In the speech which lasted for almost
2 hours, Finance Minister Nirmala Sitharaman announced high capital expenditure
for the fiscal and emphasized more on infrastructural development. Sitharaman
tabled the 15th report of the Finance Commission in Lok Sabha early on 1st
February 2021. She hopes to get back to fiscal consolidation path by FY26. The
report recommends the fiscal deficit will reach below 4.5 percent by FY26.
Finance Minister Nirmala Sitharaman
said the government would borrow Rs 80,000 crore to fulfill FY21 expenditure in
the remaining two months.
The highest single-day gain in stock
clocks in 10 months: Sensex climbs 1400 points, Nifty tops 14,000 and Dalal Street
welcomes the expansionary budget of FM
Health Care sector
India has decided to spend Rs2.23
lakh crore on public health care, a 137% increase in the amount. FM also
announced Rs 35,000 crore for Covid-19 vaccines. It clearly indicates that we
need some health care reforms amidst the sudden Covid-19 Pandemic in order to
fight with any such unforeseen situation in the near future.
Customs Duty reforms.
In an attempt to improve local
demand, FM Nirmala Sitharaman declared a slew of changes in customs duty.
She clarified that the government has been revamping the customs duty system
since last year and has removed 80 outdated exemptions. This year, Sitharaman
is seeking a study of more than 400 old customs exemptions to put into place a
revised customs duty system. Custom duty is being increased on certain goods
like steel, leather, finished synthetic gemstones, auto parts and chemicals
etc. Exemptions are withdrawn in order to encourage MSME sector and increase
domestic trade, as these goods are easily available in our own country and will
increase opportunities for MSME’s.
Although there was no relief or
reform for direct tax payers as the decade''s first budget keeps personal income
tax slabs unchanged, tax exemptions are to be considered for affordable house
loans. Tax holiday for start-ups is extended by 1 more year. The tax burden on
senior citizens above 75 years of age is reduced. Pensioners above the age of
75 are excluded from filing returns.
The Finance Minister has allocated Rs
3,726 crore for the next Census. This would be the first digital census ever
conducted in India.
In Budget 2021, finance minister announced the establishment
of Development Financial Institution (DFI) for which Rs 20,000 crore has been
allocated to be capitalized by Budget 2021. In 5 years, the DFI will be aiming
for a Rs 5 lakh crore portfolio. She announced that Rs 5,000 crore from road
infrastructure is to be transferred to NHAI InvIT. Rs 7,000 crore of
transmission assets to be moved to PGCIL InvIT.
‘’Many of our cities, backed by the
Government of India, have different institutions, universities, colleges. For
instance, Hyderabad has almost 40 major institutions. We will establish a
formal umbrella structure in nine cities so that these institutions can have
stronger synergies while retaining their internal autonomy as well’’, Quoted
the FM. The government will enact the legislation envisaged in the National
Education Policy 2020 for the establishment of the Higher Education Commission
of India (HECI). FM also suggested the establishment of a central university in
Leh to facilitate "accessible higher education in Ladakh."
FM has also proposed the consolidate
provisions of acts such as SEBI Act, Depositories Act, Securities Contracts
Regulation Act and Government Securities Act. With a Divestment target of 1.75
lakh crore, Government has announced to privatize 2 PSU Banks and one general
insurance company (LIC). FM also added that LIC IPO will come up in the year
Budget 2021 is a vision for ''Atmanirbhar Bharat'', will
boost India''s self-confidence, stated PM Narendra Modi.
Although the proposed budget is declined towards infrastructural
development in some states of India, there were no solid reforms proposed for middle
income group, Personal tax payers and agricultural sector.