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Union Budget 2021-2022

What is the 'Union budget'?

● The Union Budget, referred to as the Annual Financial Statement in Article 112 of the
Constitution of India, is the annual budget of the Republic of India, presented before
the beginning of each financial year by the Finance Minister of India in Parliament.
● It is the statement of the government’s finances for the financial year, where the
government makes estimates of revenue and expenses for the upcoming fiscal year
that runs from April 1 to March 31.
● The word 'budget' has its origin in the French word Bougette, which means leather
briefcase.
● From 2017-18, the government merged the Railway Budget with the Union Budget.

Who makes the Budget?

● The budget is made through a consultative process involving the ministry of finance,
NITI Aayog and other ministries.
● Finance ministry issues guidelines for spending, based on which ministries present
their demands.
● The Budget division of the Department of Economic Affairs in the finance ministry is
the nodal body responsible for producing the Budget.

How is the budget made?

● The budget division issues a circular to all union ministries, states, UTs, autonomous
bodies, departments and the defence forces for preparing the estimates for the next
year.
● After ministries & departments send in their demands, extensive consultations are
held between Union ministries and the Department of Expenditure of the finance
ministry.
● At the same time, the Department of Economic Affairs and the Department of
Revenue meet stakeholders such as farmers, businessmen, FIIs, economists and civil
society groups to take their views.
● Once the pre-Budget meetings are over, a final call on the tax proposals is taken by
the finance minister. The proposals are discussed with the PM before the Budget is
frozen.
● The finance ministry collects information about receipts and expenditure from various
departments to prepare the revised estimates for the budget.
● The government also holds pre-budget consultations with stakeholders such as state
representatives, bankers, agriculturists, economists and trade unions to understand
their demands, which includes tax incentives and fiscal support.
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Budget printing & presentation

● The finance minister and other officials participate in 'halwa ceremony', which marks
the process of printing documents for the Budget.
● The Finance Minister presents the budget in the Lok Sabha outlining key estimates and
proposals.
● The budget is tabled in the Parliament after the minister's speech.

Presenting the first-ever digital Union Budget, Union Minister of Finance and Corporate
Affairs Smt. Nirmala Sitharaman stated that India’s fight against COVID-19 continues into
2021 and that this moment in history, when the political, economic, and strategic relations in
the post-COVID world are changing, is the dawn of a new era – one in which India is well-
poised to truly be the land of promise and hope.

The key highlights of the Union Budget 2021-22 are as follows:

6 pillars of the Union Budget 2021-22:

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.

Health and Wellbeing-

● Rs. 2,23,846 crores outlay for Health and Wellbeing in BE 2021-22 as against Rs.
94,452 crores in BE 2020-21 – an increase of 137%.
● Focus on strengthening three areas: Preventive, Curative, and Wellbeing.
● Steps being taken for improving health and wellbeing:

Vaccines

● Rs. 35,000 crores for COVID-19 vaccine in BE 2021-22.

● The Made-in-India Pneumococcal Vaccine is to be rolled out across the country,
from the present 5 states – to avert 50,000 child deaths annually.

Health Systems

Rs. 64,180 crore outlay over 6 years for PM Atma Nirbhar Swasth Bharat Yojana – a
new centrally sponsored scheme to be launched, in addition to NHM.
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● National Institution for One Health, 17,788 rural and 11,024 urban Health and
Wellness Centers.
● 4 regional National Institutes for Virology.
● 15 Health Emergency Operation Centers and 2 mobile hospitals.
● Integrated public health labs in all districts and 3382 block public health units in 11
states.
● 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.
● 17 new Public Health Units and strengthening of 33 existing Public Health Units.
● Regional Research Platform for WHO South-East Asia Region, 9 Biosafety Level III
laboratories.

Nutrition

● Mission Poshan 2.0 to be launched:

● To strengthen nutritional content, delivery, outreach, and outcome.
● Merging the Supplementary Nutrition Programme and the Poshan Abhiyan.
● Intensified strategy to be adopted to improve nutritional outcomes across 112
Aspirational Districts.

