Budget 2021-2022
Speech of
Nirmala Sitharaman
Minister of Finance
February 1, 2021
Hon’ble Speaker,
I present
the Budget for the year 2021-2022.
Introduction
1.
Honourable Speaker, the preparation of this Budget was
undertaken in circumstances like never before. We knew of calamities that have
affected a country or a region within a country, but what we have endured with
COVID-19 through 2020 is sui generis.
2.
When I presented the Budget 2020-21, we could not have
imagined that the global economy, already in throes of a slowdown, would be
pushed into an unprecedented contraction.
3.
We could not have also imagined then that our people
as those in other countries would have to endure the loss of near and dear ones
and suffer hardships brought about due to a health crisis.
4.
The risk of not having a lockdown was far too high.
Within 48 hours of declaring a three-week-long complete lockdown, the Prime
Minister announced the Pradhan Mantri Garib Kalyan Yojana, valued at `2.76 lakh
crores – this provided, free food grain to 800 million people, free cooking gas
for 80 million families for months, and cash directly to over 400 million
farmers, women, elderly, the poor and the needy.
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5.
Even as a large section of citizens stayed home, milk,
vegetable, and fruit-suppliers, health and sanitary workers, truck drivers,
railways and public transport workers, bank employees, electricity workers, our
annadatas, police, firemen, and the
armed forces, all had to go about their work
as normal, but with the additional anxiety of the virus hanging over them. We
recognise this, and I think I speak on behalf of everybody in this august
House, when I express my heartfelt gratitude to these men and women, for how
they were able to carry out their work and duty, to provide for the nation’s
basics, over those crucial months.
6.
Speaker Sir, for public good, Honourable Members of Parliament
and Members of Legislative Assemblies too offered their salaries.
7.
In May 2020, the government announced the AtmaNirbhar
Bharat package (ANB 1.0). To sustain the recovery, further into the year, we
also rolled out two more AtmaNirbhar Bharat packages (ANB 2.0 and ANB 3.0).
Total financial impact of all AtmaNirbhar Bharat packages including measures
taken by RBI was estimated to about `27.1 lakh crores which amounts to
more than 13% of GDP.
8.
As a government, we kept a watch on the situation and
were proactive in our responses. The government, led by the Prime Minister,
stretched its resources to deliver for most vulnerable sections of our society
–
the poorest of the poor, the Dalits, Tribals, the elderly, the migrant workers,
and our children. The PMGKY, the three ANB packages, and announcements made
later were like five mini-budgets in themselves.
9.
The AtmaNirbhar Packages accelerated our pace of
structural reforms. Redefinition of MSMEs, Commercialisation of the Mineral
Sector, Agriculture and Labour Reforms, Privatisation of Public Sector
Undertakings, One Nation One Ration Card, and Production Linked Incentive
Schemes are some of the notable reforms carried out during this period.
Faceless Income Tax Assessment, DBT and Financial Inclusion are the others.
10.
Today, India has two vaccines available, and has begun
medically safeguarding not only her own citizens against COVID-19, but also
those of
100
or more countries. It is added comfort to know that
two or more vaccines are also expected soon.
3
11.
Honourable Prime Minister launched the vaccination
drive by crediting and thanking our scientists. We are ever grateful for the
strength and rigour of their efforts.
12.
Having said that, we are all reminded time and again
that our fight against COVID-19 continues into 2021.
13.
Now, just as it had happened after the two World Wars,
there are signs that the political, economic, and strategic relations in the
post COVID world are changing. This moment in history is the dawn of a new era –
one in which India is well-poised to truly be the land of promise and hope.
''Faith is the bird that feels the light and sings when the dawn is
still dark''.
-Rabindranath Tagore
(Fireflies – A Collection of
Aphorisms)
14.
In this spirit, I can’t help but recall the joy that
we, as a cricket-loving nation, felt after Team India’s recent spectacular
success in Australia. It has reminded us of all the qualities that we as a
people, particularly our youth, epitomise of having abundant promise and the
unsuppressed thirst to perform and succeed.
15.
Today, data shows that India now has one of the lowest
death rate of 112 per million population and one of the lowest active cases of
about
130
per million. This has laid the foundation to the
revival we are seeing now in the economy.
16.
This Budget will be the first of this new decade. This
Budget will also be a digital Budget and that has happened with all your
support.
17.
So far, only three times has a Budget followed a
contraction in the economy. All such contractions were as a result of
situations typical to India. This time, the contraction in our economy is due
to a global pandemic, just like in several other countries.
18.
Having said that, I want to confidently state that our
Government is fully prepared to support and facilitate the economy’s reset.
This Budget provides every opportunity for our economy to raise and capture the
pace that it needs for sustainable growth.
19.
2021 is the year of many important milestones for our
history. I mention a few of these: It is the 75th year of
Independence; 60 years of Goa’s accession to India; 50 years of the 1971
India-Pakistan War; it will be
4
the year of
the 8th Census of Independent India; it will also be India’s turn at the BRICS
Presidency; the year for our Chandrayaan-3 Mission; and the Haridwar Maha
Kumbh.
20.
