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New Delhi: Union Minister of Finance and Corporate Affairs Nirmala Sitharaman presented the Union Budget 2021-22 in the Parliament on Monday, February 1 2021 announcing that the Government shall work towards taking the country forward to the next level of health,
prosperity and well-being.

“We shall strive to bring Ease of living for every citizen,” Ms Sitharaman emphasised.

Regarding the Farm Sector, the Finance Minister underscored the central Government proposes to encourage those State governments who undertake implementation of following model laws already issued by the Central government:
a) Model Agricultural Land Leasing Act, 2016
b) Model Agricultural Produce and Livestock Marketing (Promotion and Facilitation) Act, 2017; and
c) Model Agricultural Produce and Livestock Contract Farming and Services (Promotion and
Facilitation) Act, 2018

Budget 2021-22 that provides a soothing touch to senior citizens above 75 and leaves the income tax slabs and exemptions untouched, reflects firm commitment of the Government to boost economic growth by investing in infrastructure development and disinvestment and strategic sale. This is substantiated by increase in capital expenditure by 34.5% (₹1,42,151 crore) over BE 2020-21.In RE 2020-21, the total expenditure has been estimated at ₹ 34,50,305 crore and is more than Provisional Actual (2019-20) by ₹ 7,63,975 crore.

Income Tax

Citizens, 75 years and above, who have only Pension and Interest income – will not have to file Income Tax Returns

Re-opening of Assessment to be reduced to 3 years from 6 years. Re-opening only with approval of Pr.CCIT can be made upto 10 years where there is evidence of concealment of Income of Rs. 50 lakhs or more.

Reducing Litigation for small tax payers – Faceless Dispute Resolution Panel will be set up for those with total Income not exceeding Rs.50 lakh and disputed income of Rs.10 lakh.

Income Tax Appellate Tribunal to become Faceless – There will be only electronic communication.

Relaxation to NRIs – Rules will be in place to remove hardship of Double Taxation

Tax Audit Limit to be increased to Rs.10 crores from Rs.5 crores for those having less than 5% cash transactions

Dividend will be exempt from TDS. Advance tax liability on dividend income will arise only after declaration or payment of dividend. For Foreign Investors – lower treaty rate benefit is proposed.

The total resources being transferred to the States including the devolution of State’s share, Grants/ Loans and releases under Centrally Sponsored Schemes etc in BE 2021-22 is ₹13,88,502 crore, which shows an increase of ₹74,565 crore over RE (2020-21).

Investment on Health Infrastructure increased substantially

PM AtmaNirbhar Swasth Bharat Yojana, will be launched with an outlay of about ₹ 64,180 crores over 6 years.

The outlay of about ₹ 64,180 crores will be in addition to the National Health Mission. The main interventions under the scheme are:

a. Support for 17,788 rural and 11,024 urban Health and Wellness Centers

b. Setting up integrated public health labs in all districts and 3382 block public health units in 11 states;

c. Establishing critical care hospital blocks in 602 districts and 12 central institutions;

d. Strengthening of the National Centre for Disease Control (NCDC), its 5 regional branches and 20 metropolitan health surveillance units;

e. Expansion of the Integrated Health Information Portal to all States/UTs to connect all public health labs;

f. Operationalisation of 17 new Public Health Units and strengthening of 33 existing Public Health Units at Points of Entry, that is at 32 Airports, 11 Seaports and 7 land crossings;

g. Setting up of 15 Health Emergency Operation Centers and 2 mobile hospitals; andh. Setting up of a national institution for One Health, a Regional Research Platform for WHO South East Asia Region, 9 Bio-Safety Level III laboratories and 4 regional National Institutes for Virology.

Infrastructure

The National Infrastructure Pipeline (NIP) was announced by the Finance Minister in December 2019 is the first-of-its-kind, whole-of-government exercise ever undertaken by Government of India. 

The NIP was launched with 6835 projects; the project pipeline has now expanded to 7,400 projects. Around 217 projects worth ₹1.10 lakh crores under some key infrastructure Ministries have been completed. The NIP is a specific target which this government is committed to achieving over the coming years. It will require a major increase in funding both from the government and the financial sector.

In this Budget, the Finance Minister has proposed to take concrete steps to do this, in three ways: Firstly, by creating the institutional structures; secondly, by a big thrust on monetizing assets, and thirdly by enhancing the share of capital expenditure in central and state budgets.

Infrastructure financing – Development Financial Institution (DFI) 

Infrastructure needs long term debt financing. A professionally managed Development Financial Institution is necessary to act as a provider, enabler and catalyst for infrastructure financing. Accordingly, a sum of ₹ 20,000 crores is proposed to capitalise this institution.