Universal Coverage of Water Supply

● Rs. 2,87,000 crores over 5 years for Jal Jeevan Mission (Urban) - to be launched
with an aim to provide:
● 2.86 crore household tap connections.
● Universal water supply in all 4,378 Urban Local Bodies.
● Liquid waste management in 500 AMRUT cities.

Swachch Bharat, Swasth Bharat

Rs. 1,41,678 crores over 5 years for Urban Swachh Bharat Mission 2.0. Main
interventions under Swachh Bharat Mission (Urban) 2.0:

● Complete faecal sludge management and waste water treatment.

● Source segregation of garbage.
● Reduction in single-use plastic.
● All Reduction in air pollution by effectively managing waste from construction-
and-demolition activities.
● Bioremediation of legacy dump sites.

Clean Air

Rs. 2,217 crores to tackle air pollution, for 42 urban centers with a million-plus
population.
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Scrapping Policy

● Voluntary vehicle scrapping policy to phase out old and unfit vehicles
● Fitness tests in automated fitness centres:
● After 20 years in case of personal vehicles.
● After 15 years in case of commercial vehicles.

Physical and Financial Capital and Infrastructure-

Production Linked Incentive scheme (PLI)

● Rs. 1.97 lakh crore in next 5 years for PLI schemes in 13 Sectors.
● To create and nurture manufacturing global champions for an Atma Nirbhar
Bharat.
● To help manufacturing companies become an integral part of global supply
chains, possess core competence and cutting-edge technology.
● To bring scale and size in key sectors.
● To provide jobs to the youth.

Textiles

● Mega Investment Textiles Parks (MITRA) scheme, in addition to PLI:

7 Textile Parks to be established over 3 years. Textile industry to

become globally competitive, attract large
investments and boost employment generation & exports

Infrastructure

● National Infrastructure Pipeline (NIP) expanded to 7,400 projects.

● Around 217 projects worth Rs. 1.10 lakh crore completed
● Measures in three thrust areas to increase funding for NIP:

o Creation of institutional structures

o Big thrust on monetizing assets
o Enhancing the share of capital expenditure
o Creation of institutional structures: Infrastructure Financing

● Rs. 20,000 crore to set up and capitalise a Development Financial Institution

(DFI) – to act as a provider, enabler and catalyst for infrastructure financing.
● Rs. 5 lakh crore lending portfolio to be created under the proposed DFI in 3
years.
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● Debt Financing by Foreign Portfolio Investors to be enabled by amending

InvITs’ and REITs’ legislations.

Big thrust on Monetizing Assets

● National Monetization Pipeline to be launched

● Important asset monetization measures:

o 5 operational toll roads worth Rs. 5,000 crores being transferred to

the NHAIInvIT
o Transmission assets worth Rs. 7,000 crores to be transferred to
the PGCILInvIT
o Dedicated Freight Corridor assets to be monetized by Railways, for
operations and maintenance, after commissioning
o Next lot of Airports to be monetized for operations and management
concession
o Other core infrastructure assets to be rolled out under the Asset
Monetization.

Programme:

1. Oil and Gas Pipelines of GAIL, IOCL and HPCL

2. AAI Airports in Tier II and III cities
3. Other Railway Infrastructure Assets
4. Warehousing Assets of CPSEs such as Central Warehousing
Corporation and NAFED
5. Sports Stadiums

Roads and Highways Infrastructure

● Rs. 1,18,101 lakh crores, highest ever outlay, for Ministry of Road Transport
and Highways.
● Under the Rs. 5.35 lakh crore Bharatmala Pariyojana, more than 13,000 km
length of Flagship Corridors/Expressways.

Railway Infrastructure

● Rs. 1,10,055 crores for Railways of which Rs. 1,07,100 crores is for capital
expenditure.
● National Rail Plan for India (2030): to create a ‘future ready’ Railway system by
2030.
● 100% electrification of Broad-Gauge routes to be completed by December,
2023.
● Western Dedicated Freight Corridor (DFC) and Eastern DFC to be
commissioned by June 2022, to bring down the logistic costs – enabling Make
in India strategy.