Honourable Speaker, before I commence Part A of the
Budget, I want to take a moment to acknowledge how isolating and distancing
seemed like insurmountable challenges for a country like ours that has people
coming together in times of crises. It hurt us in many ways. I bow my head in
respect to every citizen, for the endurance shown in facing what was an
undeniably a tough year for all our physical and mental well-being.
PART A
21.
In Part A, I wish to lay a vision for AtmaNirbhar Bharat.
22.
AtmaNirbharta is not a new idea. Ancient India was
largely self-reliant, and equally, a business epicentre of the world.
23.
AtmaNirbhar Bharat is an expression of 130 crores
Indians who have full confidence in their capabilities and skills.
24.
We are already part of International groupings such as
the G20 and BRICS. The Coalition for Disaster Resilient Infrastructure and the
International Solar alliance are realities today due to India’s efforts.
25.
The proposals in Part A will further strengthen the
sankalp of Nation First, Doubling Farmer’s Income, Strong Infrastructure,
Healthy India, Good Governance, Opportunities for Youth, Education for All,
Women Empowerment, and Inclusive Development, among others.
26.
Additionally, also on the path to fast-implementation
are the 13 promises we had made in the Budget of 2015-16 which were to
materialise during the Amrut Mahotsav of 2022, on the 75th year of our
Independence. They too resonate with this vision of AtmaNirbharta.
27.
The Budget proposals for 2021-2022 rest on 6 pillars.
i.
Health and Wellbeing
ii.
Physical & Financial Capital, and Infrastructure
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iii.
Inclusive Development for Aspirational India
iv.
Reinvigorating Human Capital
v.
Innovation and R&D
vi.
Minimum Government and Maximum Governance
1. Health and Wellbeing
28.
Even at the outset, I would like to say that the
investment on Health Infrastructure in this Budget has increased substantially.
Progressively, as institutions absorb more, we shall commit more.
29.
Taking a holistic approach to Health, we focus on
strengthening three areas: Preventive, Curative, and Wellbeing.
Health Systems
30.
A new centrally sponsored scheme, PM AtmaNirbhar Swasth Bharat Yojana,
will be launched with an outlay of about
` 64,180 crores over 6 years. This will develop capacities of primary, secondary, and
tertiary care Health Systems, strengthen existing national institutions, and
create new institutions, to cater to detection and cure of new and emerging
diseases. This will be in addition to the National Health Mission. The main
interventions under the scheme are:
a.
Support for 17,788 rural and 11,024 urban Health and
Wellness Centers
b.
Setting up integrated public health labs in all
districts and 3382 block public health units in 11 states;
c.
Establishing critical care hospital blocks in 602
districts and 12 central institutions;
d.
Strengthening of the National Centre for Disease
Control (NCDC), its 5 regional branches and 20 metropolitan health surveillance
units;
e.
Expansion of the Integrated Health Information Portal
to all States/UTs to connect all public health labs;
f.
Operationalisation of 17 new Public Health Units and
strengthening of 33 existing Public Health Units at Points of Entry, that is at
32 Airports, 11 Seaports and 7 land crossings;
g.
Setting up of 15 Health Emergency Operation Centers
and 2 mobile hospitals; and
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h.
Setting up of a national institution for One Health, a
Regional Research Platform for WHO South East Asia Region, 9 Bio-Safety Level
III laboratories and 4 regional National Institutes for Virology.
Nutrition
31.
To strengthen nutritional content, delivery, outreach,
and outcome, we will merge the Supplementary Nutrition Programme and the Poshan
Abhiyan and launch the Mission Poshan 2.0. We shall adopt an intensified
strategy to improve nutritional outcomes across 112 Aspirational Districts.
Universal Coverage of Water
Supply
32.
The World Health Organisation has repeatedly stressed
the importance of clean water, sanitation, and clean environment, as a pre
requisite to achieving universal health.
33.
The Jal Jeevan Mission (Urban), will be launched. It
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. It will be implemented over 5 years, with an outlay of `2,87,000
crores.
Swachch Bharat, Swasth
Bharat
34.
For further swachhta
of urban India, we intend to focus on complete faecal sludge management and
waste water treatment, source segregation of garbage, reduction in single-use
plastic, reduction in air pollution by effectively managing waste from
construction-and-demolition activities and bio-remediation of all legacy dump
sites. The Urban Swachh Bharat Mission
2.
0 will be implemented with a total financial
allocation of `1,41,678
crores over a period of 5 years from 2021-2026.
Clean Air
35.
To tackle the burgeoning problem of air pollution, I
propose to provide an amount of `2,217 crores for 42 urban centres
with a million-plus population in this budget.
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Scrapping Policy
36.
We are separately announcing a voluntary vehicle
scrapping policy, to phase out old and unfit vehicles. This will help in
encouraging fuel-efficient, environment friendly vehicles, thereby reducing
vehicular pollution and oil import bill. Vehicles would undergo fitness tests
in automated fitness centres after 20 years in case of personal vehicles, and
after 15 years in case of commercial vehicles. Details of the scheme will be
separately shared by the Ministry.
Vaccines
37.
