Union Budget 2021 Highlights: FM gives spending boost to lift pandemic-hit economy, new cess to finance agri infra

The government’s subsidies on food, fertilisers, LPG and kerosene are pegged at Rs 5.96 lakh crore in the current fiscal, over 2.5-fold jump from the initial budget estimates as the Centre distributed additional food grains free of cost to help poor mitigate the impact of COVID-19 pandemic. (PTI)

The government’s proposal to create a permanent institutional framework to buy investment grade debt securities in stressed and normal times and to deepen the bond market is a very positive step for debt mutual funds, experts said on Monday. “To instill confidence amongst the participants in the corporate bond market during times of stress and to generally enhance secondary market liquidity, it is proposed to create a permanent institutional framework,” Finance Minister Nirmala Sitharaman announced in the Union Budget 2021-22. The proposed body would purchase investment grade debt securities both in stressed and normal times and help in the development of the bond market, she added. Prathit Bhobe, CEO and MD, at Tata Mutual Fund said the measure to set up a body to buy bonds up to investment grade is a good step to help deepen and market making in corporate bond market. (PTI)

The government on Monday extended the additional tax deduction of Rs 1.5 lakh on interest paid on housing loan for purchase of affordable homes by one more year to March 31, 2022, a move aimed at boosting demand in the sluggish real estate sector. The additional deduction of Rs 1.5 lakh over and above Rs 2 lakh was introduced in the 2019 budget. This was allowed for those buying homes for the first time and of up to Rs 45 lakh cost. In the budget speech for 2021-22 fiscal year, Finance Minister Nirmala Sitharaman said the government sees ‘Housing for All’ and affordable housing as priority areas. “In the July 2019 Budget, I provided an additional deduction of interest, amounting to Rs 1.5 lakh, for loan taken to purchase an affordable house. I propose to extend the eligibility of this deduction by one more year, to 31st March 2022,” she said. The minister said the additional deduction of Rs 1.5 lakh shall therefore be available for loans taken up till March 31, 2022, for the purchase of an affordable house. Now, a person purchasing an affordable house will get an enhanced interest deduction of up to Rs 3.5 lakh. (PTI)

The Centre has allocated Rs 73,000 crore to the rural employment guarantee programme MGNREGA for the next fiscal 2021-22, substantially lower than the actual expenditure of Rs 1.11 lakh crore in the current fiscal which included an additional Rs 40,000 crore for the scheme given by the government in the wake of the pandemic’s impact on the economy. The Centre had allocated Rs 40,000 crore to MGNREGA as part of the Pradhan Mantri Garib Kalyan Yojana. | READ MORE

The Rs 230-crore reduction in the budgetary allocation to the environment ministry has drawn flak from environmentalists who say it may slow down or completely halt green initiatives. Besides the shrunk budget, they also feel that the Centre has not clarified how a separate amount of Rs 2,217 crore, set aside for tackling air pollution in 42 cities with minimum population of one million, will be utilised. “The total budget allocated for the ministry this year is Rs 2,869.93 crore while last year it was Rs 3,100 crore. This implies that a number of environmental measures could be slowed down or halted,” said Avinash Chanchal, a Climate Campaigner for the Greenpeace India. “The government has allocated Rs 2,217 crore to tackle air pollution in 42 urban cities and introduced a voluntary vehicle scrapping policy. But it isn’t clear how these funds would be utilized to resolve the pollution crisis,” he said. (PTI)

The allocation to the Panchayati Raj Ministry for the year 2021-22 increased by more than 32 per cent to Rs 913.43 crore in the Union Budget presented by Finance Minister Nirmala Sitharaman on Monday compared to the revised expenditure during the current financial year. The major jump in the allocation was seen in the Svamitva scheme, which more than doubled to Rs 200 crore from Rs 79.65 crore in the current fiscal. The Svamitva scheme was launched by Prime Minister Narendra Modi in the last calendar year. It aims to provide the record of rights to village household owners in rural areas and issuance of property cards. It also enables monetization of rural residential assets for credit and other financial services. As per the detailed financial statement, Rs 913.43 crore has been allocated to the Panchayati Raj Ministry for the year 2021-22, compared to the revised estimate of Rs 690 crore for the fiscal 2020-21. However, the budget estimate for the current fiscal was Rs 900.94 crore. The government also increased allocation to the Rashtriya Gram Swaraj Abhiyaan by nearly 19 per cent to Rs 593 crore for the next fiscal from Rs 499.94 crore this fiscal. (PTI)

