India budget 2021 passed: As it happened

New Delhi - India doubles healthcare spending, opens up insurance to more FDI to get growth back up



By Web Report

Published: Mon 1 Feb 2021, 7:51 AM

Last updated: Mon 1 Feb 2021, 12:20 PM

Indian Finance Minister Nirmala Sitharaman on Monday unveiled the budget for fiscal 2021-22, that aims to shore up an economy badly-hit by the novel coronavirus pandemic.

The economy is projected to contract 7.7 per cent in the current fiscal year, although the government forecasts growth of 11 per cent for the coming fiscal year, after a massive Covid-19 vaccination drive and a rebound in consumer demand and investments.

These are the highlights from Sitharaman’s fiscal 2021-22 budget speech:


Deficit

* 2020/21 fiscal deficit seen at 9.5% of GDP

* 2021/22 fiscal deficit seen at 6.8% of GDP

* 2025/26 fiscal deficit target set at 4.5% of GDP


Expenditure

* 2020/21 revised expenditure 4.39 trillion rupees ($60.14 billion)

* 2020/21 capital expenditure estimated at 5.54 trillion rupees ($75.90 billion)

* 2021/22 gross expenditure seen at 34.83 trillion rupees ($477.16 billion) in 2021/22

* To provide more than 2 trillion rupees ($27.40 billion)for states and autonomous bodies

Borrowing


* India says will need 800 billion rupees ($10.96 billion) in next two months from bond market

* 2021/22 gross market borrowing seen at 12 trillion rupees ($164.40 billion)


Healthcare

* India to allocate 2.2 trillion rupees ($30.20 billion) for healthcare in 2021/22

* Sitharaman says expect two or more Covid-19 vaccines soon

* India to launch new federal health scheme with outlay of around 641 billion rupees ($8.80 billion) over the next six years

* To allocate 350 billion rupees ($4.81 billion) for Covid-19 vaccines, and allocate more funds if needed.


Finance

* India to introduce bill for development financial institution with capital of 200 billion rupees ($2.74 billion)

* To infuse 200 billion rupees ($2.74 billion) for recapitalization of state-run banks in FY2022

* India to consolidate certain SEBI regulations for Securities Market Code

* To relax FDI cap for insurance sector to 74% from 49%

* Set up asset reconstruction company to take over toxic assets

* To cut money market requirement to 15% from 25%

* To allocate 15 billion rupees ($205.50 million) for scheme to incentivise use of digital payments

* India to incentivise incorporation of one-person companies


Taxation

* Proposes exemption to senior citizens for filing income tax returns

* Proposes changes in personal income taxes for non-resident Indian

* To set up dispute resolution panel for small taxpayers


Divestment

* India sets 2021/22 divestment target at 1.75 trillion rupees ($23.97 billion)

* India to divest two public sector banks and one general insurance company

* India to launch IPO of Life Insurance Corporation

* India to announce policy for privatisation of state-run companies

* To create new list of companies for divestment

* India to introduce new mechanism for privatisation of loss-running state-run companies

* To monetise surplus lands of public sector entities


Infrastructure

* To allocate 2.87 trillion rupees ($39.40 billion) for clean water supplies over the next five years

* To allocate 3 trillion rupees ($41.10 billion) for power sector for next five years

* To provide 10 billion rupees ($137.01 million)to Solar Energy Corporation of India

* Sitharaman says will move to end power distribution company monopolies

* To double ship recycling capacity by 2024

* India to monetise infrastructure assets


Transport

* Allocates 1.18 trillion rupees ($16.17 billion) for ministry of roads and highways

* Allocates 1.1 trillion rupees ($15.07 billion) for railways

* Railways to monetise freight corridors

* India to launch new vehicle scrapping policy

* Proposes tax holiday for aircraft leasing firms in India


Agriculture

* India allocates an estimated 1.7 trillion rupees ($23.29 billion) for paddy procurement

* Hikes enhanced agriculture credit target to 16.5 trillion Indian rupees ($226.05 billion) in 2020/21

* To include loans for activities in allied sectors in agriculture

* To discontinue small savings fund loans to Food Corporation of India


Labour

* To launch database for gig economy, building and construction workers

* Social security benefits to be extended to gig economy workers

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11:36am

Markets cheer as India stocks cross 1,600 points as benchmark S&P BSE Sensex touch 1,658.04 points or 3.58 per cent at 47,911.20 and NSE Nifty 50 index rose 1.93 per cent or 262.50 points to 13,897.10 .


11:35am

“We are withdrawing exemption on certain kind of leather imports,” says Nirmala Sitharaman


11:30am

Government proposes to relax norms to attract more foreign investment in infrastructure sector: Finance Minister


11:29m

Govt proposes to review over 400 old exemptions in indirect taxes; to begin extensive consultation from October 2021: FM


11:20m

NRIs exempted from tax audit

India’s finance minister Nirmala Sitharaman in her budget presentation proposed to increase the threshold for tax audit from Rs 50 million to Rs 100 million for businesses that have been transacting 95 per cent digitally.

