Finance Minister Nirmala Sitharaman on Monday unveiled the Union Budget for 2021-22, making a big push for economic growth to create more jobs with a sharp increase in the outlay for infrastructure such as highways. She also doubled the allocation for the healthcare sector to Rs 2.23 lakh crore amid the ongoing war on the Coronavirus pandemic.
The Government has clearly chosen to spend its way out of the economic crisis caused by the pandemic with a total expenditure of Rs 34.83 lakh crore which includes major schemes for the farm sector and benefits for the poor at the cost of a huge fiscal deficit of 6.8 per cent of GDP. The outlay in the new budget is around 15% higher than the corresponding figure for the preceding budget.
High borrowing
The government has given precedence to growth and decided to bridge the gap in finances through borrowings to the tune of a whopping Rs 2 lakh crore. Another Rs 80,000 crore will be borrowed from the market to meet the requirements of the current financial year which ends on March 31, the Finance Minister said.
Disinvestment of public sector firms
To bridge part of the deficit, the government also plans to raise 1.75 lakh crore by selling its stake in public sector companies and banks such as IDBI Bank, a general insurance company, Bharat Petroleum, SCI and Concor, the Finance Minister said.
She disclosed that the current financial year (2020-21) was expected to end with a deficit of 9.5% much higher than the 7% expected earlier.
Sitharaman said the capital expenditure in the budget has been increased by 34.5% to Rs 5.54 lakh crore. This constitutes productive investments to give a fillip to economic growth and create more employment.
No changes in income tax
The government has left income tax and corporate tax rates unchanged, but taken steps to ease compliance for taxpayers. The Finance Minister said that the advance tax liability on dividend income shall arise only after payment of dividend. The Budget also introduces pre-filled tax forms with respect to details like salary income, tax payment and TDS to make filing of returns easier.
Senior citizens above the age of 75 years who live on pensions have been exempted from filing income tax returns.
Customs duty on gold, silver cut
The Finance Minister has reduced customs duty on gold and silver as the prices of the two precious metals have soared. The customs duty on gold has been reduced to 7.5 per cent. Sitharaman said, "Gold and silver presently attract a basic customs duty of 12.5%. Since the duty was raised from 10% in July 2019, prices of precious metals have risen sharply. To bring it closer to previous levels, we are rationalizing customs duty on gold and silver."
Smartphones are likely to turn costlier as the Finance Minister announced that imported components will be subjected to 'moderate' customs duty. Similarly, the Customs duty on some automobile parts will also be increased to 15%.
Apart from helping raise more revenue this hike will also help Indian industry in tune with the Aatamnirbhar Bharat campaign.
Insurance and bank reforms
Sitharaman said the foreign direct investment (FDI) ceiling for the insurance sector would be increased to 74% from the current 49% to facilitate the flow of much-needed funds in the sector.
She also allocated Rs 20,000 crore to recapitalise state-run banks that are saddled with bad loans and therefore have not been able to extend adequate credit to boost growth.