The industries and trading sector gave mixed reactions to the 2021-22 budget presented by the Union Finance Minister, Nirmala Sitharaman on Monday. Minor, small and medium enterprises’ Association of Industries president Pramod Dafaria while welcoming the budget said, “We are hopeful that the provision of Rs 15,700 crore in the budget will majorly benefit the small-scale industries.” However, Pithampur Audyogik Sangathans president Gautam Kothari said, “We are unable to understand how the government will help over 35 lakh small-scale industries which suffered heavily because of COVID-19 scare with a provision of just Rs 15,700 crore.” They are already facing the problem of not having any working capital. Traders body, Ahilya Chamber of Commerce president Ramesh Khandelwal said after the COVID-19 crisis they were expecting some big gifts from the government, but our hopes were dashed. Even the working class is disappointed on not getting any rebate in income tax slabs. (PTI)

The revised estimate for direct tax collection this year is Rs 9.05 lakh crores, out of which we have collected Rs 6.63 lakh crores. I am very confident that we will achieve the target: CBDT Chairman PC Mody (ANI)

It was not a Budget like never before, it was a let down like never before. The Budget like the previous one will unravel sooner than you think: Congress leader P Chidambaram (ANI)

The government on Monday said capital market watchdog Securities and Exchange Board of India (Sebi) will be the designated regulator for gold exchanges, which will infuse transparency in gold transactions. “In the Budget of 2018-19, the government had announced its intent to establish a system of regulated gold exchanges in the country. For the purpose, Sebi will be notified as the regulator,” Finance Minister Nirmala Sitharaman announced in the Union Budget 2021-22. | READ MORE

Aircraft leasing companies based out of GIFT city in Gujarat’s Gandhinagar would get a tax holiday on capital gains and rental income earned, Finance Minister Nirmala Sitharaman announced on Monday. At present, there are no aircraft leasing companies in Gujarat International Finance Tec (GIFT) city. “I propose to include, among others, tax holiday for capital gains for aircraft leasing companies, tax exemption for aircraft lease rentals paid to foreign lessors… located in IFSC (International Financial Services Centre),” the minister said in her budget speech. No major aircraft leasing companies are based in India. Majority of the aircraft fleet with the Indian carriers have been leased from foreign companies such as Avolon, GECAS, BBAM, BOC Aviation and Dubai Aerospace Enterprise Capital.  (PTI) 

The Union budget has opened the floodgates for imports of Chinese stainless-steel with temporary revocation of anti-dumping and countervailing duties, which is expected to hurt domestic manufacturers of such product, an industry body said on Monday. Suspension of these duties will undermine domestic manufacturing with an adverse impact on employment generation and defeat the ‘Make in India’ movement, Indian Stainless Steel Development Association (ISSDA) said. “This is a big unintentional gift to Chinese companies and will severely hit the domestic stainless-steel industry, which has been in financial stress for more than a decade. (PTI)

The government on Monday proposed changes in the DICGC Act to ensure depositors of troubled banks can withdraw their funds of up to Rs 5 lakh. In the light of lenders like Punjab and Maharashtra Co-operative (PMC) Bank, Yes Bank and Lakshmi Vilas Bank running into trouble in recent times, the government had amended the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act, raising the insurance cover on deposit five-fold to Rs 5 lakh. | READ MORE