The move is expected to benefit non-resident Indians who have businesses operating in India. Besides this, the Indian government will be notifying rules to eliminate double taxation for NRIs on foreign retirement funds, and has proposed one person companies which will help NRIs entrepreneurs.


11:15am

Nirmala Sitharaman reduces tax compliance for citizens over 75 yrs of age; NRIs exempted from audit


11: 05am

Senior Citizens (75 years & above) earning only pension and interest income are now exempted from filing IT Returns: FM Nirmala Sitharaman


11:03am

India’s FM has proposed to reduce the time frame for reopening of tax reassessment cases from 6 years to 3 years: FM Nirmala Sitharaman


10:57am

One nation, one ration card plan under implementation in 32 states, 1 UT: FM

We have launched one nation, one ration card scheme through which beneficiaries can claim their rations anywhere in the country. Migrant workers in particular benefit from scheme. One nation, One ration card plan is under implementation by 32 states & UTs: FM Nirmala Sithraman.


10:56am

Social security benefits will be extended to gig and platform workers. Minimum wages will apply to all categories of workers. Women will be allowed to work in all categories and also in night shifts with adequate protection: FM Nirmala Sithraman


10:54am

Fiscal Deficit is pegged at 9.5 per cent for fiscal 2021, says Sitharaman


10:50am

The upcoming census in India will be a digital one, says Sitharaman


10:49am

UAE collaboration for skills enhancement

India has collaborated with the UAE for skill enhancement of workers. We also have collaborative training programme with Japan. We will extend such partnerships with more countries, says India’s FM


10:45am

FM announces development of 5 major fishing hubs

I am proposing substantial investments in the development of modern fishing harbours & fish landing centres. 5 major fishing harbours - Kochi, Chennai, Visakhapatnam, Paradip and Petuaghat will be developed as hubs for economic activities: FM Nirmala Sitharaman.


10:40am

Divestment target for FY22 at Rs 1.75 trillion: Nirmala Sitharaman

In FY21, the government had budgeted to raise Rs 2.1 trillion through divestments but fell short. Some of the big ticket divestments planned last year, like the stake sale in LIC, may conclude this year. The government has approved a new public sector enterprises policy, which is intended to drive privatisation. Fiscal support in FY22 depends on revenue generation from the success of these programmes.


10:36am

These are the initial highlights from Sitharaman’s fiscal 2021-22 budget speech:

EXPENDITURE

* 2020/21 revised expenditure 4.36 trillion rupees ($59.74 billion)

* 2020/21 capital expenditure estimated at 5.43 trillion rupees ($74.40 billion)

* 2020/21 budget deficit said to be 9.5% of GDP - Bloomberg

* To provide more than 2 trillion rupees ($27.40 billion)for states and autonomous bodies

HEALTHCARE

* India to allocate 2.2 trillion rupees ($30.20 billion) for healthcare in 2021/22

* Sitharaman says expect two or more COVID-19 vaccines soon

* India to launch new federal health scheme with outlay of around 641 billion rupees ($8.80 billion) over the next six years

* To allocate 350 billion rupees ($4.81 billion) for COVID-19 vaccines, and allocate more funds if needed.

FINANCE

* India to introduce bill for development financial institution with capital of 200 billion rupees ($2.74 billion)

* To infuse 200 billion rupees ($2.74 billion) for recapitalization of state-run banks in FY2022

* India to consolidate certain SEBI regulations for Securities Market Code

* To relax FDI cap for insurance sector to 74% from 49%

* Set up asset reconstruction company to take over toxic assets

INFRASTRUCTURE

* To allocate 2.87 trillion rupees ($39.40 billion) for clean water supplies over the next five years

* To allocate 3 trillion rupees ($41.10 billion) for power sector for next five years

* To provide 10 billion rupees ($137.01 million)to Solar Energy Corporation of India

* Sitharaman says will move to end power distribution company monopolies

* To double ship recycling capacity by 2024

* India to monetise infrastructure assets

TRANSPORT

* Allocates 1.18 trillion rupees ($16.17 billion) for ministry of roads and highways

* Allocates 1.1 trillion rupees ($15.07 billion) for railways

* Railways to monetise freight corridors

* India to launch new vehicle scrapping policy


10:35am

Govt proposes further recapitalisation of state-owned banks; earmarks Rs 200 billion: FM


10:30am

Government to now allow one-person companies. No restriction on paid-up capital and turnover, to incentivise incorporation of one-person companies. Conversion of one-person company to any other kind, reducing residency limit from 182 days to 120 days. Allow non-resident Indians (NRIs) to incorporate one-person companies in India.


