Union Budget 2021-22 – Preparation For Revamping The Economy

The Union Finance Minister, Nirmala Sitharaman has presented the Union Budget for the financial year 2021-22 (“Budget”) in the Parliament on February 1, 2021.

The Budget is being presented after the most the distressing year 2020 by far which marked the year of deadly pandemic COVID-19 that has not only impacted the health but also the businesses and communities across the world.

The COVID-19 pandemic has also drastically impacted the Indian economy and resulted in the contraction of GDP.

The Budget presented by the Finance Minister has rested the budget proposals on 6 pillars, namely,

(i) Health and Pharmaceuticals;

(ii) Physical and Financial Capital and Infrastructure;

(iii) Agriculture;

(iv) Inclusive development of Human Capital;

(v) Innovation and R&D and;

(vi) Minimum Government and Maximum Governance.

However, the Budget has significantly focused on the improvement of the healthcare sector and the revival of the infrastructure sector.

Key Highlights of the Budget

We have herein below discussed a few key highlights of the Budget:

1. Healthcare and Pharmaceuticals

Keeping in mind the current COVID-19 pandemic situation, the Indian Government has decided to allocate a budget of INR 2.23 lakh crores (being an increment of 137% from the previous budget allocation to this sector) for the preventive and curative care and well-being of the citizens.

Further, given the current situation where Government is still struggling to combat COVID-19 pandemic, INR 35,000 crores have been allocated towards vaccine rollout in the year 2021-22.

Along with this, the Government has further developed capacities for primary, secondary and tertiary care health systems for the purpose of strengthening existing national institutions and create new institutions to cater to the need of detection and cure of new and emerging diseases.

2. Physical and Financial Capital and Infrastructure

The Government in this sector has announced the Production Linked Incentive (PLI) scheme for 13 sectors in order to create manufacturing global champions for an Atmanirbhar Bharat.

Further, in order to attract large investments and boosts employment generation, a scheme for Mega Investment Textiles Parks (MITRA) shall also be launched.

The Finance Minister also announced that Debt Financing of Infrastructure Investment Trusts (InVITs) and Real Estate Investment Trusts (REITs) by Foreign Portfolio Investors will be enabled by making suitable amendments in the relevant legislations.

3. Agriculture

The Government has further laid emphasis on the improvement of agricultural infrastructure and enhance farmers’ remuneration and in order to achieve the said objective, Agriculture Infrastructure and Development Cess (AIDC) has been imposed on a small number of items such as petrol, diesel and liquor.

4. Inclusive Development of Human Capital

The Government has focused on the enhancement of employment opportunities and in order to boost the employment sector, the Government has decided that social security benefits shall be given to all platform workers along with the applicability of minimum wages will to all categories of workers.

Further, Government has also come up with a plan to provide an opportunity to women who will be allowed to work in all categories and also in the night-shifts with adequate protection along with a reduction in compliance burden on employers with a single registration and licensing and online returns.

5. Innovation and R&D

The Government has further allocated a budget of INR 50,000 crores to National Research Foundation which is proposed to be spent over a period of 5 years.

Further, the National Language Translation Mission (NTLM) has also been announced which will enable the wealth of governance and policy-related knowledge on the internet is made available in the Indian languages.

6. Minimum Government and Maximum Governance

The Government has decided to increase permissible FDI limit from 49% to 74% in Insurance Companies and will allow foreign ownership and control with safeguards along with decriminalization of the Limited Liability Partnership Act, 2008.

In addition to this, compliance requirements have been eased for small companies where the threshold increased to share capital of up to INR 2 Crore and Turnover of up to INR 20 Crore will be small companies.

One Person Companies will be allowed to grow without any restrictions on paid-up capital and turnover and MCA version 3.0 will be launched which will have additional modules for e-scrutiny, e-Adjudication, e-Consultation and Compliance Management.

Conclusion

The Budget for the session 2021-22 has been considered as a welcome move by the Indian Government for revamping the economy through these difficult times.

The increase in the total budget structure for all the major sectors as discussed above is a big step for strengthening the entire economy and a major preparation to combat any other pandemic in future.

The Budget of this session has actually been formed keeping in mind the requirement to address the important aspects and need of the nation.

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