The third budget analysis in the tenure of Prime Minister Narendra Modi, is in line with his vision of ATMANIRBHAR BHARAT, presented by the finance minister Smt. Nirmala Sitharaman on 1st February 2021. This was the first paperless budget in Indian financial history. The budget analysis of 2021 revolved around six major pillars
Health and well being
Physical and financial capital structure
Inclusive development for aspirational India
Reinvigorating human capital
Innovation and R&D
Minimum government and maximum governance
The budget analysis of 2021 is a significant one due to the unprecedented pandemic which adversely affected the Indian economy especially the sectors of tourism, transport, hospitality, and MSME sector.
The finance minister has exempted senior citizens (who only have pension and interest incomes) from filing their income tax returns. However, the finance minister avoided giving any income tax relief; further the time limit for the reopening of assessment is reduced to 3 years from 6 years, hence benefiting the taxpayer. The finance minister has committed to set up the national faceless income tax appellate tribunal centres where the issues related to direct taxes would be resolved. Further, the financial minister exempted the audits for all those whose income is more than 10 CR provided that 95% of their transaction are digital to retain this benefit. The 2021 budget reflects the commitment made to the taxpayer of transparency, minimum government maximum governance.
PILLAR 1- HEALTH AND WELL BEING
Due to the unprecedented outbreak of COVID-19 which made the population globally vulnerable, a total of 2,23,846 crore has been allocated to the healthcare and well-being of the population of India for the fiscal year 2021-22. There is an increase of 137% of the budget allocated in this parameter as compared to the fiscal year of 2019-2020. The increased allocation of financial resources in this pillar was deemed as extremely necessary to tackle the virus.
A total of 35,000 crores have been allocated for the COVID- 19 vaccines for the fiscal year of 2021-22. In addition to the national health mission, a central sponsored scheme named “PM Atmanirbhar Swastha Bharat Yojana” will be launched and a total of 64,180 crores will be allocated to this scheme over a period of 6 years. The budget further emphasized the importance of clean drinking water by allocating 2,81,000 crores to the Jal Javeen mission (urban) over the next 5 years which will ensure to provide clean drinking water in all the urban cities spread across India.
PILLAR 2 - INFRASTRUCTURE
For the fiscal year of 2021-22, a total of 5.54 lakh crore has been allocated to this parameter, one can observe a 34.5% increase in the investment in this pillar as compared to the last year. The finance minister in her speech committed to the formation of seven mega-investment textile parks (MITRA) over a period of 3 years. For the development of financial institutions, a total of 20,000 crores have been allocated. Further, a total of Rs 1,18,101 crores has been invested in the ministry of road transport and highways, whereas a total of 1,10,055 crores has been allocated to the railways.
The government also aims to launch the comprehensive national hydrogen energy mission with the aim to promote the national hydrogen mission as a fuel, this advancement by the government is in line with the Paris climate agreement; the government has further allocated a total of 2000 crores towards the solar energy co-operation of India.
The government raised the existing FDI from 49% to 74%, the financial minister further mentioned about the setting up of bad banks that will consolidate stressed debt. An amendment in the definition of small companies can be seen in the companies act 2013. The government made a very important development by committing to formulate the investment charter to protect the investors. From this, it can be implied that the government aimed at enhancing the financial capital of the country that faced repercussions due to the outbreak of COVID-19; i.e. the government is trying to revamp the economy by heavily investing in the physical and financial infrastructure of the country.
PILLAR 3- INCLUSIVE DEVELOPMENT FOR ASPIRATIONAL INDIA
The discussion with respect to this pillar revolved primarily around the agriculture and the allied sectors; farmer’s welfare and rural India; migrant workers and labours; financial inclusion; and schemes that already exist. However, a lot of emphasis was laid on the MSP regime that the assured price under the MSP regime is approximately 1.5 times the cost of production across all commodities.
The margin for the approval of loans under the stand-up India scheme has been reduced from 25% to 15% provided that the individual either is a woman or belongs to the SC or ST community.
PILLAR 4- REINVIGORATING HUMAN CAPITAL
From the discussion of the fourth pillar, it can be implied that the government placed a lot of emphasis on education. The government announced the formation of 100 new Sanik schools spread across India. The government is committed to set up a higher education commission in light of the commitment made by the government in the year 2019. The government has promised to set up 750 eklavya model residential schools in the tribal areas in India.
PILLAR 5- INNOVATION AND R&D
Under this parameter, a total of 50,000 crores have been allocated to the national research foundation for over 5 years with the intention to push innovation and R&D. To promote research and development in the field of marine biology a budget of 4000 crores has been allocated to the deep ocean mission over a period of five years. To promote a digital mode of payment 1500 crores has been allocated.
PILLAR 6- MINIMUM GOVERNMENT AND MAXIMUM GOVERNANCE
The government promised to introduce the National commission for Allied healthcare Professional Bill and the National Nursing and Midwifery Commission Bill in the coming years
This year’s fiscal deficit is estimated to be 6.8% given the outcomes of the pandemic over the Indian economy and the government has decided to amend the FRBMA where the target of the fiscal deficit would be reduced to 4.5% of the GPD by 2025-26. It can be drawn that huge financial resources have been allocated to the health and
Well being, and to the development of infrastructure, given how vulnerable the population and economic health of the country was to the outcomes of the pandemic.