Finance Minister Ms Nirmala Sitharaman presented the Union Budget 2021-22 amid the Covid-19 pandemic and in a contracting economy. Ms Sitharaman had said that the Budget 2021 would be “unlike anything seen so far.”
After the Budget was presented, the Sensex rose over 2,200 points and the Nifty topped 14,250.
The budget covered a plethora of areas where the government wants to gain ground in a Covid-19-hit economy.
Ms Sitharaman said the government wants to pump money in the Garib Kalyan Rojgar Abhiyaan to the tune of Rs 2.76 lahh crore and Rs 27.14 lakh crore for Atmanirbhar Bharat Rozgar Yojana.
Ms Sitaraman expressed gratitude to the essential and frontline workers and “the endurance of our citizens. This budget looks to sustain our economy.”
Among various allocations the Budget defence expenditure increased to Rs 4,78,195 crore from Rs 4,71,378 crore to fortify the armed forces especially with regards to the standoff with China.
The Union Budget proposed a farm cess of Rs 2.5 per litre on petrol and Rs 4 on diesel.
Sitharaman also proposed that the government to set up a Development Financial Institution. The National Highways Authority of India (NHAI) and Power Grid Corporation of India (PGCIL) will now set up InvITs to attract global funds. An InvIT is an investment vehicle created to hold income-generating and operational infrastructure assets such as roads, power transmission lines, and gas pipelines. These assets have long-term contracts with strong counterparties that provide a steady cash flow over the long term.
The Budget also proposes to frame a new Rationalised Securities Markets Code.
The Union government allocated Rs 20,000 crore for recapitalisation of PSU banks. Ms Sitharaman proposed to divest two PSU banks and one general insurance company in FY21-22. The government will create a new list of companies for divestment, Ms Sitharaman said. In addition, it will form a special purpose vehicle (SPV) for monetising land owned by the government PSUs.
The finance minister also plans to spend Rs 1.41 lakh crore for Urban Clean India Mission.
Senior citizens can now hope to heave a sigh of relief as far as their income tax (I-T) returns are involved. Senior citizens (above 75 years) with only pension or interest as income will be exempted from filing I-T returns.
There was also an outlay of Rs 1.18 lakh crore for the Ministry of Road Transport and Highways and Rs 1.1 lakh crore for the Railways in FY22
The government will spend Rs 64,180 crore on healthcare over six years and is looking forward for two new vaccines and has set aside Rs 35,000 crore for Covid-19 vaccine in FY22.
The Budget also proposes an increase in the allowed limit for foreign direct investment (FDI) for insurance companies to 74 per cent from 49 per cent.
“The FY22 budget has been much better than the market's expectations. The feared and anticipated measures around Covid Cess/higher capital Gains tax/Wealth Tax did not materialise,” said Motilal Oswal, MD & CEO, Motilal Oswal Financial Services. “This will provide a huge relief to market and economy and help in sustaining the buoyant sentiments in the economy. Government has clearly articulated the focus towards infra and capex spending.”
The extension of tax exemption schemes in affordable housing is also welcome as it can provide a good multiplier effect on the gross domestic product (GDP), he added.
Sidharth Rath, MD & CEO, SBM Bank India, said, “The Union Budget is what seems to be the best possible balancing act addressing the need for sustained fiscal support to foster faster recovery, growth and fiscal consolidation to the extent possible.”