The Pneumococcal Vaccine, a Made in India product, is
presently limited to only 5 states will be rolled out across the country. This
will avert more than 50,000 child deaths annually.
38.
I have provided `35,000 crores for Covid-19 vaccine
in BE 2021-22. I am committed to provide further funds if required.
39.
The Budget outlay for Health and Wellbeing is `2,23,846 crores in BE 2021-22 as
against this year’s BE of `94,452 crores an increase of 137 percentage. The details of
the same are at Annexure I of the Speech.
2.
Physical and Financial Capital and Infrastructure
AtmaNirbhar Bharat – Production Linked Incentive scheme (PLI)
40.
For a USD 5 trillion economy, our manufacturing sector
has to grow in double digits on a sustained basis. Our manufacturing companies
need to become an integral part of global supply chains, possess core
competence and cutting-edge technology. To achieve all of the above, PLI
schemes to create manufacturing global champions for an AtmaNirbhar Bharat have
been announced for 13 sectors. For this, the government has committed nearly `1.97 lakh
crores, over 5 years starting FY 2021-22. This initiative will help bring scale
and size in key sectors, create and nurture global champions and provide jobs
to our youth.
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Textiles
41.
To enable the textile industry to become globally
competitive, attract large investments and boost employment generation, a
scheme of Mega Investment Textiles Parks
(MITRA) will be launched in addition to the PLI scheme. This will create world class infrastructure with plug
and play facilities to enable create global champions in exports. 7 Textile
Parks will be established over 3 years.
Infrastructure
42.
The National Infrastructure Pipeline (NIP) which I
announced in December 2019 is the first-of-its-kind, whole-of-government
exercise ever undertaken by Government of India. The NIP was launched with 6835
projects; the project pipeline has now expanded to 7,400 projects. Around
217
projects worth `1.10 lakh crores under some key
infrastructure Ministries have been completed.
43.
The NIP is a specific target which this government is
committed to achieving over the coming years. It will require a major increase
in funding both from the government and the financial sector. In this Budget, I
propose to take concrete steps to do this, in three ways:
44.
Firstly, by creating the institutional structures;
secondly, by a big thrust on monetizing assets, and thirdly by enhancing the
share of capital expenditure in central and state budgets.
Infrastructure financing -
Development Financial Institution (DFI)
45.
Infrastructure needs long term debt financing. A
professionally managed Development Financial Institution is necessary to act as
a provider, enabler and catalyst for infrastructure financing. Accordingly, I
shall introduce a Bill to set up a DFI. I have provided a sum of `20,000
crores to capitalise this institution. The ambition is to have a lending
portfolio of at least `5 lakh crores for this DFI in three years time.
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46.
Debt Financing of InVITs and REITs by Foreign
Portfolio Investors will be enabled by making suitable amendments in the
relevant legislations. This will further ease access of finance to InVITS and
REITs thus augmenting funds for infrastructure and real estate sectors.
Asset Monetisation
47.
Monetizing operating public infrastructure assets is a
very important financing option for new infrastructure construction. 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. Some important measures in the
direction of monetisation are:
a.
National Highways Authority of India and PGCIL each
have sponsored one InvIT that will attract international and domestic
institutional investors. Five operational roads with an estimated enterprise
value of ` 5,000
crores are being transferred to the NHAI InvIT. Similarily, transmission assets
of a value of `7,000
crores will be transferred to the PGCIL InvIT.
b.
Railways will monetise Dedicated Freight Corridor
assets for operations and maintenance, after commissioning.
c.
The next lot of Airports will be monetised for
operations and management concession.
d.
Other core infrastructure assets that will be rolled
out under the Asset Monetization Programme are: (i) NHAI Operational Toll Roads
(ii)
Transmission Assets of PGCIL (iii) Oil and Gas
Pipelines of GAIL, IOCL and HPCL (iv) AAI Airports in Tier II and III cities,
(v) Other Railway Infrastructure Assets (vi) Warehousing Assets of CPSEs such
as Central Warehousing Corporation and NAFED among others and
(vii) Sports Stadiums.
Sharp Increase in Capital
Budget
48.
In the BE 2020-21, we had provided `4.12 lakh
crores for Capital Expenditure. It was our effort that in spite of resource
crunch we should spend more on capital and we are likely to end the year at
around `4.39
10
lakh
crores which I have provided in the RE 2020-21. For 2021-22, I propose a sharp
increase in capital expenditure and thus have provided `5.54 lakh
crores which is 34.5% more than the BE of 2020-21. Of this, I have kept a sum
of more than `44,000
crores in the Budget head of the Department of Economic Affairs to be provided
for projects/programmes/departments that show good progress on Capital
Expenditure and are in need of further funds. Over and above this expenditure,
we would also be providing more than `2 lakh crores to States and
Autonomous Bodies for their Capital Expenditure.
49.
We will also work out specific mechanisms to nudge
States to spend more of their budget on creation of infrastructure.
Roads and Highways
Infrastructure
50.
More than 13,000 km length of roads, at a cost of `3.3 lakh
crores, has already been awarded under the `5.35 lakh crores Bharatmala
Pariyojana project of which 3,800 kms have been constructed. By March 2022, we
would be awarding another 8,500 kms and complete an additional 11,000 kms of
national highway corridors.