10:27am

India’s finance minister has proposed to revise definition of small companies by increasing their threshold for capitalisation to not exceeding Rs 5million to not exceeding Rs 20 million.


10:25am

Indians govt stretched its resources to help the poor

- Free food grain to 800 million people

- Free cooking gas for 80 million families

- Jal Jeevan Mission, universal coverage of water supply

- Budget to double farm incomes


10:24am

Indian government proposes IPO of Life Insurance Corporation of Indian in next financial year


10:22am

FDI in insurance companies proposed to increase from 49 per cent to 75 per cent


10:17am

New scrapping policy for commercial vehicles to reach clean air goal

Voluntary scrapping policy has been announced for discarding old commercial vehicles, which are constidered a large contributor for air pollution in India. The finance minister said that the scrapping parameters will be based on fitness test - 20 years in a personal vehicle and 15 years for the commercial vehicle. More details to be available soon.


10:16am

India to launch 7 textile parks in 3 years

Government has committed Rs 1.97 trillion for PLI schemes covering 13 sectors. Further seven textile parks will be launched over three years. Sitharaman said, " A scheme of Investments Textile Park will be launched in addition to PLI Scheme which will create world class infrastructure with plug and play facilities to enable global champions in exports.


10:16am

Budget highlights

1. Ujwala scheme will be extended to cover 10 million more beneficiaries

2. 100 more districts will added to the city gas network

3. Gas pipeline initiative in Jammu and Kashmir


10:12am

A hydrogen energy mission to be launched in 2021-22 to generate hydrogen from green power sources: FM Nirmala Sitharaman


10:08am

For 2021-22, I propose a sharp increase in Capital Expenditure & thus have provided Rs 5.54 trillion which is 34.5 per cent more than the BE 2020-21: FM Nirmala Sitharaman


10:03am

New economic corridors planned to boost road infrastructure: : Finance Minister Nirmala Sitharaman

9:57am

India now has one of the lowest Covid-19 death rates of 112 per million population and one of the lowest active cases of about 130 per million. This has laid the foundation for the economic revival we see today: Finance Minister Nirmala Sitharaman in Parliament


10am

Capital expenditure of Rs 5.5 trillion proposed for 2021-22


9:55am

FM lists six pillars for economic revival

Budget proposals rest on 6 pillars, including health and well-being; physical and financial capital: FM

Six pillar of this budget:

1. Health & Wellbeing

2. Physical and financial

3. Inclusive development for aspiration

4. Reinvigoration of Healthcare centres and setting up of new ones

5. Strengthening Research and Development

6. Minimum govt and maximum governance

9:50am

"India now has one of the lowest Covid-19 death rates of 112 per million population and one of the lowest active cases of about 130 per million. This has laid the foundation for the economic revival we see today," Indian Finance Minister Nirmala Sitharaman said.


9:48am

I bow my head in respect to every citizen for endurance shown in facing what was an undeniably a tough year for all our physical and mental well-being: FM Nirmala Sitharaman


9:47am

Free food grain to 800 million people, free cooking gas for 80 million families: FM Nirmala Sitharaman


9:45am

The preparation of this budget was undertaken in circumstances like never before, in view of calamities that have affected a country or a region within a country. But what we have endured with Covid-19 to 2020 is Sui generis: FM Nirmala Sitharaman


9:45am

Today India has two vaccines available and has begun safeguarding not only her own citizens against coronavirus but also those of 100 or more countries. It has added comfort to know that 2 ore more vaccines are also expected soon: FM Nirmala Sitharaman

9:43am

Indian Finance Minister Nirmala Sitharaman said India could have never imagined the health crisis that was about to unfold when she presented budget for 2020. "The total impact of Atmanirbhar Bharat and measures by RBI was Rs 27.1 trillion, which amounts to 30 per cent of GDP," Sitharaman said.


9:35am

Nirmala Sitharaman begins Budget presentation

Indian finance minister Nirmala Sitharaman begins speech in Parliament ahead of presenting the Union Budget


9:25am

Rupee opens 8 paisa higher

Indian rupee opened 8 paise higher at 72.87 per dollar against Friday's close of 72.95, with buying seen in the domestic equity market ahead of Union Budget 2021.


9:15am

Cabinet approves the Budget 2021-22

Union Cabinet approves the Union Budget 2021-22 that will be presented by Finance Minister Nirmala Sitharaman in the Parliament.


9:15am

Budget must support farmers: Rahul Gandhi

"Budget 2021 must support MSMEs, farmers and workers to generate employment. Increase Healthcare expenditure to save lives. Increase Defence expenditure to safeguard borders," the Congress leader has tweeted.


9:05am

Lok Sabha Speaker Om Birla arrives at the Parliament.


9:05am

Prime Minister Narendra Modi arrives at Parliament

Prime Minister Narendra Modi has reached the Parliament for a scheduled Cabinet Meeting that precedes the Budget Presentation.


