Presentation of the first digital budget announcement, Union Finance and Corporate Affairs Minister Smt. Nirmala Sitharaman suggested that the Union Budget 2021-2022, inspired by the Covid-19 pandemic, is touted as the best budget in 100 years. This budget has set the benchmark for India to become Aatmanirbhar or self-reliant.

Rs. 34.5 Lakh, Crore estimate for 2021-22, is announced by the finance minister in the pandemic context.

This 2021-22 budget called for the maximum capital growth of 34.4%, providing railways, roads and defense with more funding.

6 Union Budget Pillars for 2021-22:

•  Health and Well-being
•  Infrastructure and physical &      financial resources
•  Aspiration India Inclusive Development
•  Human Capital Reinvigorating
•  R&D and innovation
•  Minimal government and maximum governance

Important Announcements:

Healthcare and Well-Being –

The budget for the health and wellness sectors allocated to Rs. 2,83,000 Crores

The action plan required nearly 30,000 rural and urban health and wellness facilities to be set up.

For the Covid-19 vaccine, the finance minister also funded around Rs. 35,000 Crores with a plan to provide additional funds.

Models of Growth & Investment –

The finance minister emphasized the government’s commitment to building an expansionary budget for ‘Aatmanirbhar Bharat’ to enhance capital investment, growing spending and promoting better employment opportunities.

Major Infrastructural Announcements –

•  Public-Private mode of collaboration in major ports
•  More Government Infrastructure Pipeline projects
•  Public transportation budget of around Rs. 18,000 Crores
•  Development of Metrolite and associated technologies in Tier 2 cities 
•  Approximately Rs. 1, 00,000 crores for the construction of 11,000 kilometers of the national highway corridor

In The Manufacturing Sector –

Establishment of 7 mega parks for textiles

Production-Linked incentive program or PLI for a wide range of products in electronics that seeks to make India a worldwide manufacturing and export hub

At about Rs. 5.54 Lakh Crores, the government’s capital expenditure for FY22 is very generous, which is 35 percent higher than last year.

Investments Announcements –

The FDI growth in the insurance company from the current 49% to 74%

Public banks recapitalization of approximately Rs. 20,000 Crores was proposed for FY22

The establishment of the Development Finance Organization

Balancing the Books and The Budget Deficit –

The country’s fiscal deficit is forecast at 9.5% of GDP for FY21, i.e., during April 2020 and March 2021, at the macro level. The finance minister projects a fiscal deficit of 6.8 % for FY22, with a projection to reduce it consistently to below 4.5 percent by 2025-26.

Proposed strategy to Handle The FY22 Fiscal Deficit:

•  A total of Rs. 12,00,000 Crores Borrowing 
•  Strategic divestment of two banks of the public sector and one general insurance company
•  LIC’s Initial Public Offering (IPO)
•  Sale of BPCL and Air India
•  Selling non-core properties such as surplus land

Taxes:

There are no significant changes in direct taxation.

This budget aimed to improve the tax experience through:

•  Extending the framework of Vivad se Vishwas until 28 Feb 2021
•  Reduction in the re-opening of tax assessments from 6 to 3 years
•  Reduced litigation involving small taxpayers
•  Increase thresholds for a tax audit.