Budget 2021: Finance Minister Nirmala Sitharaman on Monday presented the Union Budget for upcoming financial year with policies and proposals focused on reviving the pandemic-hit economy. Ms Sitharaman announced an unprecedented increase in capital expenditure for infrastructure at the same time Budget 2021 also doubled spending healthcare to Rs 2.23 lakh crore amid Covid-19 pandemic. As part of healthcare spending, Budget 2021 allocated Rs 35,000 crore for Covid-19 vaccine and launched PM Atmanirbhar Swasth Bharat Yojana with an outlay of Rs 64,180 crore over six years.
Here are highlights of macro-economic fiscal announcements in the Budget 2021:
- Fiscal deficit relative to GDP at 9.5 per cent in current financial year and 6.8 per cent for next fiscal shows a sharp deviation from the Fiscal Responsibility and Budget Management (FRBM) target of 3 per cent. The focus will be on sectors with high employment and output multipliers like construction and health, EY said in a report.
- Capital expenditure is estimated to increase from 1.6 per cent of GDP in FY20 to 2.3 per cent of GDP in FY21 Revised Estimates (RE) and further to 2.5 per cent of GDP in FY22 Budget Estimates (BE)
- The Fifteenth Finance Commission has recommended amendment of the FRBM Act, based on recommendations of a high powered inter-governmental group.
- The Finance Commission has permitted a higher fiscal deficit for the states in 2021-22 at 4 per cent of GDP for states considered together. Additionally, a flexibility of 0.5 per cent of GDP has been allowed subject to certain conditions. The deficit-GDP ratio is to be brought down in line with the FRBM requirement of 3 per cent of GDP by 2023-24
- Government's gross tax revenues contracted by 5.5 per cent in current financial year after having declined by 3.4 per cent in FY20
- Using a nominal growth of 14.4 per cent and a buoyancy of 1.2, centre's gross tax revenues are projected to show a growth of 16.7 per cent in FY22 (BE)
- Both Personal Income Tax (PIT) and Corporate Income Tax (CIT) are projected to grow by more than 22 per cent in next financial year over FY21 RE. This is largely due to base effects, EY added.
- A reinvigorated disinvestment plan has been planned for FY22 with receipts from disinvestment budgeted to increase to Rs 1.75 lakh crores from Rs 32,000 crore in FY21.