#Budget2021: Nirmala Sitharaman vaccinates India's economy with healthcare and infra shots; no IT filing for 75+ pensioners
New Delhi/IBNS: Amid the pandemic and riding on the call for a self-reliant (Atmanirbhar) India, Union Finance Minister Nirmala Sitharaman presented a budget with substantial focus on healthcare and vaccine, while exempting pensioners above 75 years from filing Income Tax, keeping the personal IT unchanged and announcing infrastructural funds for poll-bound states Tamil Nadu, West Bengal, Kerala and Assam.
Delivering her budget amid Covid-19, the Finance Minister announced Rs. 35,000 crore for Covid-19 vaccines this year.
She stressed that two more indigenous vaccines, apart from Covishield and Covaxin, will be available in the market to combat the contagion.
In another push for privatisation, Sitharaman on Monday announced a strategic disinvestment in two public sector banks other than IDBI Bank and one insurance company in the next fiscal year.
"Disinvestment target in FY 2021-2022 is 1.75 lakh crore," she said.
"Rs 20,000 cr for recapitalisation of govt banks," she added.
"All disinvestments of BPCL, CONCOR, Pawan Hans, Air India to be completed in FY 2021-2022," the FM said.
WATCH: Nirmala Sitharaman presenting Union Budget 2021
On bank disinvestment, former State Bank of India (RBI) chairperson Arundhati Bhattacharya told CNBC TV 18, "We have been pushing for this for a long time. It depends upon execution. Execution is very important... It opens India up and brings in competition. And of course the foreign investors will love that."
In a relief for taxpayers, no change in the income taxes has been announced while senior citizens, who are above 75 years of age, with pension have been exempted from paying taxes, allaying fears of tax hike at a time the economy is struggling to recover from the Covid consequences.
In the first digital (paperless) budget, Sitharaman read from her tablet, instead of papers, the fiscal deficit for the FY 2021-2022 is estimated at 6.8% of Gross Domestic Product (GDP).
"Fiscal deficit in FY 2020-2021 is pegged at 9.5% of GDP," said Sitharaman and added, "We intend to reach a fiscal deficit of below 4.5% by 2025-2026."
In the run-up to the assembly elections in Tamil Nadu, West Bengal and Kerala, Sitharaman made significant announcements on highway projects in these states.
WATCH: PM Modi speaks on budget
Sitharaman announced 3,500 of national highway works in Tamil Nadu at an investment of 1.03 lakh crores, 675 km highway works in West Bengal at the cost of 25,000 crores with improvement of Kolkata-Siliguri road and allotment of 65,000 crore for highway projects in Kerala.
She has also announced Rs. 3,400 crore for the road infrastructure development in Assam.
In the agircultural sector, Sitharaman has proposed an agricultural and infrastructure cess.
The FM said over 75,000 crore wheat MSP paid to farmers in 2020-21. She said the government committed to welfare of farmers amid noisy protest.
Post Sitharaman's speech, the stock market cheered as the BSE Sensex surged by over 2,000 points and NIFTY breached the 14,200-mark.
Highlights of Union Budget 2021-22
1. First digital Budget in the history of India
2. Vehicle Scrapping Policy. Vehicle Fitness Test after 20 years in case of Personal vehicle and 15 years in case of commercial vehicles
3. 64,180 crores allocated for New Health Schemes
4. 35,000 crores allocated for Covid Vaccine
5. 7 Mega Textile Investment parks will be launched in 3 years
6. 5.54 lakh crore provided for Capital Expenditure
7. 1.18 lakh crore for Ministry of Roads
8. 1.10 lakh crore allocated to Railways
9. Proposal to amend Insurance Act. Proposal to increase FDI from 49% to 74 %.
10. Deposit Insurance cover (DICGC Act 1961 to be amended). Easy and time bound access of deposits to help depositors of stress banks.
11. Proposal to revive definition of ‘Small Companies’ under Companies Act 2013. Capital less than 2 Cr. and Turnover Less than 20 Cr.
12. Disinvestment: IPO of LIC, Announced Disinvestment of Companies will be completed in FY 2021-22
Direct and Indirect tax
1. Senior Citizens: Reduced Compliance burden. 75 years and above. Proposal not to file ITR if only pension income and interest income.