51.
To further augment road infrastructure, more economic
corridors are also being planned. Some are:
a.
3,500 km of National Highway works in the state of
Tamil Nadu at an investment of `1.03 lakh crores. These include Madurai-Kollam corridor,
Chittoor-Thatchur corridor. Construction will start next year.
b.
1,100 km of National Highway works in the State of
Kerala at an investment of `65,000 crores including 600 km section of Mumbai-Kanyakumari
corridor in Kerala.
c.
675 km of highway works in the state of West Bengal at
a cost of `25,000
crores including upgradation of existing road-Kolkata – Siliguri.
d.
National Highway works of around `19,000
crores are currently in progress in the State of Assam. Further works of more
than `34,000
11
crores
covering more than 1300 kms of National Highways will be undertaken in the
State in the coming three years.
52.
Some of the flagship corridors and other important
projects that would see considerable activity in 2021-22 are in Annexure-II.
53.
I am also providing an enhanced outlay of `1,18,101
lakh crores for Ministry of Road Transport and Highways, of which `1,08,230
crores is for capital, the highest ever.
Railway Infrastructure
54.
Indian Railways have prepared a National Rail Plan for
India – 2030. The Plan is to create a ‘future ready’ Railway system by 2030.
55.
Bringing down the logistic costs for our industry is
at the core of our strategy to enable ‘Make in India’. It is expected that
Western Dedicated Freight Corridor (DFC) and Eastern DFC will be commissioned
by June 2022. The following additional initiatives are proposed:
a.
The Sonnagar – Gomoh Section (263.7 km) of Eastern DFC
will be taken up in PPP mode in 2021-22. Gomoh-Dankuni section of 274.3 km will
also be taken up in short succession.
b.
We will undertake future dedicated freight corridor projects
namely East Coast corridor from Kharagpur to Vijayawada, East-West Corridor
from Bhusaval to Kharagpur to Dankuni and North-South corridor from Itarsi to
Vijayawada. Detailed Project Reports will be undertaken in the first phase.
c.
Broad Gauge Route Kilometers (RKM) electrified is
expected to reach 46,000 RKM i.e., 72% by end of 2021 from 41,548 RKM on 1st Oct 2020.
100% electrification of Broad-Gauge routes will be completed by December, 2023.
56.
For Passenger convenience and safety the following
measures are proposed:
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a.
We will introduce the aesthetically designed Vista
Dome LHB coach on tourist routes to give a better travel experience to
passengers.
b.
The safety measures undertaken in the past few years
have borne results. To further strengthen this effort, high density network and
highly utilized network routes of Indian railways will be provided with an
indigenously developed automatic train protection system that eliminates train
collision due to human error.
c.
I am providing a record sum of `1,10,055
crores, for Railways of which `1,07,100 crores is for capital expenditure.
Urban Infrastructure
57.
We will work towards raising the share of public
transport in urban areas through expansion of metro rail network and
augmentation of city bus service. A new scheme will be launched at a cost of `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. The scheme
will boost the automobile sector, provide fillip to economic growth, create
employment opportunities for our youth and enhance ease of mobility for urban
residents.
58.
A total of 702 km of conventional metro is operational
and another 1,016 km of metro and RRTS is under construction in 27 cities. Two
new technologies i.e., ‘MetroLite’ and ‘MetroNeo’ will be deployed to provide
metro rail systems at much lesser cost with same experience, convenience and
safety in Tier-2 cities and peripheral areas of Tier-1 cities.
59.
Central counterpart funding will be provided to:
a.
Kochi Metro Railway Phase-II of 11.5 km at a cost of `1957.05 crores.
b.
Chennai Metro Railway Phase-II of 118.9 km at a cost
of `63,246
crores.
c.
Bengaluru Metro Railway Project Phase 2A and 2B of
58.19 km at a cost of `14,788 crores.
d.
Nagpur Metro Rail Project Phase-II and Nashik Metro at
a cost of `5,976
crores and
`2,092 crores respectively.
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Power Infrastructure
60.
The past 6 years have seen a number of reforms and
achievements in the power sector. We have added 139 Giga Watts of installed
capacity, connected an additional 2.8 crores households and added 1.41 lakh
circuit km of transmission lines.
61.
The distribution companies across the country are
monopolies, either government or private. There is a need to provide choice to
consumers by promoting competition. A framework will be put in place to give
consumers alternatives to choose from among more than one Distribution Company.
62.
The viability of Distribution Companies is a serious
concern. A revamped reforms-based result-linked power distribution sector
scheme will be launched with an outlay of `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.
63.
Prime Minister, while speaking at the 3rd Re-inVest
Conference in November 2020, had announced plans to launch a comprehensive
National Hydrogen Energy Mission. It is now proposed to launch a Hydrogen
Energy Mission in 2021-22 for generating hydrogen from green power sources.
Ports, Shipping, Waterways
64.
Major Ports will be moving from managing their
operational services on their own to a model where a private partner will
manage it for them. For the purpose, 7 projects worth more than `2,000
crores will be offered by the Major Ports on Public Private Partnership mode in
FY21-22.
