculture and Allied sectors, farmers’ welfare and rural India, migrant workers and labour, and financial inclusion.
Agriculture
Dwelling on agriculture, she said that the Government is committed to the welfare of farmers. The MSP regime has undergone a sea change to assure price that is at least 1.5 times the cost of production across all commodities. The procurement has also continued to increase at a steady pace. This has resulted in increase in payment to farmers substantially.
Early this year, the Prime Minister had launched SWAMITVA Scheme. Under this, a record of rights is being given to property owners in villages. Up till now, about 1.80 lakh property-owners in 1,241 villages have been provided cards and the Finance Minister proposed during FY21-22 to extend this to cover all states/UTs. To provide adequate credit to our farmers, Government has enhanced the agricultural credit target to Rs. 16.5 lakh crore in FY22.
In an important announcement to boost value addition in agriculture and allied products and their exports, the scope of ‘Operation Green Scheme’ that is presently applicable to tomatoes, onions, and potatoes, will be enlarged to include 22 perishable products.
Fisheries
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.
Migrant Workers and Labourers
Government has launched the One Nation One Ration Card scheme through which beneficiaries can claim their rations anywhere in the country. One Nation One Ration Card plan is under implementation by 32 states and UTs, reaching about 69 crore beneficiaries – that’s a total of 86% beneficiaries covered. The remaining 4 states and UTs will be integrated in the next few months.
Government proposes to conclude a process that began 20 years ago, with the implementation of the 4 labour codes. For the first time globally, social security benefits will extend to gig and platform workers. Minimum wages will apply to all categories of workers, and they will all be covered by the Employees State Insurance Corporation. Women will be allowed to work in all categories and also in the night-shifts with adequate protection.
Financial Inclusion
To further facilitate credit flow under the scheme of Stand Up India for SCs, STs, and women, the FM proposed to reduce the margin money requirement from 25% to 15%, and to also include loans for activities allied to agriculture.
4. Reinvigorating Human Capital
The FM said that the National Education Policy (NEP) announced recently has had good reception, while adding that more than 15,000 schools will be qualitatively strengthened to include all components of the National Education Policy. She also announced that 100 new Sainik Schools will be set up in partnership with NGOs/private schools/states. She also proposed to set up a Higher Education Commission of India, as an umbrella body having 4 separate vehicles for standard-setting, accreditation, regulation, and funding. For accessible higher education in Ladakh, Government proposed to set up a Central University in Leh.
Scheduled Castes and Scheduled Tribes Welfare
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 Rs. 20 crore to Rs. 38 crore, and for hilly and difficult areas, to Rs. 48 crore.
5. Innovation and R&D
The FM said that in her Budget Speech of July 2019, She had announced the National Research Foundation and added that the NRF outlay will be of Rs. 50,000 crore, over 5 years.
Government will undertake a new initiative – National Language Translation Mission (NTLM). This will enable the wealth of governance-and-policy related knowledge on the Internet being made available in major Indian languages.
The New Space India Limited (NSIL), a PSU under the Department of Space, will execute the PSLV-CS51 launch, carrying the Amazonia Satellite from Brazil, along with a few smaller Indian satellites.
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.
6. Minimum Government, Maximum Governance
Dwelling on the last of the six pillars of the Budget, the Finance Minister proposed to take a number of steps to bring reforms in Tribunals for speedy delivery of justice and proposes to take further measures to rationalised the functioning of Tribunals. he year 2021-2022.
On Fiscal position, she underlined that the pandemic’s impact on the economy resulted in a weak revenue inflow. Once the health situation stabilised, and the lockdown was being slowly lifted, Government spending was ramped up so as to revive domestic demand. As a result, against an original BE expenditure of Rs. 30.42 lakh crore for 2020-2021, RE estimates are Rs. 34.50 lakh crore and quality of expenditure was maintained. The capital expenditure, estimated in RE is Rs. 4.39 lakh crore in 2020-2021 as against Rs. 4.12 lakh crore in BE 2020-21.
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 Rs 80,000 crore for which it would be approaching the markets in these 2 months. The fiscal deficit in BE 2021-2022 is estimated to be 6.8% of GDP.
Sitharaman announced that the Government plan to continue the path of fiscal consolidation, and intend to reach a fiscal deficit level below 4.5% of GDP by 2025-2026 with a fairly steady decline over the period.