Union Budget 2021: FM Nirmala Sitharaman presents budget to revive the Indian economy

Today, Finance Minister Nirmala Sitharaman presented a fiscal expansionary budget. The budget is extremely crucial as it will decide how the ruling party is planning to revive the Indian economy after COVID-19 pandemic.

The Union Budget 2021-22 came out with a host of demand side measures, with an intention to create jobs primarily through big infrastructure announcements.

These included the highest ever capital expenditure of Rs 5.54 lakh crore for FY22, a proposed development finance institution (DFI), and wide scale asset monetisation by agencies like the National Highways Authority of India and the Indian Railways, as well as an asset monetisation pipeline.

Stating that fighting the COVID-19 pandemic remains the Centre’s biggest priority, Sitharaman also rolled out a Rs 2.46 lakh crore healthcare budget for FY22, with Rs 35,000 crore earmarked for COVID-19 vaccine programme.

Markets responded positively to the Finance Minister’s expansionary stance. The BSE Sensex was up 3.13%, while Nifty50 was up 3% when the Finance Minister ended her one hour and 50 minutes speech.

As the measures pointed out the fiscal deficit target for FY22 is 6.8% of GDP, for FY21 the fiscal deficit was revised to 9.5% from 3.5%.

On the Tax reforms Finance Minister exempted senior citizens older than 75 years from filing tax returns. The timeline for reopening of assessment under income tax returns was also reduced to 3 years from present 6 years. The Finance Minister also exempted dividend distribution taxes for investing in REITs and InVITs.

She also provided an additional Rs 1.5 lakh tax deduction on loans taken to buy a house under the affordable housing scheme, with deadline extended till 31 March 2022.

The Budget also introduced a renewed thrust towards asset sales and privatisation after the false starts of the past few years, with a target of Rs 1.75 lakh crore. The initial public offering (IPO) of LIC will be completed in the coming fiscal, and that the Centre had identified four sectors as ‘strategic’ in which government will have a presence.

She said the Centre will pare stake in two state owned banks and a general insurance company.

The budgeted capex for FY22 stands at Rs 5.54 lakh crore. For FY21, the Centre had budgeted its own capital expenditure at Rs 4.13 lakh crore, which was later increased by Rs 35,200 crore.

From a fiscal deficit of 9.5% of GDP in FY21, the Centre will now follow a glide path which will bring down the budget deficit to below 4.5% of GDP by FY26. This was based on the suggestions of the Fifteenth Finance Commission, whose report for FY22 to FY26 was tabled in Parliament along with the budget.

 

 

 

 

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