2. Reduction in time for IT Proceedings: Reopening of Assessments period reduced from 6 years to 3 years except in cases of serious tax evasion cases
3. Proposal to constitute ‘Dispute Resolution Committee’. (Taxable income 50 lakhs and disputed income 10 lakh).
4. National Faceless Income Tax Appellate Tribunal Centre
5. Relaxations to NRI: Propose to notify rules for removing hardship for double taxation.
6. Tax Audit Limit: Proposal of tax audit increased from 5 Cr. to 10 cr. (Only for 95% digitized payments business)
7. Propose to provide relief on advance tax liability on dividend income.
8. Propose to include tax holidays for Aircraft leasing companies
9. Prefiling of returns (Salary, Tax payments, TDS etc.) Details of Capital gains from listed Securities, dividend income, etc. will be prefilled
10. Small Charitable Trusts. Increased from 1 crore to 5 crores (Compliance limit)
11. Late deposit of employee’s contribution by employer will not be allowed as deduction
12. Incentive to startup: Tax holiday exemption for one more year
13. Duties reduced on various textile, chemicals and other products
14. Gold and Silver (BCD reduced)
15. Agriculture Products: Custom duty increased on cottons, silks, alcohol etc.
Reactions from various industries
Commenting on the Union Budget 2021, Dr. Prathap C Reddy, Chairman, Apollo Hospitals Group said, "The Covid-19 pandemic was an unprecedented medical crisis and it underlined the importance of building a resilient healthcare infrastructure. Today, the Hon’ble Finance Minister’s said health was her first pillar and her announcements to develop primary, secondary and tertiary healthcare systems, greatly gladdened my heart.
"This ground-breaking focus on health which will provide access to medical care for all in our country, fuel job creation and boost economic momentum.
"India’s efforts in managing the pandemic have been exemplary – our frontline workers and scientists have been working tirelessly to save lives and develop indigenous vaccines. Now the allocation of Rs. 35,000 crores for Covid-19 vaccines and more if required, makes our glorious nation stand tall as a model for the world."
Dr. Simmardeep Gill, COO, CK Birla Hospitals, Kolkata said, "When the world came to a screeching halt due to Covid-19, which unleashed a catastrophe of unprecedented proportions, it was the healthcare industry which had to bear a large chunk of the ensuing brunt. While it would be premature to immediately judge how well the industry has fared in the face of adversity, one cannot deny the capabilities displayed by the health care sector.
"It was comforting to see the Finance Minister, Nirmala Sitharaman, today take a holistic approach and focus on strengthening three areas: preventive, curative and well-being. I acknowledge and appreciate the endeavour of the Government by making provisions of an outlay of Rs 2.24 lakh crores in the budget exclusively towards healthcare, which represents an increase of about 137 per cent from last year."
Dilip Oommen, CEO, ArcelorMittal Nippon Steel India; and President of Indian Steel Association, said, "The budget is truly expansionary and progressive, striking a right balance between welfare and growth without being constrained by the fiscal deficit.
"The Government is fully geared up to support and facilitate the economy’s reset and strengthen the country as the business epicentre of the world. Introduction of PM Atmanirbhar Swasth Bharat Yojana in addition to the National Health Mission is commendable. Heavy spending on infrastructure and increased spending for capital expenditure creation – a 25 % rise – are welcome moves."
Vishal Kapoor, CEO, IDFC AMC said, "Budget 2021 seems to have a done a remarkable job in being simple and effective. It makes a strong push for growth with a sharp increase in capital expenditure, especially in infrastructure. Additional resource required are targeted to be raised through divestment and monetization, and domestic corporate and MSMEs would be happy to see additional custom duties in certain sectors, with no increase in taxes for them. Individual tax payers would be relieved that there have been no change in Income tax rates, given the pre-budget concern of a possible Covid cess or higher capital gains or wealth tax imposition.
"Additionally tax filing simplification for investors through pre-filled capital gains and interest income, relief for senior citizens in filing taxes and a reduction in the limit for tax assessment reopening from 6 years to 3 years will improve tax-payer confidence. Retail investors will also look forward to the benefit from regulatory consolidation and the Investor Charter announced."
Akshay Daftary, director, SIRO Clinpharm on Budget 2021 for the healthcare sector said, "The allotment of Rs 3000 crore funds under skill development is a positive move by the government in terms of recruiting people since the EMS (Emergency Medical Services) industry demands skilled individuals in paramedics as they are the ones driving the sector and hence play a vital role in saving lives.
The allocation of Rs 35,000 crore for COVID-19 vaccines was much needed as it is the need of the hour. Additionally, the allocation of Rs 69,000 crore to healthcare is again something that is commendable and a heartening measure announced by the FM for the development of the healthcare sector. Overall, Budget 2021 is realistic, positive, and holistic at the same time, centered around the common man and his needs."
B Gopkumar, MD & CEO, Axis Securities, said, "The FY22 budget has a clear focus on infrastructure creating with more allocation to the sector. Even in the pandemic hit FY21, the government managed to keep the infrastructure spending at elevated levels which was a key positive. The government has expanded the scope of the National Infrastructure Pipeline to include more projects and has increased the budgetary allocation.
