Budget roundup; First Budget after the Covid-19 Outbreak got a thumbs-up from India

Bureau,Odishabarta

DELHI:The Centre will go in for a massive spending spree on infrastructure creation, healthcare, education and demand generation to revive India’s pandemic-battered economy.

In her third budget presentation in Parliament on Monday, Finance Minister Nirmala Sitharaman proposed to unleash massive fiscal expansion in 2021-22 on the back of high borrowings, fire sales and an agricultural cess.

However, no adverse impact is set to come on prices as the Centre made prior duty adjustments before imposing the cess.

The first Budget after the Covid-19 outbreak got a thumbs-up from India Inc with the equity markets jumping around 5 per cent in the day’s trade.

The biggest take-away from the Budget has been the Centre’s aggressive push to revive the economy via higher outlay for capital expenditure.

The FM proposed to increase capex by 34 per cent in Budget 2021-22 in comparison to the previous fiscal Budget Estimate.

In her Budget speech that lasted for around 1 hour and 45 minutes, Sitharaman doled out enormous amounts for Railways, roadways, healthcare, education as well as the agriculture sector.

Capex alone has been proposed to be increased to Rs 5.54 lakh crore from Rs 4.12 lakh crore spending target in BE FY21.

Also, she proposed to institute a ‘Land Bank’ monetisation company along with an asset management and reconstruction company or a ‘Bad Bank’ and a Development Financial Institution (DFI) which will fund infra projects.

Besides, the Finance Minister proposed to relax certain conditions which prohibited private funding, restriction on commercial activities, and direct investment in infrastructure to attract foreign sovereign wealth and pension funds to invest in domestic infra projects.

She laid out a new import structure along with proposals for a conducive environment to usher in investments into Fintech, insurance and start-ups.

Further, Sitharaman proposed to give relief to those Non-Resident Indians who have returned to India but face hardship of double taxation.

The Minister set aside Rs 20,000 crore for public sector bank re-capitalisation and gave a push to digital payments and research in Artificial Intelligence.

She also announced a vehicle scrappage policy, hydrogen energy mission and rationalisation of customs duty structure by eliminating outdated exemptions.

On the personal tax front, exemption was proposed from filing income tax returns for senior citizens with age of 75 years and above, and who only have pension and interest income.

The dividend payments to Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) from tax deduction at source (TDS) have been exempted.

Apart from exemptions, the budget envisages constitution of a Dispute Resolution Committee for small taxpayers.

In terms of shoring up the Centre’s revenues, Sitharaman proposed an asset monetisation pipeline.

She also set a massive divestment target of Rs 1.75 lakh crore.

However, Covid-19 prevented the Centre in achieving the FY21 target, with collections only coming in at Rs 19,499 crore.

In FY22, the Centre plans to divest two public sector banks, as well as a state-owned general insurance company.

Even the IPO route will be considered for LIC to augment falling revenues.Sale of certain projects such as city gas pipelines, roads and ports are expected to give some relief to the Centre.

But here as well, the fine print suggests hiving off these assets after their completion.

An Agriculture Infrastructure and Development Cess on excise and customs duties will kick-in to augment the Centre’s coffers.

Consequently, the fiscal deficit for next year is set at 6.8 per cent from 9.5 per cent for FY21, out of which the Centre plans to borrow Rs 80,000 crore by the end of the current fiscal.

Sitharaman proposed to amend the FRBM Act to institute more elasticity and return to a fiscal deficit level below 4.5 per cent of GDP by 2025-2026.The FRBM Act mandates a fiscal deficit of 3 per cent of GDP that needs to be achieved by March 31, 2020-2021..

In addition, she said the first Budget post the onset of Covid-19 pandemic has ample opportunities for growth and economic reset.
She said that in the post-Covid world, India is well positioned to benefit from the new realignments in the economic and political spheres.

FARMERS’ PROGRESS TO BE GOVT’S PRIORITY

New Delhi: Amid the coronavirus pandemic when the pace of manufacturing and services sector came to a grinding halt, agriculture and allied sectors in India have picked up pace as the country saw the strength of the farm sector. The Government also took care of a large population of the country related to agriculture and farming and enacted new laws to intensify the winds of improvement in the agricultural sector. The Budget 2021-22 is going to be presented in Parliament on Monday, amid wrangling over agricultural reform..

In such a situation, it is expected that Modi Government, which claims to give priority to the progress of villages, the poor and farmers, will also give priority to agriculture and rural development in the upcoming Budget.

