The Union Budget of India is the country’s comprehensive annual financial statement and is mentioned in Article 112 of the Indian constitution. It is a detailed account of the government’s finances including its revenues from various sources and outlays that will be incurred on different activities. It is important to note that the term “budget” is not mentioned in our constitution.
The Union Budget is presented on 01st February every year since 2017. Prepared by the Department of Economic Affairs under the Ministry of Finance, Government of India, it is presented by the means of a finance bill and appropriation bill. These bills need to be passed in the Parliament before the budget can come into effect on 01st April.
The first budget was presented by James Wilson in 1860.
The first budget of independent India was presented by Finance minister RK Shanmukham Chetty on 26th November 1947.
The first budget of republic India was presented by John Mathai on 28th February 1950.
The first railway budget was presented by John Mathai in 1924 on the recommendation of the Acworth Committee.
The last railway budget was presented by Suresh Prabhu in 2016. Since 2017, the railway budget has been merged with the General Budget.
As of 2020, Morarji Desai has presented the budget maximum number of times (10 times) in the Parliament.
Nirmala Sitharaman abandoned the age-old tradition of carrying budget in a briefcase and switched to “Bahi-Khata” in 2019.
Nirmala Sitharaman's Budget 2020 speech is the longest in terms of duration.
Union Budget 2021-2022 has been presented by Finance Minister Nirmala Sitharaman on 01st February 2021. It is the first paperless budget in India and is presented with the help of a made-in-India tablet. The Budget proposes several new schemes and key announcements that are discussed underneath.
In Union Budget Part A- Sankalp of Atmanirbhar Bharat, Nirmala Sitharaman mentioned the six main pillars of Union Budget 2021-22 which are:
Health & Well-being
Physical & Financial Capital & Infrastructure
Inclusive development for aspirational India
Reinvigorating human capital
Innovation & R&D
Minimum Govt & Maximum Governance.
Now, let us look at the major announcements under each of these segments:
Prime Minister Atamnirbhar Swachh Bharat Yojna: This scheme will be launched to develop the primary, secondary, and tertiary healthcare systems. It will also aim at strengthening the existing healthcare infrastructure. An outlay of about 64,180 crores over 6 years has been announced for the new health schemes under this.
COVID-19 vaccine: Union Budget 2021-22 has allocated Rs 35,000 crores for the COVID19 vaccine this year. Further, the government is committed to providing additional funds if required.
Pneumococcal vaccine rollout: In order to avert 50,000 child deaths annually, a pneumococcal vaccine which is presently available for 5 states will be made available to all the states.
Mishan Poshan 2.0 will be launched to augment the nutritional outcomes across 112 aspirational districts.
Jal Jivan Urban Mission will be launched and implemented in 5 years. A total of Rs 2.87 lakh crore has been allocated for this mission.
Clean Air Programme: A proposal has been submitted to tackle the worsening condition of air quality in 32 urban areas at an outlay of Rs. 2,217 crore.
Voluntary Vehicle Scrapping Policy: To combat vehicular pollution, a voluntary vehicle scrapping policy is rolled out under which vehicles will undergo a fitness test after 20 years for private vehicles and 15 years for commercial vehicles.
Production-Linked-Incentive Scheme (PLI): A PLI scheme has been announced at an outlay of Rs 1.97 lakh crore over the next 5 years for 13 sectors to have sustained double-digit growth in the manufacturing section. Sitharaman mentioned that it is imperative for fulling the dream of a five-trillion-dollar economy.
Mega Textile Investment Parks: Sitharaman announced that 07 mega textile investment parks will be set up in 3 years.
Capital Expenditure: A total of Rs 5.54 lakh crores has been allocated for the proposed increase in capital expenditure.
Development Finance Institution: Sitharaman has proposed to set up a Development Finance Institution at a cost of Rs 20,000 crore.
Roads & Highways: A total sum of 1.18 lakh crore has been awarded for the development of ports, roads, and highways. Further, FM announced that a 600km corridor will be constructed in West-Bengal at a cost of 25000 Crore.
Railway Infrastructure: The Finance Minister proposed to provide a record sum of Rs 1,10,055 crores for Railways of which Rs 1,07,100 crores is for Capital Expenditure only.
MetroLite and MetroNeo: FM Sitharaman has proposed to introduce MetroLite and MetroNeo in the Tier-2 cities and the peripheral areas of Tier-1 cities.
Gas Pipeline Network: The Gas pipeline network will also be extended in Jammu and Kashmir. And the City Gas Distribution (CGD) program will be extended to 100 districts in the next three years.
