The Union Budget presented on 1st February 2021 by Finance Minister Hon. Nirmala Sitharaman was first of its kind. For starters, it was a paperless budget presented in a Made in India Tablet. Secondly, it was a budget where more focus was given on capital expenditure. Since 2014, very fewer budgets were focused on capital expenditure. Let’s start our adventure- The government decided to allocate on Public welfare schemes like - Amrutahaar Yojana (INR 2.87 lakh crores) which is spent across in Ministry of Women and Child Development for malnourished children, pregnant and lactating mothers and Swachh Bharat Abhiyan -Urban (INR 1.41 lakh crores). Central Government had set up divestment plans for nearly a decade. Now in this Union Budget announcement was made that Central Government is going to set up a National Monetisation Pipeline which will contain various assets in form of PSU’s to monetise in coming years. To raise funds for infrastructure NHAI and similar PSU’s will be raising funds through INVITS. The Central Government has estimated capital expenditure of INR 5+ lakh crores. States and Autonomous bodies will get INR 2+ lakh crores over and above the 5 lakh crores estimates. She has focused more on capital expenditure in this budget and which is a good thing especially during the phase of recovery in the post-COVID-19 scenario, where the world is looking at a nation or a story to invest after divesting from China. India focusing more to do capex itself sends a message to the investors across the globe that India is willing to expand the domestic manufacturing. The Ministry of Road and Transport has been allocated INR 1.18 lakh crores. Railways have been allocated INR 1.1 lakh crores of which 90% is capital expenditure. Public bus transport has been allocated INR 18000+ crores. This allocation has focused more on the transport and logistics sector strengthening it over time. The major move was made in the Power infrastructure sector. The government has designed a plan to increase the number of competitors in power distribution companies and have also allocated INR 3+ lakh crores, over 5 years for revamping of distribution companies. Solar energy is been allocated INR 1000 crores and renewables have been allocated INR 1500 crores. Now, the thing that amazed equity markets was increased FDI limits in insurance sector from 49% to 74%. This will ensure a good corpus of capital in the Insurance sector and penetrate the potential in the Insurance sector in India. Furthermore, maximum directors and KMP should be Residents of India and a certain percentage of the profits should be transferred to general reserve. Nifty bank index not only hailed but rallied approx. 7% on the announcement that government has undertaken a task to clean PSB’s books by selling the bad loans to AIF’s through AMC’s, also the recapitalisation of PSB is estimated INR 20,000 crores. The government has plans to divest a general insurance company and also focusing on Land monetisation of Central Government’s ownership. The central government has announced to come up with LIC IPO. Proceeds estimated from divestment in the current fiscal year is around INR 1.75 lakh crores. There have been adequate relaxations provided in taxation for start-up funding. Coming on taxation related announcements, the government has focused more on compliance, user friendly and transparent tax systems. Senior citizens above the age of 75 years who has an only pension and interest income are exempted from filing returns. The scheme VIVAAD SE VISHWAS scheme is ensuring reliance over our tax systems and it is getting a good response. Tax audit limits have been raised from 5 crores to 10 crores providing relaxation to MSME’s, Small, micro-enterprises. Tax holiday provided for capital gains to the leasing company, ensuring leasing concept in India. Tax exemption for the relocation of funds of IFSC. Faceless dispute resolution is some key aspects. The prime sector in these times is the health care sector. The budgetary allocation to this sector is INR 64,000 crores. The state borrowings are capped at 5% of GSDP which is post a hike today ensuring enough capital expenditure requirements for States economy. Import duties on metals have increased but such duties on Steel have been reduced forming a piece of negative news for the sector. Agriculture credit has been allocated around INR16.75 lakh crores and rural infrastructure to get around 30,000 to 40,000 crores ensuring a strong Grameen base. Now the most important figures of any budget which concerns or relaxes the nation’s fiscal as a whole is – The expenditure stands at INR 34.8 lakh crores of which approx. 5.54 lakh crores are of capital expenditure. Fiscal Deficit was 9% of GDP for the last FY and the current estimate is of 6.8% of GDP. This budget was not much of firecrackers but it wasn’t also something shattering as far as the previous budgets are concerned. The government has focused more on growth story and especially after the recovery of the economy, a bold budget having capital expenditure was more of a need of the hour and it was delivered partly. Investing in India was a statement to be made and I personally believe we took a small step towards it. Thank you.
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