The ambition, according to the Finance Minister, is to have a lending portfolio of at least ₹5 lakh crores for this DFI in three years time.

Debt Financing of InVITs and REITs by Foreign Portfolio Investors will be enabled by making suitable amendments in the relevant legislations. This will further ease access of finance to InVITS and REITs thus augmenting funds for infrastructure and real estate sectors.

Asset Monetisation

Monetizing operating public infrastructure assets is a very important financing option for new infrastructure construction. A “National Monetization Pipeline” of potential brownfield infrastructure assets will be launched. An Asset Monetization dashboard will also be created for tracking the progress and to provide visibility to investors.

Some important measures in the direction of monetisation are:

a. National Highways Authority of India and PGCIL each have sponsored one InvIT that will attract international and domestic institutional investors. Five operational roads with an estimated enterprise value of ₹ 5,000 crores are being transferred to the NHAI InvIT. Similarily, transmission assets of a value of ₹ 7,000 crores will be transferred to the PGCIL InvIT.

b. Railways will monetise Dedicated Freight Corridor assets for operations and maintenance, after commissioning. 

c. The next lot of Airports will be monetised for operations and management concession. 

d. Other core infrastructure assets that will be rolled out under the Asset Monetization Programme are:

(i) NHAI Operational Toll Roads 

(ii) Transmission Assets of PGCIL

(iii) Oil and Gas Pipelines of GAIL, IOCL and HPCL

(iv) AAI Airports in Tier II and III cities,

(v) Other Railway Infrastructure Assets

(vi) Warehousing Assets of CPSEs such as Central Warehousing Corporation and NAFED among others and 

(vii) Sports Stadiums.

Sharp Increase in Capital Budget

In the BE 2020-21,  ₹ 4.12 lakh crores was provided for Capital Expenditure. The effort is in spite of resource crunch the government should spend more on capital and to end the year at around ₹ 4.39 lakh crores which has been provided in the RE 2020-21.

For 2021-22, a sharp increase in capital expenditure has been proposed and thus there’s a provision of ₹ 5.54 lakh crores which is 34.5% more than the BE of 2020-21. Of this, a sum of more than ₹ 44,000 crores has been kept in the Budget head of the Department of Economic Affairs to be provided for projects /programmes /departments that show good progress on Capital Expenditure and are in need of further funds. Over and above this expenditure, more than ₹2 lakh crores will be provided to States and Autonomous Bodies for their Capital Expenditure. 

The central government will also work out specific mechanisms to nudge States to spend more of their budget on creation of infrastructure.

Roads and Highways Infrastructure

More than 13,000 km length of roads, at a cost of ₹ 3.3 lakh crores, has already been awarded under the ₹ 5.35 lakh crores Bharatmala Pariyojana project of which 3,800 kms have been constructed. By March 2022, and government would be awarding another 8,500 kms and complete an additional 11,000 kms of national highway corridors.

To further augment road infrastructure, more economic corridors are also being planned. Some are: a. 3,500 km of National Highway works in the state of Tamil Nadu at an investment of ₹ 1.03 lakh crores. These include:

a. Madurai-Kollam corridor, Chittoor-Thatchur corridor. Construction will start next year.

b. 1,100 km of National Highway works in the State of Kerala at an investment of ₹ 65,000 crores including 600 km section of Mumbai-Kanyakumari corridor in Kerala.

c. 675 km of highway works in the state of West Bengal at a cost of ₹25,000 crores including upgradation of existing road-Kolkata –Siliguri.

d. National Highway works of around ₹19,000 crores are currently in progress in the State of Assam. Further works of more than ₹34,000 crores covering more than 1300 kms of National Highways will be undertaken in the State in the coming three years. 

The Budget proposes an enhanced outlay of ₹ 1,18,101 lakh crores for Ministry of Road Transport and Highways, of which ₹1,08,230 crores is for capital, the highest ever.

Railway Infrastructure

Indian Railways have prepared a National Rail Plan for India – 2030. The Plan is to create a ‘future ready’ Railway system by 2030.

Bringing down the logistic costs for industry is at the core of the strategy to enable ‘Make in India’, the Finance Minister said adding, it is expected that Western Dedicated Freight Corridor (DFC) and Eastern DFC will be commissioned by June 2022. 

The following additional initiatives are proposed:

a. The Sonnagar – Gomoh Section (263.7 km) of Eastern DFC will be taken up in PPP mode in 2021-22. Gomoh-Dankuni section of 274.3 km will also be taken up in short succession.

b. Future dedicated freight corridor projects would be undertaken, they are namely East Coast corridor from Kharagpur to Vijayawada, East-West Corridor from Bhusaval to Kharagpur to Dankuni and North-South corridor from Itarsi to Vijayawada. Detailed Project Reports will be undertaken in the first phase. 

c. Broad Gauge Route Kilometers (RKM) electrified is expected to reach 46,000 RKM i.e., 72% by end of 2021 from 41,548 RKM on 1st Oct 2020. 100% electrification of Broad-Gauge routes will be completed by December, 2023. 