8:52am

Union Cabinet's meeting begins ahead of the presentation of Union Budget 2021-22 by Finance Minister Nirmala Sitharaman at the Parliament today.


8:35am

Visuals from the Parliament


8:30am

Finance Minister Nirmala Sitharaman and MoS Finance and Corporate Affairs Anurag Thakur arrive at the Parliament.


8:27am

Union Home Minister Amit Shah and Union Health Minister Dr Harsh Vardhan arrive at the Parliament.


8:25am

Finance Minister Nirmala Sitharaman, MoS Finance & Corporate Affairs Anurag Thakur and senior officials of the Ministry of Finance, called on President Kovind at Rashtrapati Bhavan before presenting the Union Budget 2021-22.



8:12am

Indian shares rise ahead of budget

Indian shares rose on Monday ahead of the federal budget where Finance Minister Nirmala Sitharaman is expected to unveil several measures to bolster the economy following the impact of the Covid-19 pandemic.

The NSE Nifty 50 index rose 0.78 per cent to 13,741 by 0346 GMT, while the benchmark S&P BSE Sensex was up 0.84 per cent at 46,673.82.

The blue-chip stock indexes rocketed to record highs earlier in 2021 as India started a huge vaccination drive and as corporates reported encouraging earnings, but in the days leading up to the budget they have fallen for six straight sessions up to Friday.

ICICI Bank Ltd rose as much as 4.1 per cent after reporting a jump in quarterly profit on Saturday. Investors are also awaiting monthly sales numbers from automakers on Monday.

7:30am

Nirmala Sitharaman arrives at finance ministry

Union Finance Minister Nirmala Sitharaman on Monday morning reached the Ministry of Finance in the North Block, ahead of presenting the Union Budget 2021-22 in the Parliament.


Budget will be in accordance with people's expectations: Anurag Thakur

Union Minister of State for Finance Anurag Thakur has asserted that the budget 2021-22 will be in accordance with people’s expectations and added that the government is working towards a self-reliant India and making its economy grow.

“The Budget will be in accordance with people’s expectations. Sabka Saath, Sabka Vikas, Sabka Vishwas is the agenda of the Modi government. The government which functions on the mantra of ‘Sabka Saath, Sabka Vikas, Sabka Vishwas’ gave a new direction to India by announcing the Aatmanirbhar package, protecting it from the pandemic and bringing the economy back on track swiftly,” Thakur told ANI.

“I have full confidence the budget will fulfill the aspirations of the people. We will continue to make efforts to make India self-reliant and make our economy grow,” he added.

Thakur also offered prayers at his residence, ahead of the presentation of the Union Budget 2021-22 in the Parliament.


7:2am

Budget will be delivered in paperless form for the first time.

The Budget presentation will begin with a speech from Finance Minister scheduled to take place at around 11 am (India time). The duration of the budget speech usually ranges from 90 to 120 minutes.

This year, the Union Budget will be delivered in paperless form for the first time.

Finance Minister had launched the "Union Budget Mobile App" for hassle-free access of Budget documents by Members of Parliament (MPs) and the general public using the simplest form of digital convenience, according to the Finance Ministry.


7am

After pandemic disruption, time to focus on demand side of economy

Ahead of the Budget, Sitharaman tabled the Economic Survey tabled in Parliament on Friday. The Indian economy can contract by 7.7 per cent in the current financial year ending on March 31 and the growth could be 11 per cent in the next financial year, according to the survey.

The contraction in FY21 is mainly due to the coronavirus pandemic and the visible damage caused by the subsequent countrywide lockdown to contain it.

The survey unveiled two days before the Union Budget is broadly in line with forecasts by the Reserve Bank of India (RBI) which has said it expected the country's GDP to contract by 7.5 per cent in the year ending March 31.

In the quarter ending June 2020, the GDP contracted by 23.9 per cent followed by a milder contraction of 7.5 per cent in the quarter ended September 2020.

The first part of the Budget Session is scheduled to continue till February 15 while the second part of the session will be held from March 8 to April 8. Rajya Sabha will function from 9 am to 2 pm and Lok Sabha from 4 pm to 9 pm with Zero Hour and Question Hour.

Parliamentary Affairs Minister Pralhad Joshi said on Saturday that the budget session will take up 38 legislative items.


Tax Cut Hopes

Corporations and industry chambers expect the finance minister to unveil some tax relief measures for pandemic-hit sectors such as real estate, aviation, tourism and autos.

And analysts say the government would also have to consider providing tax relief to small businesses and consumers.

But, with India’s fiscal deficit for the current financial year ending in March likely rising to more than 7 per cent of gross domestic product - double the government’s initial estimate of 3.5 per cent - analysts believe this may be quite challenging.

Photo: AFP
Photo: AFP

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