“This Union Budget was one of the most anticipated budgets especially by the start-up and ecommerce ecosystem. It was a pro-technology and a pro-growth budget which focused on re-energizing the healthcare, infrastructure, agriculture and banking sector by numerous employment and capital generating reforms. However, there is still a lot missing in context. Firstly, from a tax perspective, introducing a more long-term exemption structure on capital gains would have been more helpful. The budget could have looked at introducing ‘a no dividend and no capital tax mechanism’ which can help companies funded by VCs to infuse more working capital into their operations. From a regulatory perspective, the budget should have looked at creating a single window clearance framework for start-ups and small businesses for aspects like company registration, GST registration, company incorporation, shop establishment, etc. which would have helped to reduce the compliance burden on companies. One of the other rewarding moves by the government is to extend social security benefits to gig and platforms workers which will now add a much-needed safety net for them and will also help the sector grow in a sustainable way. Given that India is the third most robust start-up industry in the world and ranks 4th among countries with maximum unicorns (currently 28 in India), the budget needed to look at providing more impetus to this sector, which significantly contributes to the GDP of the country and is a key employment generator,” Sourjyendu Medda, Founder, CBO and CFO of DealShare, said.

Union Finance Minister Nirmala Sitharaman announces outlay of Rs 4071.23 cr for Ministry of Information and Broadcasting in 2021-2022 fiscal, decrease of Rs 303 cr from last year (PTI)

The budgetary allocation for the ministry of tourism has been slashed from Rs 2,500 crore in 2020-21 to Rs 2026.77 crore this year, in a blow to the tourism industry which is reeling from huge losses due to the coronavirus crisis. The revised estimate for the ministry was Rs 1,260 crore. The budget has allocated Rs 1088.03 crore for development of tourism infrastructure. | READ MORE

“Earmarking of Rs 15,700 crores towards the development of MSME sector is indeed a positive move and it will have an impact on the Agarbathi industry as most of the Agarbathi manufacturers fall under the MSME bracket. Similarly the plan to put in place a revised customs duty structure by October 2021 is also commendable.  In fact, even the strengthening of NCLT framework, implementation of e-courts systems,  introducing alternate methods of debt resolution and setting up a special framework for MSMEs will help the industry significantly.  However, considering that the government had acknowledged the issues that MSMEs faced owing to budget , one would have expected extensive support. The budget should have considered giving a 50% additional weightage under the Atmanirbhar Allowance in the Income Tax Act on the cost of materials consumed as well as on the manufacturing expenses incurred in making raw Agarbathi. This would have provided a great relief to the small units who have recently commenced their efforts in making our industry self-reliant and completely indigenous. Further, the government should have re-considered investing in providing infrastructure support like setting up of a dedicated state warehousing facilities and offering them at concessional rates. Funds should have also been considered for setting up common facility centres for bamboo stick making from strips across the district and taluka headquarters of  identified states,” Arjun Ranga, President of All India Agarbathi Manufacturers’ Association (AIAMA), said.

India on Monday set aside over Rs 7,100 crore in its budget for 2021-22 as development assistance for countries in its neighbourhood as well as in Africa and Latin America, with Bhutan getting the maximum allocation of Rs 3,004 crore while Rs 100 crore will be given to Chabahar port project in Iran. Finance Minister Nirmala Sitharaman allocated Rs 18,154 crore to the Ministry of External Affairs in the union budget, out of which Rs 7,148 crore has been earmarked as aid to countries. | READ MORE

RSS-aligned Bharatiya Mazdoor Sangh (BMS) on Monday expressed disappointment over the government’s budget proposals with regard to disinvestment and foreign direct investment, especially in the insurance sector. The BMS, however, lauded the government for its current efforts on the massive vaccination programme, a special scheme for tea workers in West Bengal and Assam, labour oriented push on infrastructure projects in construction sector and development of five major fishing harbours viz. Kochi, Chennai, Visakhapatnam, Paradip, and Petuaghat as hubs for economic activities etc. On other budget proposals, it said in a statement that “mixing the beautiful concept of Aatmanirbhar Bharat with FDI and disinvestment in the Union Budget is disappointing for the employees”. (PTI) 

Ram Kaundinya, Director General, Federation of Seed Industry of India said it is a status quo budget for agriculture and seed industry. “Agriculture contributed significantly to our successful fight against COVID. But the sector did not get the needed attention in the budget. No transformative measures have been proposed.” (PTI)

