INDIAN INSTITUTE OF MANAGEMENT LUCKNOW

Budget 2021
“Faith is the bird that feels
the light and sings when
the dawn is still dark”

- FM Nirmala Sitharaman quoting Rabindranath Tagore

Source: Budget 2021-22
Budgeted Receipts
 Budgeted Receipts
Receipt Type Source Amount (In INR Crore) Amount (In INR Crore)

Revenue Receipts 17,88,424

Tax Revenue 15,45,396

Non Tax revenue 2,43,028

Capital Receipts 16,94,812

Recovery of Loans 13,000

Other Receipts (Disinvestment) 1,75,000

Borrowings and other Liabilities 15,06,812

Total 34,83,236 34,83,236

Budgeted Expenditure
 Budgeted Receipts
Expenditure Type Source Amount (In INR Crore) Amount (In INR Crore)

Revenue Account 26,72,604

Establishment Expenditure 6,09,014

Central Sector Schemes/Projects 10,51,703

Other Central Sector Expenditure 10,11,887

-Interest Payments (8,09,701)

Transfers 8,10,632

Central Sponspored Schemes 3,81,305

Finance Comission Grants 2,20,843

Other Expenditure 2,08,484

Total 34,83,236 34,83,236

Fiscal position

• Fiscal deficit estimated to be 9.5% for FY’21 and

6.8% for FY’22.
• Targeted to fall below 4.5% by FY’26
• The FRBM Act had set the fiscal deficit
target at 3% of the GDP by FY21, according
to an amendment to the act in 2018.
However, additional spending during the
pandemic has delayed fiscal consolidation
path.
 KEY HIGHLIGHTS
• Relief for Senior Citizens: 75 years and above with only Pension and Interest - No need to file Return. TDS will be
deducted
• NRIs will get relief from difficulties due to difference in fiscal year and claim of foreign tax credit
• Tax audit limit of 5 crore for assessee having more than 95% receipts and payments non cash increased to 10
crore
• No TDS on dividend paid to REIT and INVIT
• Advance Tax on dividend income shall arise only after declaration of dividend and foreign investors shall be
eligible for lower TDS
• Infrastructure Debt Funds shall be allowed to issue Zero Coupon Bond.
• IFSC shall be eligible for tax holiday on Capital Gains
• Income Tax return prefill option shall include Capital Gains on listed securities, Dividend, Interest from Banks
and Post office
• Permissible FDI limit in insurance companies raised from 49% to 74%
• India will introduce bill to set up new Development Financial Institution. Rs 20,000 crore provided to capitalize
new Development Financial Institution. New DFI aims to have lending portfolio of Rs 5 lakh crore in 3 years
• FY22 capital expenditure up 34.5% (Vs FY21 BE), at Rs 5.54 lakh crore
• Ujjwala Scheme will be extended to cover 1 cr more beneficiaries. Will add 100 more districts in the next 3
years for city gas distribution
• Fiscal deficit for FY21 at 9.5% Vs estimate of 7%
SIX PILLARS TO STRENGTHEN THE
VISION OF ATMANIRBHARTA

Health and wellbeing Capital and Infrastructure

Inclusive Development Reinvigorating human

capital

Innovation and R&D Minimum government,

maximum governance
 Health & Wellbeing

Increase of 137% in Budget Expenditure for Health and Wellbeing from 94.4k crores to
2.23 lac crores

• PM Atmanirbhar Swasth Bharat Yojana will have an outlay of 64,180 crore

rupees spread over six years focusing on expanding health infrastructure
• Mission Poshan 2.0: Merging Supplementary Nutrition Programme and the
Poshan Abhiyan to strengthen nutritional content, delivery, outreach, and
outcome
• Jal Jeevan Mission (Urban),implemented over 5 years, with an outlay of 2,87,000
crores. Aims at universal water supply in all 4,378 Urban Local Bodies with 2.86
crores household tap connections, as well as liquid waste management in 500
AMRUT cities
• Urban Swachh Bharat Mission 2.0 will be implemented with a total financial
allocation of 1,41,678 crores
• Scrappage Policy: Vehicles would undergo fitness tests after 20 years in case of
personal vehicles, and after 15 years in case of commercial vehicles thereby
reducing vehicular pollution and oil import bill
 Physical and Financial Capital and Infrastructure