Urban Infrastructure
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● Raising the share of public transport in urban areas by the expansion of metro
rail network and augmentation of city bus service.
● Rs. 18,000 crores for a new scheme, to augment public bus transport.
● Innovative PPP models to run more than 20,000 buses.
● To boost the automobile sector, provide a fillip to economic growth, create
employment opportunities for our youth.
● ‘MetroLite’ and ‘MetroNeo’ technologies to provide metro rail systems at
much lesser cost with similar experience in Tier-2 cities and peripheral areas
of Tier-1 cities.

Power Infrastructure

139 Giga Watts of installed capacity and 1.41 lakh circuit km of transmission lines
added, and additional 2.8 crore households connected in past 6 years.

● Consumers to have the alternatives to choose the Distribution Company for

enhancing competitiveness.
● Rs. 3,05,984 crores over 5 years for a revamped, reforms-based and result-
linked new power distribution sector scheme.
● A comprehensive National Hydrogen Energy Mission 2021-22 to be launched.

Ports, Shipping, Waterways

● Rs. 2,000 crores worth 7 projects to be offered in PPP-mode in FY 21-22 for the
operation of major ports.
● Indian shipping companies to get Rs. 1624 crore worth subsidy support over 5
years in global tenders of Ministries and CPSEs.
● To double the recycling capacity of around 4.5 Million Light Displacement
Tonne (LDT) by 2024; to generate an additional 1.5 lakh jobs.

Petroleum & Natural Gas

● Extension of Ujjwala Scheme to cover 1 crore more beneficiaries.

● To add 100 more districts to the City Gas Distribution network in the next 3
years.
● An independent Gas Transport System Operator to 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

● A single Securities Markets Code to be evolved.

● Support for development of a world class Fin-Tech hub at the GIFT-IFSC.
● A new permanent institutional framework to help in the development of the
Bond market by purchasing investment-grade debt securities both in stressed
and normal times.
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● Setting up a system of Regulated Gold Exchanges: SEBI to be notified as

a regulator and Warehousing Development and Regulatory Authority to be
strengthened.
● To develop an investor charter as a right of all financial investors.
● Capital infusion of Rs. 1,000 crores to Solar Energy Corporation of India and Rs.
1,500 crores to Indian Renewable Energy Development Agency.
● Increasing FDI in Insurance Sector: To increase the permissible FDI limit from
49% to 74% and allow foreign ownership and control with safeguards.
● Stressed Asset Resolution: Asset Reconstruction Company Limited and Asset
Management Company to be set up.
● Recapitalization of PSBs: Rs. 20,000 crores in 2021-22 to further consolidate
the financial capacity of PSBs.

Deposit Insurance:

● Amendments to the DICGC Act, 1961, to help depositors get an easy and time-
bound access to their deposits to the extent of the deposit insurance cover.
● Minimum loan size eligible for debt recovery under the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security
Interest (SARFAESI) Act, 2002 proposed to be reduced from Rs. 50 lakh to Rs.
20 lakh for NBFCs with minimum asset size of Rs. 100 crores.

Disinvestment and Strategic Sale:

● Rs. 1,75,000 crores estimated receipts from disinvestment in 2021-22.

● Strategic disinvestment of BPCL, Air India, Shipping Corporation of India,
Container Corporation of India, IDBI Bank, BEML, Pawan Hans, Neelachal Ispat
Nigam limited etc. to be completed in 2021-22.
● Other than IDBI Bank, two Public Sector Banks and one General Insurance
company to be privatized
● IPO of LIC in 2021-22.
● New policy for Strategic Disinvestment approved; CPSEs except in four
strategic areas to be privatized.
● Special Purpose Vehicle in the form of a company to monetize idle land.
● Introducing a revised mechanism for ensuring timely closure of sick or loss-
making CPSEs.