65.
A scheme to promote flagging of merchant ships in
India will be launched by providing subsidy support to Indian shipping
companies in global tenders floated by Ministries and CPSEs. An amount of `1624 crores
will be provided over 5 years. This initiative will enable greater training and
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employment
opportunities for Indian seafarers besides enhancing Indian companies share in
global shipping.
66.
India has enacted Recycling of Ships Act, 2019 and
acceded to the Hong Kong International Convention. Around 90 ship recycling
yards at Alang in Gujarat have already achieved HKC-compliant certificates.
Efforts will be made to bring more ships to India from Europe and Japan.
Recycling capacity of around 4.5 Million Light Displacement Tonne (LDT) will be
doubled by 2024. This is expected to generate an additional 1.5 lakh jobs for
our youth.
Petroleum & Natural Gas
67.
Our government has kept fuel supplies running across
the country without interruption during the COVID-19 lockdown period. Taking
note of the crucial nature of this sector in people’s lives, the following key
initiatives are being announced:
a.
Ujjwala Scheme which has benefited 8 crores households
will be extended to cover 1 crores more beneficiaries.
b.
We will add 100 more districts in next 3 years to the
City Gas Distribution network.
c.
A gas pipeline project will be taken up in Union
Territory of Jammu & Kashmir.
d.
An independent Gas Transport System Operator will be
set up for facilitation and coordination of booking of common carrier capacity
in all-natural gas pipelines on a non-discriminatory open access basis.
Financial Capital
68.
I propose to consolidate the provisions of SEBI Act,
1992, Depositories Act, 1996, Securities Contracts (Regulation) Act, 1956 and
Government Securities Act, 2007 into a rationalized single Securities Markets
Code.
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69.
The Government would support the development of a
world class Fin-Tech hub at the GIFT-IFSC.
70.
To instill confidence amongst the participants in the
Corporate Bond Market during times of stress and to generally enhance secondary
market liquidity, it is proposed to create a permanent institutional framework.
The proposed body would purchase investment grade debt securities both in
stressed and normal times and help in the development of the Bond market.
71.
In the budget of 2018-19, Government had announced its
intent to establish a system of regulated gold exchanges in the country. For
the purpose, SEBI will be notified as the regulator and Warehousing Development
and Regulatory Authority will be strengthened to set up a commodity market eco
system arrangement including vaulting, assaying, logistics etc in addition to
warehousing.
72.
Towards investor protection, I propose to introduce an
investor charter as a right of all financial investors across all financial
products.
73.
To give a further boost to the non-conventional energy
sector, I propose to provide additional capital infusion of `1,000
crores to Solar Energy Corporation of India and `1,500 crores to Indian Renewable
Energy Development Agency.
Increasing FDI in Insurance
Sector
74.
I propose to amend the Insurance Act, 1938 to increase
the permissible FDI limit from 49% to 74% in Insurance Companies and allow
foreign ownership and control with safeguards. Under the new structure, the
majority of Directors on the Board and key management persons would be resident
Indians, with at least 50% of Directors being Independent Directors, and
specified percentage of profits being retained as general reserve.
Stressed Asset Resolution by
setting up a New Structure
75.
The high level of provisioning by public sector banks
of their stressed assets calls for measures to clean up the bank books. An
Asset
16
Reconstruction
Company Limited and Asset Management Company would be set up to consolidate and
take over the existing stressed debt and then manage and dispose of the assets
to Alternate Investment Funds and other potential investors for eventual value
realization.
Recapitalization of PSBs
76.
To further consolidate the financial capacity of PSBs,
further recapitalization of `20,000 crores is proposed in 2021-22.
Deposit Insurance
77.
Last year, Government had approved an increase in the
Deposit Insurance cover from `1 lakh to `5 lakhs for bank customers. I shall be moving amendments to
the DICGC Act, 1961 in this Session itself to streamline the provisions, so
that if a bank is temporarily unable to fulfil its obligations, the depositors
of such a bank can get easy and time-bound access to their deposits to the
extent of the deposit insurance cover. This
would help depositors of banks that are currently under stress.
78.
To improve credit discipline while continuing to
protect the interest of small borrowers, for NBFCs with minimum asset size of `100 crores,
the minimum loan size eligible for debt recovery under the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI)
Act, 2002 is proposed to be reduced from the existing level of `50 lakhs to `20 lakhs.
Company Matters
79.
The decriminalizing of the procedural and technical
compoundable offences under the Companies Act, 2013, is now complete. I now
propose to next take up decriminalization of the Limited Liability Partnership
(LLP) Act, 2008.
80.
Sir, I propose to revise the definition under the
Companies Act, 2013 for Small Companies by increasing their thresholds for Paid
up capital from “not exceeding `50 Lakh” to “not exceeding `2 Crore” and turnover from “not
exceeding `2 Crore” to
“not exceeding `20 Crore”.
This will benefit
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more than two lakh companies
in easing their compliance requirements.
81.