Sharp increase in capital expenditure to Rs.5.54 lakh crores which is 34.5% more than the BE of
2020-21.
• Infrastructure financing -
• Development Financial Institution (DFI) : A sum of Rs.20,000 crores has been set aside to capitalise this
institution. The ambition is to have a lending portfolio of at least Rs. 5 lakh crores for this DFI in three
years time.
• Debt Financing of InVITs and REITs by Foreign Portfolio Investors will be enabled by making suitable
amendments in the relevant legislations
• Asset monetization : A “National Monetization Pipeline” of potential brownfield infrastructure assets will be
launched. An Asset Monetization dashboard will also be created for tracking the progress and to provide
visibility to investors.
• Monetization of roads (Rs. 5,000Cr.) and transmission assets (Rs.7,000Cr.) via InvITs of NHAI and PGCIL
• Monetization of Dedicated Freight Corridor assets, and airports for operations and maintenance, after
commissioning.
• Other core infra assets including NHAI operational toll roads, O&G pipelines of GAIL, IOCL, HPCL, AAI
airports in T2 and T3 cities, other railway infra, warehousing assets and stadiums.
• Outlay of Rs.1,18,101 crores for Ministry of Road Transport and Highways, vs Rs. 91,823.22 crores last year
• Outlay of Rs.1,10,055 crores for Railways, vs Rs 72,215.63 crores last year.
• A new scheme will be launched at a cost of Rs.18,000 crores to support augmentation of public bus transport
services. The scheme will facilitate deployment of innovative PPP models to enable private sector players to
finance, acquire, operate and maintain over 20,000 buses.
 Physical and Financial Capital and Infrastructure
(Cont’d.)
• Financial Capital -
• Permissible FDI limit in Insurance Companies from 49% to 74%
• Stressed Asset Resolution by setting up a New Structure - An ARC and AMC would be set up to consolidate and
take over the existing stressed debt and then manage and dispose of the assets to AIFs and other potential
investors for eventual value realization.
• Rs. 20,000 crores proposed for Recapitalization of PSBs
• Disinvestment: Estimated Rs. 1,75,000 crores of disinvestment in BE 2021-22
• Proposed disinvestment of BPCL, Air India, Shipping Corporation of India, Container Corporation of India,
IDBI Bank, BEML, Pawan Hans, Neelachal Ispat Nigam limited etc., LIC IPO , Proposed privatization of two
PSBs and one General Insurance company
• Monetization of non-core assets - surplus land with ministries, PSEs. Proposed to set up an SPV for this
purpose
• Existing schemes-
• National Infrastructure Pipeline (NIP) - The NIP was launched with 6835 projects; the project pipeline has now
expanded to 7,400 projects.
• AtmaNirbhar Bharat - Production Linked Incentive Scheme (PLI) : Earlier last year, PLI schemes to create
manufacturing global champions were announced for 13 sectors. For this, the government committed nearly
1.97 lakh crores, over 5 years starting FY 2021-22.
• A revamped reforms-based result-linked power distribution sector scheme will be launched with an outlay of
Rs. 3,05,984 crores over 5 years. The scheme will provide assistance to DISCOMS for Infrastructure creation
including pre-paid smart metering and feeder separation, upgradation of systems, etc., tied to financial
improvements.
 Inclusive Development
• Agriculture
• MSP to assure price that is at least 1.5 times the cost of production across all commodities
• PM’s SWAMITVA Scheme- Property cards to be provided in all states and UTs
• Agricultural credit target enhanced to 16.5 lakh crores- focus on animal husbandry, dairy
and fisheries
• Rural Infrastructure fund enhanced from 30,000 to 40,000 crores
• Micro Irrigation Fund under NABARD doubled by another 5,000 crores
• Operation Green Scheme enlarged to include 22 perishable products
• 1000 more mandis will be integrated with e-NAM
• Agriculture Infrastructure Fund made available to APMCs
• Fisheries
• Multipurpose Seaweed Park to be established in Tamil Nadu- transform lives of coastal
communities by providing employment and additional income; substantial investment in
developing fishing harbours & landing centres
• Migrant workers & laborers
• One Nation One Ration Card to be implemented by all states and UTs
• Social security benefits to be extended to gig and platform workers 1st time globally;
minimum wages applied to all categories of workers; everyone covered by the Employee
State Insurance Corporation; women allowed to work in all categories & also in night shifts
• Financial inclusion
• Stand Up India scheme- margin money requirement reduced from 25% to 15%
• 15,700 crores to support the MSME sector, more than double of this year’s BE
 Reinvigorating Human Capital

Schools
• 100 new Sainik Schools will be set up in partnership with NGOs/ private
schools/states
• More than 15,000 schools will be qualitatively strengthened to include all
components of the National Education Policy.
Higher Education
• Higher Education Commission of India: An umbrella body having 4 separate
vehicles for standard-setting, accreditation, regulation, and funding to be legislated
• A central university in Leh to improve accessibility
Scheduled Caste and Scheduled Tribe Welfare
• Revamped post matric scholarship scheme, 35,219 crores allocated for 6 years
• Target of establishing 750 Eklavya model residential schools in tribal areas
Skilling
• Partnership with the United Arab Emirates (UAE), to benchmark skill
qualifications, assessment, and certification, accompanied by the deployment of
certified workforce
• National Apprenticeship Promotion Scheme: Amending to provide post-education
apprenticeship, training of graduates and diploma holders in Engineering
 Innovation and R&D