Inclusive Development for Aspirational India-

Agriculture

● SWAMITVA Scheme to be extended to all States/UTs, 1.80 lakh property-

owners in 1,241 villages have already been provided cards.
● Agricultural credit target enhanced to Rs. 16.5 lakh crore in FY22 - animal
husbandry, dairy, and fisheries to be the focus areas.
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● Rural Infrastructure Development Fund to be enhanced to Rs. 40,000

crores from Rs. 30,000 crores.
● To double the Micro Irrigation Fund to Rs. 10,000 crores.
● ‘Operation Green Scheme’ to be extended to 22 perishable products, to boost
value addition in agriculture and allied products.
● APMCs to get access to the Agriculture Infrastructure Funds for augmenting
infrastructure facilities.

Fisheries

● 5 major fishing harbours – 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 scheme for beneficiaries to claim rations anywhere
in the country - migrant workers to benefit the most.
● Social security benefits for gig and platform workers too.
● minimum wages and coverage under the Employees State Insurance Corporation
applicable for all categories of workers.
● Women workers are allowed in all categories, including night-shifts with adequate
protection.

Reinvigorating Human Capital-

School Education

● 15,000 schools to be strengthened by implementing all NEP components. Shall act

as exemplar schools in their regions for mentoring others.
● 100 new Sainik Schools to be set up in partnership with NGOs/private
schools/states.

Higher Education

● 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.
● Central University to come up in Leh for accessibility of higher education in
Ladakh.

Scheduled Castes and Scheduled Tribes Welfare

● 750 Eklavya model residential schools in tribal areas.

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● Revamped Post Matric Scholarship Scheme for welfare of SCs.

Skilling

● Proposed amendment to Apprenticeship Act to enhance opportunities for youth

● Rs. 3000 crores for realignment of existing National Apprenticeship Training
Scheme (NATS) towards post-education apprenticeship, training of graduates and
diploma holders in Engineering.
● Initiatives for partnership with other countries in skilling to be taken forward,
similar to partnership.

Innovation and R&D-

● Modalities of National Research Foundation announced in July 2019 –

o Rs. 50,000 crores outlay over 5 years

o To strengthen overall research ecosystem with a focus on national-priority
thrust areas

● Rs. 1,500 crores for the proposed scheme to promote digital modes of payment.
● National Language Translation Mission (NTLM) to make governance and policy-
related knowledge available in major Indian languages.

● PSLV-CS51 to be launched by New Space India Limited (NSIL) carrying Brazil’s

Amazonia Satellite and some Indian satellites.

● As part of the Gaganyaan mission activities:

o 4 Indian astronauts being trained on Generic Space Flight aspects, in
Russia.
o First unmanned launch is slated for December 2021.
● Rs. 4,000 crores 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.
● Rs. 3,768 crores allocated for the 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 the Portuguese.
● Rs.1,000 crore for the welfare of Tea workers especially women and their
children in Assam and West Bengal through a special scheme.
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Fiscal Position

Item Original BE 2020-21 RE 2020-21 BE 2021-22

`30.42 lakh crore

Expenditure `34.50 lakh crore `34.83 lakh crore

Capital Expenditure `4.12 lakh crore `4.39 lakh crore ` 5.5 lakh crore

Fiscal Deficit (as % of GDP) - 9.5% 6.8%

o Gross borrowing from the market for the next year to be around 12 lakh crores.
o Plan to continue on the path of fiscal consolidation, achieving a fiscal deficit
level below 4.5% of GDP by 2025-2026 with a fairly steady decline over the
period.
o It will be achieved by increasing the buoyancy of tax revenue through
improved compliance, and secondly, by increased receipts from monetisation
of assets, including Public Sector Enterprises and land.

Net borrowing of the States:

● Net borrowing for the states allowed at 4% of GSDP for the year 2021-2022 as
per the recommendation of 15th FC.
● States are expected to reach a fiscal deficit of 3% of GSDP by 2023-24, as
recommended by the 15th Finance Commission.