As a further measure which directly benefits Start-ups
and Innovators, I propose to incentivize the incorporation of One Person
Companies (OPCs) by allowing OPCs to grow without any restrictions on paid up
capital and turnover, allowing their conversion into any other type of company
at any time, reducing the residency limit for an Indian citizen to set up an
OPC from 182 days to 120 days and also allow Non Resident Indians (NRIs) to
incorporate OPCs in India.
82.
To ensure faster resolution of cases, NCLT framework
will be strengthened, e-Courts system shall be implemented and alternate
methods of debt resolution and special framework for MSMEs shall be introduced.
83.
During the coming fiscal 2021-22, we will be launching
data analytics, artificial intelligence, machine learning driven MCA21 Version
3.0. This Version 3.0 will have additional modules for e-scrutiny,
e-Adjudication, e-Consultation and Compliance Management.
Disinvestment and Strategic
Sale
84.
In spite of COVID-19, we have kept working towards
strategic disinvestment. A number of transactions namely BPCL, Air India,
Shipping Corporation of India, Container Corporation of India, IDBI Bank, BEML,
Pawan Hans, Neelachal Ispat Nigam limited among others would be completed in
2021-22. Other than IDBI Bank, we propose to take up the privatization of two
Public Sector Banks and one General Insurance company in the year 2021-22. This
would require legislative amendments and I propose to introduce the amendments
in this Session itself.
85.
In 2021-22 we would also bring the IPO of LIC for
which I am bringing the requisite amendments in this Session itself.
86.
In the AtmaNirbhar Package, I had announced that we
will come out with a policy of strategic disinvestment of public sector
enterprises. I am happy to inform the House that the Government has approved
the said policy. The policy provides a clear roadmap for disinvestment in all
non-strategic and strategic sectors. We have kept four areas that are strategic
18
where
bare minimum CPSEs will be maintained and rest privatized. In the remaining
sectors all CPSEs will be privatized. The main highlights of the policy are
mentioned at Annexure-III.
87.
To fast forward the disinvestment policy, I am asking
NITI to work out on the next list of Central Public Sector companies that would
be taken up for strategic disinvestment.
88.
To similarly incentivise States to take to
disinvestment of their Public Sector Companies, we will work out an incentive
package of Central Funds for States.
89.
Idle assets will not contribute to AtmaNirbhar Bharat.
The non-core assets largely consist of surplus land with government
Ministries/Departments and Public Sector Enterprises. Monetizing of land can
either be by way of direct sale or concession or by similar means. This
requires special abilities and for this purpose, I propose to use a Special Purpose Vehicle in the form of a company that would carry out this
activity.
90.
In order to ensure timely completion of closure of
sick or loss making CPSEs, we will introduce a revised mechanism that will
ensure timely closure of such units.
91.
I have estimated ` 1,75,000 crores as receipts from
disinvestment in BE 2021-22.
Government Financial Reforms
92.
Under the Treasury Single Account (TSA) System
autonomous bodies directly draw funds from the Government’s account at the time
of actual expenditure, saving interest costs. We will extend the TSA System for
universal application from 2021-22.
93.
On the recommendation of the Fifteenth Finance
Commission, we have undertaken a detailed exercise to rationalise and bring
down the number of Centrally Sponsored Schemes. This will enable consolidation
of outlays for better impact.
19
94.
The Government is committed to the development of
Multi-State Cooperatives and will provide all support to them. To further
streamline the ‘Ease of Doing Business’ for Cooperatives, I propose to set up a
separate Administrative Structure for them.
3. Inclusive Development for
Aspirational India
95.
Honourable Speaker Sir, under this pillar, I will
cover Agriculture and Allied sectors, farmers’ welfare and rural India, migrant
workers and labour, and financial inclusion.
Agriculture
96.
Our Government is committed to the welfare of farmers.
The MSP regime has undergone a sea change to assure price that is at least 1.5
times the cost of production across all commodities. The procurement has also
continued to increase at a steady pace. This has resulted in increase in
payment to farmers substantially.
97.
In case of wheat, the total amount paid to farmers in
2013-2014 was `33,874
crores. In 2019-2020 it was `62,802 crores, and even better, in 2020-2021,
this amount, paid to farmers, was `75,060 crores. The number of wheat
growing farmers that were benefitted increased in 2020-21 to
43. 36 lakhs as compared to
35.57 lakhs in 2019-20.
98.
For paddy, the amount paid in 2013-14 was `63,928
crores. In 2019-2020 this increased `1,41,930 crores. Even better, in
2020-2021, this is further estimated to increase to `172,752
crores. The number of farmers benefitted increased from 1.24 crores in 2019-20
to 1.54 crores in 2020-21.
99.
In the same vein, in case of pulses, the amount paid
in 2013-2014 was `236 crores.
In 2019-20 it increased `8,285 crores. Now, in 2020-2021, it is at `10,530
crores, a more than 40 times increase from 2013-14.
100.
The receipts to cotton farmers have seen a stupendous
increase from `90 crores in
2013-14 to `25,974
crores (as on 27th January 2021). The details are in
Annexure IV.
20
101.