For Passenger convenience and safety the following measures are proposed:
a. Aesthetically designed Vista Dome LHB coach will be introduced on tourist routes to give a better travel experience to passengers. 

b. The safety measures undertaken in the past few years have borne results. To further strengthen this effort, high density network and highly utilized network routes of Indian railways will be provided with an indigenously developed automatic train protection system that eliminates train collision due to human error. 

c. A record sum of ₹1,10,055 crores, for Railways of which ₹1,07,100 crores is for capital expenditure. 

Urban Infrastructure

The Government will work towards raising the share of public transport in urban areas through expansion of metro rail network and augmentation of city bus service.

A new scheme will be launched at a cost of ₹18,000 crores to support augmentation of public bus transport services. The scheme will facilitate deployment of innovative PPP models to enable private sector players to finance, acquire, operate and maintain over 20,000 buses. The scheme will boost the automobile sector, provide fillip to economic growth, create employment opportunities for our youth and enhance ease of mobility for urban residents. 

A total of 702 km of conventional metro is operational and another 1,016 km of metro and RRTS is under construction in 27 cities. Two new technologies i.e., ‘MetroLite’ and ‘MetroNeo’ will be deployed to provide metro rail systems at much lesser cost with same experience, convenience and safety in Tier-2 cities and peripheral areas of Tier-1 cities. 

Central counterpart funding will be provided to:a. Kochi Metro Railway Phase-II of 11.5 km at a cost of `1957.05 crores.b. Chennai Metro Railway Phase-II of 118.9 km at a cost of ₹63,246 crores.c. Bengaluru Metro Railway Project Phase 2A and 2B of 58.19 km at a cost of ₹14,788 crores.d. Nagpur Metro Rail Project Phase-II and Nashik Metro at a cost of ₹ 5,976 crores and ₹ 2,092 crores respectively.

Power Infrastructure

The Finance Minister said, past 6 years, have seen a number of reforms and achievements in the power sector. The government has added139 Giga Watts of installed capacity, connected an additional 2.8 crores households and added 1.41 lakh circuit km of transmission lines.

The distribution companies across the country are monopolies, either government or private. There is a need to provide choice to consumers by promoting competition. A framework will be put in place to give consumers alternatives to choose from among more than one Distribution Company, the Finance Minister announced.

Ports, Shipping, Waterways

Major Ports will be moving from managing their operational services on their own to a model where a private partner will manage it for them. For the purpose, 7 projects worth more than ₹2,000 crores will be offered by the Major Ports on Public Private Partnership mode in FY21-22. A scheme to promote flagging of merchant ships in India will be launched by providing subsidy support to Indian shipping companies in global tenders floated by Ministries and CPSEs. An amount of ₹1624 crores will be provided over 5 years. This initiative will enable greater training and employment opportunities for Indian seafarers besides enhancing Indian companies share in global shipping.

India has enacted Recycling of Ships Act, 2019 and acceded to the Hong Kong International Convention. Around 90 ship recycling yards at Alang in Gujarat have already achieved HKC-compliant certificates. Efforts will be made to bring more ships to India from Europe and Japan.

Recycling capacity of around 4.5 Million Light Displacement Tonne (LDT) will be doubled by 2024. This is expected to generate an additional 1.5 lakh jobs for our youth.

The Finance Minister said, “we have kept working towards strategic disinvestment”. A number of transactions namely BPCL, Air India, Shipping Corporation of India, Container Corporation of India, IDBI Bank, BEML, Pawan Hans, Neelachal Ispat Nigam limited among others would be completed in 2021-22. Other than IDBI Bank, the government proposes to take up the privatization of two Public Sector Banks and one General Insurance company in the year 2021-22.

In 2021-22, the Government would bring the IPO of LIC. This would require legislative amendments and amendments are proposed in this Session itself.

Higher Education

In order to provide quality educationto students of deprived section of the society as well as those who do
not have access to highereducation, it is proposed to start degree level full-fledged online education programme.

India should be a preferred destination for higher education. Hence, under its “Study in India” programme, Ind-SAT is proposed to be held in Asian and African
countries. It shall be used for benchmarking foreign candidates who receive scholarships for studying in Indian higher education centres.

A National Police University and a National Forensic Science University are also being proposed in the domain of policing science, forensic science, cyber-forensics etc.