According to the Economic Review 2020-21, while the industry and services sectors are projected to fall by 9.6 per cent and 8.8 per cent, respectively, in the current financial year, the growth rate of agriculture and allied sectors can remain at 3.4 per cent. The agriculture and allied sectors recorded a growth rate of 3.4 per cent at constant prices during FY 2020-21 (first advance estimate).

Modi Government’s priority has been to double the income of farmers by 2022 and to develop basic facilities in villages including ‘pucca’ houses for all the poor in the country. Therefore, with a view to achieving these goals, the budgetary allocation of major schemes of agriculture and rural development sector can be expected to increase in the upcoming Budget.

A senior official of the Union Ministry of Agriculture and Farmers Welfare said that farmers’ awareness about all the schemes of agriculture sector, including Prime Minister Kisan Samman Nidhi (PM-KISAN), is continuously increasing and the benefits of these schemes are beginning to be seen at the ground level.

The Government will also focus on the scheme to provide short-term agricultural loans to farmers at affordable interest rates. Other schemes of the agriculture sector, including the Prime Minister Crop Insurance Scheme, the Prime Minister Agricultural Irrigation Scheme, can also be given importance in this budget. Agricultural economists point out that along with agriculture, the Government will give prominence to the plans of the food processing industry, which will help in achieving the goal of doubling the income of farmers.

Major schemes for the development of villages proved to be very helpful in providing employment opportunities to the workers migrating from the cities during the corona period. The Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGA), in addition to providing employment to the daily wage labourers in the villages, proved to be crucial in the development of basic infrastructure in the villages, which was called an opportunity in disaster and under the self-sufficient India package.

Experts say that in the upcoming Budget also, other rural development schemes, including MNREGA can be increased. The budgetary allocation of MNREGA was Rs 61,500 crore in 2020-21, but under the self-sufficient package in the corona era, an additional allocation of Rs 40,000 crore was made for the scheme.

Farmers have been agitating for more than two months on the borders of Delhi to repeal the new agricultural laws and to demand a legal guarantee for the purchase of crops at the minimum support price (MSP). Agricultural experts point out that MSP is a big issue in the farmers’ movement, so some announcement can be expected in the Budget regarding MSP as well.

Union Finance Minister Nirmala Sitharaman will present the General Budget of the upcoming financial year 2021-22 in Parliament on Monday.

Rs.1.10 lakh Crs. for

 Finance Minister Nirmala Sitharaman announced on Monday a record sum of Rs 1.10 lakh crore for the Railways, out of which Rs 1.07 lakh crore is for capital expenditure, and said the national transporter would monetise the dedicated freight corridors after its commissioning.

Presenting the Union Budget 2021-22, Sitharaman also applauded the services provided by the Railways to transport essential goods across the country during the coronavirus lockdown. “I am announcing a record sum of Rs 1,10,055 crore for Railways of which Rs 1,07,100 crore is for capital expenditure only,” she said.

“Indian Railways have prepared a National Rail Plan for India 2030. The plan is to create a future ready railway system by 2030 and bringing down the logistic cost for industry is at the core of the strategy to enable Make In India,” Sitharaman said. She said it was expected that the eastern and western dedicated freight corridors (EDFC and WDFC) would be commissioned by June 2022.

“The following additional initiatives are also proposed. The Sonenagar-Gomoh section of 263 km on EDFC will be taken up in PPP mode this year itself. Gomoh-Dankuni section of 274.3 km will also be taken up shortly in short succession,” she said.

The Finance Minister said the Railways would take up the future dedicated freight corridor projects; East Coast Corridor from Kharagpur to Vijayawada, East-West Corridor from Bhusawal to Kharagpur to Dankuni and North-South Corridor from Itarsi to Vijayawada.

Sitharaman said the detailed project report would be undertaken in the first phase. She said broad gauge route electrification was expected to reach 46,000 route km, which is 72 per cent by the end of 2021 from 41,548 km from October 1, 2020, adding that 100 per cent electrification of such routes would be completed by December 2023.

Stressing on the passenger convenience and safety, she said the Railways would introduce the aesthetically-designed vistadome LHB coaches on tourist routes for better travel experience to passengers.

“The safety measures taken in the last few years have borne results. To further strengthen this effort, high density network and highly utilised network routes will be provided with indigenously designed automatic train collision system that eliminates train collusion due to human error,” she said.

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