Early this year, Honourable Prime Minister had
launched SWAMITVA Scheme. Under this, a record of rights is being given to
property owners in villages. Up till now, about 1.80 lakh property-owners in
1,241 villages have been provided cards. I now propose during FY21-22 to extend
this to cover all states/UTs.
102.
To provide adequate credit to our farmers, I have
enhanced the agricultural credit target to `16.5 lakh crores in FY22. We will
focus on ensuring increased credit flows to animal husbandry, dairy, and
fisheries.
103.
We are enhancing the allocation to the Rural
Infrastructure Development Fund from `30,000 crores to `40,000
crores.
104.
The Micro Irrigation Fund, with a corpus of `5,000
crores has been created under NABARD, I propose to double it by augmenting it
by another `5,000
crores.
105.
To boost value addition in agriculture and allied
products and their exports, the scope of ‘Operation Green Scheme’ that is
presently applicable to tomatoes, onions, and potatoes, will be enlarged to
include 22 perishable products.
106.
Around 1.68 crores farmers are registered and ` 1.14 lakh
crores of trade value has been carried out through e-NAMs. Keeping in view the
transparency and competitiveness that e-NAM has brought into the agricultural
market, 1,000 more mandis will be integrated with e-NAM.
107.
The Agriculture Infrastructure Fund would be made
available to APMCs for augmenting their infrastructure facilities.
Fisheries
108.
I am proposing substantial investments in the
development of modern fishing harbours and fish landing centres. To start with,
5 major fishing harbours – Kochi, Chennai, Visakhapatnam, Paradip, and
Petuaghat – will be developed as hubs of economic activity. We will also
develop inland fishing harbours and fish-landing centres along the banks of
rivers and waterways.
21
109.
Seaweed farming is an emerging sector with potential
to transform the lives of coastal communities. It will provide large scale
employment and additional incomes. To promote seaweed cultivation, I propose a
Multipurpose Seaweed Park to be established in Tamil Nadu.
Migrant Workers and
Labourers
110.
We have launched the One Nation One Ration Card scheme
through which beneficiaries can claim their rations anywhere in the country. Migrant workers in particular benefit
from this scheme – those staying away from their families can partially claim
their ration where they are stationed, while their family, in their native
places, can claim the rest. I am happy to inform you that One Nation One Ration
Card plan is under implementation by 32 states and UTs, reaching about 69
crores beneficiaries – that’s a total of 86% beneficiaries covered. The
remaining 4 states and UTs will be integrated in the next few months.
111.
To further extend our efforts towards the unorganised
labour force migrant workers particularly, I propose to launch a portal that
will collect relevant information on gig, building, and construction-workers
among others. This will help formulate Health, Housing, Skill, Insurance,
Credit, and food schemes for migrant workers.
112.
We will conclude a process that began 20 years ago,
with the implementation of the 4 labour codes. For the first time globally,
social security benefits will extend to gig and platform workers. Minimum wages
will apply to all categories of workers, and they will all be covered by the
Employees State Insurance Corporation. Women will be allowed to work in all
categories and also in the night-shifts with adequate protection. At the same
time, compliance burden on employers will be reduced with single registration
and licensing, and online returns.
Financial Inclusion
113.
To further facilitate credit flow under the scheme of
Stand Up India for SCs, STs, and women, I propose to reduce the margin money
requirement from 25% to 15%, and to also include loans for activities allied to
agriculture.
22
114.
We have taken a number of steps to support the MSME
sector. In this Budget, I have provided `15,700 crores to this sector, more
than double of this year’s BE.
4. Reinvigorating Human
Capital
115.
The National Education Policy (NEP) announced recently
has had good reception.
School Education
116.
More than 15,000 schools will be qualitatively
strengthened to include all components of the National Education Policy. They
shall emerge as exemplar schools in their regions, handholding and mentoring
other schools to achieve the ideals of the Policy.
117.
100 new Sainik Schools will be set up in partnership
with NGOs/ private schools/states.
Higher Education
118.
In Budget 2019-20, I had mentioned about the
setting-up of Higher Education Commission of India. We would be introducing
Legislation this year to implement the same. It will be an umbrella body having
4 separate vehicles for standard-setting, accreditation, regulation, and
funding.
119.
Many of our cities have various research institutions,
universities, and colleges supported by the Government of India. Hyderabad for
example, has about 40 such major institutions. In 9 such cities, we will create
formal umbrella structures so that these institutions can have better synergy,
while also retaining their internal autonomy. A Glue Grant will be set aside
for this purpose.
120.
For accessible higher education in Ladakh, I propose
to set up a Central University in Leh.
121.
The other important projects to be taken up as part of
NEP are listed at Annexure V.
23
Scheduled Castes and
Scheduled Tribes Welfare
122.
We have set ourselves a target of establishing 750
Eklavya model residential schools in our tribal areas. I propose to increase
the unit cost of each such school from `20 crores to `38 crores,
and for hilly and difficult areas, to `48 crores. This would help in
creating robust infrastructure facilities for our tribal students.
123.
We have revamped the Post Matric Scholarship Scheme,
for the welfare of Scheduled Castes. I have also enhanced the Central
Assistance in this regard. We are allotting ` 35,219 crores for 6 years till
2025-2026, to benefit 4 crores SC students.