“2020 has been a year of exceptional and unprecedented challenges and has highlighted the critical importance of two core sectors, agriculture and healthcare. The Union Budget 2021 has correctly called out the role of these two sectors in leading the nation’s recovery and being catalysts to sustainable growth,” said D Narain, Senior Bayer Representative, South Asia and CEO & MD, Bayer CropScience. (PTI)

Criticising the union budget presented in Parliament Monday, Jharkhand Chief Minister Hemant Soren said the NDA government was out to sell every assets of the country. He further said that the budget was a big disappointment for the middle class as there was no concession in the income tax. ‘Atmanirbharbharat (self-reliant India) slogan seems to have got converted into ‘atmabecho bharat’ (sell India),’ Soren wryly said while reacting on the budget 2021-22. He said there has been no change in the MGNREGAwhich is meant for the welfare of the poor.  (PTI) 

Reliance on divestments and asset monetisation for resource mobilisation in the Budget was welcomed by industry players on Monday, calling it as the “biggest takeaway” from the Budget document. Increasing taxes, the traditionally preferred option for revenues, may have been inappropriate given the impact of the coronavirus pandemic, they said. | READ MORE

Union Minister Jitendra Singh on Monday said the Budget 2021-22 has come as a relief for a nation struggling with the constraints of COVID-19 pandemic. He said the priorities laid down by the Budget will also set the tone for other countries of the world to follow.  ‘Contrary to the misgivings and propaganda by the opposition, the Budget presented today has silenced all the critics and left them to criticize only for the sake of criticism,’ said Singh, the Minister of State for Personnel.  He said the Budget in in tune with the post-COVID India vision. Singh said even though it is an economic document, the spirit of the Budget presented today goes beyond the realms of economics to lay down the roadmap of Modi-led India which is destined to emerge as a frontline member in the community of world nations. (PTI)

The government on Monday projected a 16.67 per cent growth in gross tax revenue in the next fiscal beginning April 1, at over Rs 22.17 lakh crore. The revised estimates of gross tax revenue for the current fiscal has been pegged at Rs 19 lakh crore, lower than the Rs 24.23 lakh crore budgeted earlier. | READ MORE

“The focus on infrastructure development in the current budget is indeed a positive move. In fact, the need to increase government spend on infrastructure has been a long pending ask from all industries including building materials. The allocation of Rs 1.10 lakh crore and Rs. 2000 crore towards railways and development of ports under the PPP mode respectively coupled with the government’s plan to complete 11,000 km of national highway will have a significant impact on the economy as well as the building materials industry. Further, the setting up of a professionally managed Development Financial Institution and infusing 20,000 crores to it is also highly commendable. Lack of alternate financing models has been a key concern that most infrastructure projects hasve been struggling with, the setting up of Development Financial Institution can solve this problem which in turn can lead to increase in number of projects being rolled out as well as completed. In fact, the increased spending coupled with better financing support to the infrastructure industry will not only give the building material sector the much needed boost to recover the lost ground, but should also enable the industry to board the growth trajectory,” Ashwin Reddy, Managing Director of Aparna Enterprises Limited, said. 

I think he did not listen or read Budget properly. He should read his family history to know their close relations with China. He’s commenting on PM celebrating festivals with soldiers, it’s childish.: Union Minister Smriti Irani on Rahul Gandhi’s tweet on budget allocation for Defence (ANI)

Finance Minister Nirmala Sitharaman on Monday said the government has come out with open and transparent Budget and has not made any attempt to hide anything under the carpet. She said that the focus of the Budget 2021-22 has been on spending big on infrastructure and attending to the needs of healthcare sector for reviving Indian economy which is expected to contract by 7.7 per cent in the current fiscal ending March hit by the COVID-19 crisis. | READ MORE

This Budget is the Budget of self-reliant India. All sections of the society have been taken care of in this Budget. I believe this is the Budget to turn the disaster into an opportunity during COVID pandemic: Madhya Pradesh CM Shivraj Singh Chauhan (ANI)