"The allocation of Rs 5.5 lakh crores in FY22 is a whopping 35% growth over the allocation in FY21 which clearly indicates the focus and thrust of the government. Moreover, the monetization plans by encouraging INVIT structures and financing initiatives through the setting of development financial institutions is another positive move. Overall, the strong emphasis on infrastructure which is a long-term economic growth multiplier is positive."
Seema Prem, CEO and Co-Founder, FIA Global, said, "The budget this year has given a significant support to startup ecosystem that will help turbocharge their growth. The concept of OPCs with an option to convert into any other type of company at any time, reducing residency limit for an Indian citizen to set up an OPC from 182 days to 120 days, and allow also non-resident Indians to incorporate OPCs in India will certainly boost innovation. Collateral free loans and fund of funds for MSMEs will stimulate growth and provide solace to MSMEs hit by the pandemic.
"The portability of One nation, one ration card will be a boon for migrant workers and speedy implementation will ensure that migrants can move across boundaries without worrying about access to ration. The additional allocation to MNREGS will provide substantial relief to workers whose livelihood has been impacted by the pandemic."
Anand Srinivasan, Managing Director, Covestro said, "The announcement of the budget by the Honorable Finance Minister in the midst of a pandemic situation has indeed been a very progressive one. The focus on the implementation of various agendas is a clear sign of a robust economic objective for the country.
"With further inclusion of green initiatives that focus on sustainability and a circular economy will definitely stimulate the economy to be one of the responsible countries across the globe."
Ashish Gupta, Brand Director, Volkswagen Passenger Cars, said, "The Budget 2021 as announced by the Hon’ble Finance Minister has potential to revive the economy at large. The focus on the six pillars, with greater impetus on healthcare, infrastructural & connectivity development and rural economy will have a positive impact on the businesses.
"With respect to the auto sector, increase in custom duty on certain auto parts would impact the input cost, although we’re yet to assess the financial impact. On the voluntary scrappage policy, strict governance on the fitness test would determine the benefit on the environment and pollution reduction.”
Sumit Agarwal, Director, Micky Metals Ltd, said, "The budget for this year was really good for iron and steel market. Custom duty on steel has been reduced and so the steel prices should come down. Market sales can only grow if the prices are stable and at a good price.
"Covid tax is not there which is good. The taxes for personal and corporate is not changed but would have been better if reduced a bit."
Criticising the budget, Congress MP Rahul Gandhi tweeted, "Forget putting cash in the hands of people, Modi Govt plans to handover India's assets to his crony capitalist friends."
Forget putting cash in the hands of people, Modi Govt plans to handover India's assets to his crony capitalist friends.#Budget2021— Rahul Gandhi (@RahulGandhi) February 1, 2021
Trinamool Congress Rajya Sabha MP Derek O'Brien tweeted, "India’s first paperless budget is also a 100% visionless budget.Theme of the fake budget is Sell India! Railways:sold, Airports:sold, Ports: sold, Insurance: sold, PSUs:23 sold!, Common people ignored. Farmers ignored. Rich get richer,nothing for middle class,poor get poorer."
India’s first paperless budget is also a 100% visionless budget.Theme of the fake budget is Sell India!— Derek O'Brien | ডেরেক ও'ব্রায়েন (@derekobrienmp) February 1, 2021
Common people ignored. Farmers ignored.
Rich get richer,nothing for middle class,poor get poorer (1/3)
The CPI-M has issued a statement which reads, "The Union Budget 2021-22 is a betrayal of the people caught in the double crisis of pandemic and recession. It is a classic illustration of the Modi Government’s unshakeable commitment to promoting the interests of a handful of big business houses at the expense of increasing distress and misery for the working people. This is reflected in the refusal of the Government to increase public expenditure notwithstanding its bombastic claims.
"The budgeted Central Government’s total expenditure of 34.8 lakh crores in 2021-22 is identical in nominal terms to that in 2020-21 – which amounts to slashing expenditure in real terms. This represents the complete abrogation by the Government of its responsibility towards the people but shoring up the fortunes of a privileged few including through their greater control over the nation’s productive assets."
Delhi Chief Minister and Aam Aadmi Party (AAP) supremo Arvind Kejriwal tweeted in Hindi, "This budget is just for the benefit of big companies. Besides causing inflation, this budget will cause troubles to common people."
यह बजट चंद बड़ी कम्पनियों को फ़ायदा पहुंचाने वाला बजट है।— Arvind Kejriwal (@ArvindKejriwal) February 1, 2021
ये बजट महंगाई के साथ आम जन-मानस की समस्याएं बढ़ाने का काम करेगा।