Ujjawala Scheme: This scheme will be extended to 1 Crore more beneficiaries.
Unified Securities Market Code: A unified securities market code will be introduced by consolidating the provisions of the SEBI Act, Depositories Act, and two other laws.
Investor Charter: An investor charter will be introduced to safeguard the rights of investors in all financial products.
Proposal to amend Insurance Act 1938: A proposal to amend the Insurance Act 1938 to increase the permissible FDI limit from 49% to 74% and allowing foreign ownership and control has been included in the budget.
Increase in deposit insurance cover: The center has approved an increase in the cover from Rs 1 lakh to Rs 5 lakh for bank depositors. The insurance is provided by the DICGC (Deposit Insurance and Credit Guarantee Corporation) under the DICGC Act, 1961. Hence, the said increment will be done by amending the DICGC Act, 1961. Further, Sitharaman has also promised easy and time-bound access to the promised cover.
Disinvestment: Under strategic disinvestment, the IPO of LIC will be issued this year. Further, two PSU banks, as well as one general insurance firm, will be disinvested. In addition to that, the strategic sale of Air India, IDBI Bank, and BPCL will be completed in 2021-22.
Agriculture and Allied Sectors: For the growth of Agriculture, Operation Green Scheme will be enlarged to cover 22 perishable crops and MSP (minimum support price) will be increased to 1.5 times. Further, 1000 more mandis will be integrated with the E-NAM marketplace.
Fisheries: 05 major fishing harbors will be developed in Chennai, Kochi, Paradip, Petuaghat, and Visakhapatnam.
Multipurpose Seaweed Park: A multipurpose seaweed park will be established in Tamil Nadu.
Higher Education: An umbrella structure will be created for higher education and a Higher Education Commission will also be set-up
Central University will be set up in Leh.
Sainik Schools and Eklavya Schools: 1000 Sainik Schools will be set up in partnership with NGOs, private schools, and states. 750 Eklavya schools will be set up in tribal areas.
National research foundation: A national research foundation will be set up at an outlay of 50 thousand crores.
Gaganyaan Mission 2021: The first unmanned Gaganyaan mission is scheduled for December 2021.
Deep Ocean Mission: This mission will be launched for the conservation of deep-sea biodiversity.
Launch of the first digital census: The first digital census will be launched this year at an outlay of Rs 3,758 crores.
50 Years of Liberation of Goa: To celebrate the 50 years of liberation, Goa will be granted Rs 300 Crore.
Welfare-Fund for Tea-Workers: A sum of Rs 1000 Crore has been proposed for the welfare of tea workers of Assam and West-Bengal.
Individual and Corporate Tax: The individual and corporate tax rates for FY 2021-22 are left unchanged.
Income Tax relaxation for senior citizens of 75 years age and above: The government has proposed to exempt senior citizens of 75 years and above from filling the tax provided that the pension income and interest income must be their only source of income.
Reduction in time for IT proceedings: The assessment proceedings of the cases shall be reopened only up to three years, against the earlier time limit of six years except in cases of serious tax evasion.
Dispute Resolution Committee: Government has proposed to constitute a ‘Dispute Resolution Committee’
National Faceless Income Tax Appellate Tribunal Centre will be set up.
Extension of tax holiday for start-ups: The tax holiday for startups has been extended by one more year up to 31st March 2022
Pre-filling will be allowed for salary, tax payments, TDS, etc.
Relaxation to NRIs: There is a proposal to notify rules for removing hardship for double taxation.
Advance tax will henceforth be applicable on dividend income only after its declaration.
Tax holidays for aircraft leasing: Tax holidays are proposed for aircraft leasing and rental companies
In case the employee’s PF contribution was deducted but not deposited by the employer, it will not be allowed as a deduction for the employer
Increment in the limit for tax audits: The limit for tax audits under section 44AB has been increased from Rs 5 crore to Rs 10 crore
Revision in Custom Duty Rates: Custom Duty Rates are revised for certain items including copper scrap, petrol, and high-speed diesel oil, solar inverters, solar lanterns, gold and silver, cotton, silk, alcohol, etc. The revised rates will be implemented from 02 February 2021.
Imposition of AIDC on petrol and diesel: Agriculture Infrastructure And Development Cess (AIDC) has been newly imposed on petrol and diesel at Rs2.5 and Rs.4 per liter respectively.
Introduction of Turant Customs: A new initiative called ‘Turant Customs’ will be introduced for faceless, paperless, and contactless customs measures