The increased capital expenditure for infrastructure projects in Union Budget 2021-22 will push the demand for steel in the country, steel players and experts said. To augment the country’s infrastructure, the Budget proposed significant enhancing of capital expenditure to Rs 5.54 lakh crore in the next fiscal, besides creating institutional structures and giving a big thrust to monetizing assets to achieve the goals of the National Infrastructure Pipeline (NIP). | READ MORE

Pant and Pujara! Chief economic advisor K Subramanian was spot on when, after presenting the Economic Survey for the year, he said we would see both the heroes of the Gabba in action when the Budget was presented. Finance minister Nirmala Sitharaman played defensive cricket by keeping her total expenditure for FY22 at almost the FY21 levels – it rose a whopping 28% in FY21 – since raising it any more would have spooked bond markets even more given that, at Rs 9.7 lakh crore, FY22 borrowings are 80% more than those budgeted for FY21. | READ MORE

The imposition of sharp 10 per cent customs duty on import of finished leather products will lead to price increase, manufacturers said on Monday. The hike would also make it difficult for the manufacturers of footwear and other leather products to remain competitive in exports due to higher input costs. | READ MORE

Last year, budget allocation for financial support extended through loans to FCI for procurement at MSP was Rs 1,36,600 crore. Less than Rs 85,000 was spent. No amount is allocated this year. Such things make farmers think that it’s a conspiracy to shut FCI: Yogendra Yadav, Swaraj India (ANI)

The government on Monday allocated Rs 14,200 crore for telecom infrastructure that entails completion of optical fibre cable-based network for Defence services, rolling out broadband in 2.2 lakh panchayats and improving mobile services in the North East. The government had approved Rs 24,664 crore for an advanced communications network for defence services in lieu of their vacating spectrum for mobile telephony in May 2018. The project was to be completed within 24 months. | READ MORE

Delhi Police has been allocated Rs 8,644.12 crore in Union Budget for financial year 2021-22, and around Rs 10 crore has been set aside for Nirbhaya Fund (PTI)

Commerce and Industry Minister Piyush Goyal on Monday said that hiking foreign direct investment (FDI) limit to 74 per cent in the insurance sector will open up a large source of fresh funding for the sector. In her Budget speech, Finance Minister Nirmala Sitharaman proposed to amend the Insurance Act, 1938 to increase the permissible FDI limit from 49 per cent to 74 per cent in insurance companies and allow foreign ownership and control with safeguards. | READ MORE

“At the outset, compliments to the Honourable Finance Minister on the Budget for 2021-22. For me personally, it is gratifying to note that two of the six pillars on which the budgetary proposals rest are ‘Health & Wellbeing’ and ‘Reinvigorating Human Capital’. Both Health and Skill Development are critical sectors that will ensure our sustained economic growth. While it was widely expected that the expenditure on Health would be increased, an allocation of Rs 64,000 crore over 6 years to the PM AtmaNirbhar Swasth Barat Yojana, with the holistic approach to strengthening all the three areas of Healthcare delivery – Preventive, Curative and Wellbeing – is a most welcome step, as is the continuation of the Poshan Abhiyan in its new Mission Poshan 2.0 avatar. Both will go a long way in reducing morbidity and ensuring a fitter India. It is also noteworthy that Skill Development schemes have got a boost. Expanding collaboration with foreign countries to scale up the vocational and skill training sector will further improve the employability quotient of our youth. Also, I am sure, tax benefits extended for start ups will encourage youth to take up entrepreneurial opportunities more readily,” Vandana Luthra, founder and Co-chaiperson of VLCC group, said.

The government has created a comprehensive budget with sharp focus on sustaining economic activity and investment but more clarity is needed on areas like taxation framework for adopting remote working on a long-term basis, IT body Nasscom said on Monday. The industry association noted that the IT/ITeS (Information Technology-enabled Services) industry has been a key driver of growth and jobs in 2020 and there is an opportunity to significantly accelerate it further. | READ MORE

Petrol and diesel prices will not be cut as Finance Minister Nirmala Sitharaman ignored calls for a reduction in excise duty rates to help bring down prices from historic high levels. Instead, her Budget for the 2021-22 fiscal tweaked excise duty structure to accommodate an agriculture infrastructure development cess, whose accruals would not be shared with the states. | READ MORE