Fifteenth Finance Commission:

● The final report covering 2021-26 was submitted to the President, retaining
vertical shares of states at 41%.
● Funds to UTs of Jammu and Kashmir and Ladakh would be provided by the
Centre.
● On the Commission’s recommendation, Rs. 1,18,452 crores have been
provided as Revenue Deficit Grant to 17 states in 2021-22, as
against Rs. 74,340 crores to 14 states in 2020-21.
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Tax Proposals-
The vision of a transparent, efficient tax system to promote investments and
employment in the country with minimum burden on taxpayers.

Direct Taxes

Achievements:

● Corporate tax rate was slashed to make it among the lowest in the world.
● Burden of taxation on small taxpayers eased by increasing rebates.
● Return filers almost doubled to 6.48 crore in 2020 from 3.31 crore in
2014.
● Faceless Assessment and Faceless Appeal introduced.

Reducing Disputes, Simplifying Settlement:

● Time limit for reopening cases was reduced to 3 years from 6 years.
● Serious tax evasion cases, with evidence of concealment of income of Rs.
50 lakh or more in a year, to be re-opened only up to 10 years, with
approval of the Principal Chief Commissioner.
● 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 taxpayers opted to settle tax disputes of over Rs. 85,000
crores through Vivad Se Vishwas Scheme until 30th January 2021.

Attracting Foreign Investment for Infrastructure:

● Infrastructure Debt Funds made eligible to raise funds by issuing Zero

Coupon Bonds.
● Relaxation of some conditions relating to prohibition on private funding,
restriction on commercial activities, and direct investment.

Supporting ‘Housing for All’:

● Additional deduction of interest, up to Rs. 1.5 lakh, for loan taken to buy
an affordable house extended for loans taken till March 2022.
● Tax holiday for Affordable Housing projects extended till March 2022.
● Tax exemption allowed for notified Affordable Rental Housing Projects.

Indirect Taxes

GST
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Measures taken till date:

● Electronic invoice system.

● Staggering of returns filing.
● Enhancement of capacity of GSTN system.
● Use of deep analytics and AI to identify tax evaders.

Custom Duty Rationalization:

● Twin objectives: Promoting domestic manufacturing and helping India get

onto global value chain and export better.
● 80 outdated exemptions already eliminated.

Achievements and Milestones during the COVID-19 pandemic

● Pradhan Mantri Garib Kalyan Yojana (PMGKY):

o Valued at Rs. 2.76 lakh crore.
o Free food grain to 80 crore people.
o Free cooking gas for 8 crore families.
o Direct cash to over 40 crore farmers, women, elderly, the poor and
the needy.
● Atma Nirbhar Bharat package (ANB 1.0):
o Estimated at Rs. 23 lakh crore – more than 10% of GDP.
● PMGKY, three ANB packages (ANB 1.0, 2.0, and 3.0), and announcements
made later were like 5 mini-budgets in themselves.
● Rs. 27.1 lakh crore worth of financial impact of all three ANB packages
including RBI’s measures – amounting to more than 13% of GDP.
● Structural reforms:
o One Nation One Ration Card
o Agriculture and Labour Reforms
o Redefinition of MSMEs
o Commercialisation of the Mineral Sector
o Privatisation of Public Sector Undertakings
o Production Linked Incentive Schemes
o Status of India’s fight against COVID-19:
▪ 2 Made-in-India vaccines – medically safeguarding citizens
of India and those of 100-plus countries against COVID-19
▪ 2 or more new vaccines are expected soon.
▪ Lowest death rate per million and the lowest active cases.

2021 - Year of milestones for Indian history

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● 75th year of India’s independence

● 60 years of Goa’s accession to India
● 50 years of the 1971 India-Pakistan War
● Year of the 8th Census of Independent India
● India’s turn at the BRICS Presidency
● Year for Chandrayaan-3 Mission
● Haridwar Maha Kumbh