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Budget 2021 announcements February 01 2021Budget 2021, Nirmala Sitharaman, Atmanirbhar Bhara

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Budget 2021 Announcements

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.

Top takeaway’s  

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 She clarified that the government has been revamping the customs duty system since last year and has removed 80 outdated exemptions.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 Exemptions are withdrawn in order to encourage MSME sector and increase domestic trade, as these goods are easily available in our own country and will increase opportunities for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. 

Tax reforms.

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.



Census

The Finance Minister has allocated Rs 3,726 crore for the next Census. This would be the first digital census ever conducted in India.

Infrastructure sector

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.

Education sector

‘’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."

Divestment

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 2021-22.

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. 

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