• National Research Foundation announced to be launched with a

budget outlay of 50,000 crore
• Digital Payments: 1,500 crores for a proposed scheme that will
provide financial incentive to promote digital modes of payment
• National Language Translation Mission (NTLM): This will enable the
wealth of governance-and-policy related knowledge on the Internet
being made available in major Indian languages
• Deep Ocean Mission: With a budget outlay of more than 4,000
crores, over five years, it will cover deep ocean survey exploration
and projects for the conservation of deep sea bio-diversity.
• New Space India Limited (NSIL), a PSU under the Department of
Space will execute the PSLV-CS51 launch, carrying the Amazonia
Satellite from Brazil, along with a few smaller Indian satellites
• Gaganyaan mission: four Indian astronauts are being trained on
Generic Space Flight aspects, in Russia. The first unmanned launch is
slated for December 2021.
 Minimum Government, Maximum Governance

National Commission for Allied Healthcare Professionals Bill: to ensure

transparent and efficient regulation of the 56 allied healthcare professions
National Nursing and Midwifery Commission Bill: to bring about
transparency, efficiency and governance reforms in the nursing profession
Ease of Doing Business: set up a Conciliation Mechanism and mandate its
use for quick resolution of contractual disputes. This will instil confidence in
private investors and contractors.
Digital Census: The forthcoming Census could be the first digital census in
the history of India, 3,768 crores allocated in the year 2021-2022

State specific provisions

Goa is celebrating the diamond jubilee year of the state’s liberation from
Portuguese rule. A grant of 300 crores to the Government of Goa for the
celebrations.
1,000 crores for the welfare of Tea workers especially women and their
children in Assam and West Bengal. A special scheme will be devised for the
same.
 Direct Taxation
Continuing the series of reforms introduced in the Direct tax system for the benefit of taxpayers and
economy, the current budget has provided for further steps to simplify the tax administration, ease
compliance and reduce litigation.
1. Exemption from filing income tax returns for senior citizens (age of 75 years and above) with only
pension and interest income. Paying bank to deduct necessary tax on their income.
2. Reducing time limit for reopening of Income tax assessments from 6 years to 3 years (except in
cases of serious tax evasion cases of Rs. 50 lakhs or more in a year)
3. Proposal to constitute ‘Dispute Resolution Committee’ for small tax payers (Taxable income 50
lakhs and disputed income 10 lakh)
4. Income Tax Appellate Tribunal to be made faceless
5. Increase in limit for Tax Audit from Rs. 5 Cr. to Rs. 10 cr. for individuals who carry out 95% of
transactions digitally
6. Dividend payment to REIT / InvIT exempt from TDS and provision of income tax liability only after
declaration / payment of dividend
7. Provision to raise funds by issuing tax efficient zero coupon bonds for notified Debt Fund
8. Additional deduction of Rs. 1.5 lakh to be made available for loans taken up in the 31 March 2022
for purchase of affordable house
9. Pre-filing of returns to cover details from capital gains from listed Securities, dividend income,
etc.
10. Limit for small charitable trusts increased from Rs. 1 crore to Rs. 5 crores
11. Incentive to startup companies by providing tax holiday exemption for one more year
 Indirect Taxation
January 2021 saw the highest ever collection of Goods and Sales Tax at 1.19 lakh
crore showing an increase of 8.15% Y-o-Y to January 2020.

1. Rationalisations of customs duty structure by eliminating outdated exemptions

2. Support to MSME’s hit by recent sharp rise in iron and steel prices and relief to
metal recyclers
3. Rationalisations of duties on raw material inputs to man made textiles
4. Rationalisation of custom duty on gold and silver
5. Increase in duty on solar inverters and lanterns to promote domestic production
6. Agriculture, Infrastructure and Development Cess on small number of items.
 Market impact of Budget 2021
Market Impact of Budget 2021
USD/INR 73.055 0.178 0.24%
10-year G-sec yields 6.067 0.118 1.98%
Sensex 48600.61 2314.84 5.00%
Nifty 14281.2 646.6 4.74%
Nifty Next 50 32661.55 918.3 2.89%
Nifty Midcap100 21600.9 691.05 3.30%
Nifty Small 100 7320.75 143.9 2.01%
Nifty Bank 33089.05 2523.55 8.26%
Nifty IT 24922.7 276.95 1.12%
Nifty Pharma 12103.55 -66.7 -0.55%
Nifty Finance 15702.45 1109.15 7.60%
Nifty VIX 2332.25 -202 -7.97%
Nifty 500 11770.15 467.75 4.14%
Nifty 100 14361.65 618.35 4.50%
Nifty FMCG 33689.65 568.6 1.72%
Nifty MNC 15807.9 315.8 2.04%
Nifty Services 20286.6 1081.55 5.63%
Nifty Energy 16587.55 428.35 2.65%
Nifty Realty 324.95 19.3 6.31%
Nifty PSU Banks 1956.15 142.1 7.83%
Nifty PSE 2802.6 80.65 2.96%
Nifty Consumptn 5979.85 161.7 2.78%
Nifty Auto 10227.95 414.8 4.23%
Nifty Metal 3227.25 149.8 4.87%
Nifty 200 7385.15 308.35 4.36%
Nifty Media 1706.6 56.5 3.42%
Nifty Commodity 3855.65 140.35 3.78%
“We have spent, we have
spent and we have spent”

- FM Nirmala Sitharaman (post budget remarks)