Skilling
124.
In 2016, we had launched the National Apprenticeship
Promotion Scheme. The Government proposes to amend the Apprenticeship Act with
a view to further enhancing apprenticeship opportunities for our youth. We will
realign the existing scheme of National Apprenticeship Training Scheme (NATS)
for providing post-education apprenticeship, training of graduates and diploma
holders in Engineering. Over `3,000 crores will be provided for this.
125.
An initiative is underway, in partnership with the
United Arab Emirates (UAE), to benchmark skill qualifications, assessment, and
certification, accompanied by the deployment of certified workforce. We also
have a collaborative Training Inter Training Programme (TITP) between India and
Japan to facilitate transfer of Japanese industrial and vocational skills,
technique, and knowledge. We will take forward this initiative with many more
countries.
5. Innovation and R&D
126.
In my Budget Speech of July 2019, I had announced the
National Research Foundation. We have now worked out the modalities and the NRF
outlay will be of `50,000 crores,
over 5 years. It will ensure that the overall
24
research
ecosystem of the country is strengthened with focus on identified
national-priority thrust areas.
127.
There has been a manifold increase in digital payments
in the recent past. To give a further boost to digital transactions, I earmark `1,500
crores for a proposed scheme that will provide financial incentive to promote
digital modes of payment.
128.
We will undertake a new initiative – 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.
129.
The 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.
130.
As part of the Gaganyaan mission activities, four
Indian astronauts are being trained on Generic Space Flight aspects, in Russia.
The first unmanned launch is slated for December 2021.
131.
Our oceans are a storehouse of living and non-living
resources. To better understand this realm, we will launch a Deep Ocean Mission
with a budget outlay of more than `4,000 crores, over five years. This
Mission will cover deep ocean survey exploration and projects for the
conservation of deep sea bio-diversity.
6. Minimum Government,
Maximum Governance
132.
Speaker Sir, I now come to the last of the six
pillars. This will outline plans for reforms in one of our core principles of
minimum government, maximum governance.
133.
We have taken a number of steps to bring reforms in
Tribunals in the last few years for speedy delivery of justice. Continuing with
the reforms process, I now propose to take further measures to rationalize the
functioning of Tribunals.
134.
We have introduced the National Commission for Allied
Healthcare Professionals Bill in Parliament, with a view to ensure transparent
and
25
efficient
regulation of the 56 allied healthcare professions. Additionally, to bring
about transparency, efficiency and governance reforms in the nursing
profession, The National Nursing and Midwifery Commission Bill will be
introduced by the government for passing.
135.
To have ease of doing business for those who deal with
Government or CPSEs, and carry out contracts, I propose to set up a
Conciliation Mechanism and mandate its use for quick resolution of contractual
disputes. This will instil confidence in private investors and contractors.
136.
The forthcoming Census could be the first digital
census in the history of India. For this monumental and milestone-marking task,
I have allocated `3,768
crores in the year 2021-2022.
137.
Goa is celebrating the diamond jubilee year of the
state’s liberation from Portuguese rule. From the GoI’s side, I propose a grant
of `300 crores
to the Government of Goa for the celebrations.
138.
I propose to provide `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.
Fiscal Position
139.
In these last few paragraphs of Part A of my speech, I
draw the attention of this august House to the fact that, at the beginning of
the current Financial Year, the pandemic’s impact on the economy resulted in a
weak revenue inflow. This was combined with high expenditure to provide
essential relief to vulnerable sections of the society especially the poor,
women, SCs and STs.
140.
Unlike many other countries, we opted for a series of
medium-sized packages during the pandemic so that we could calibrate and target
our response according to an evolving situation. Once the health situation
stabilised, and the lockdown was being slowly lifted, we switched to ramping up
Government spending so as to revive domestic demand. As a result, against an
original BE expenditure of `30.42 lakh crores for 2020-2021, our RE estimates are `34.50 lakh
crores. We have maintained the
26
quality of
expenditure. The capital expenditure, estimated in RE is ` 4.39 lakh
crores in 2020-2021 as against `4.12 lakh crores in BE 2020-21.
141.
The fiscal deficit in RE 2020-21 is pegged at 9.5% of
GDP. We have funded this through Government borrowings, multilateral
borrowings, Small Saving Funds and short term borrowings. We would need another
` 80,000
crores for which we would be approaching the markets in these 2 months. To
ensure that the economy is given the required push, our BE estimates for
expenditure in 2021-2022, are `34.83 lakh crores. This includes ` 5.54 lakh
crores as capital expenditure, an increase of 34.5% over the BE figure of
2020-2021. The fiscal deficit in BE 2021-2022 is estimated to be 6.8% of GDP.
The gross borrowing from the market for the next year would be around `12 lakh
crores. We plan to continue with our path of fiscal consolidation, and intend
to reach a fiscal deficit level below 4.5% of GDP by 2025-2026 with a fairly
steady decline over the period. We hope to achieve the consolidation by first,
increasing the buoyancy of tax revenue through improved compliance, and
secondly, by increased receipts from monetisation of assets, including Public
Sector Enterprises and land. The Contingency Fund of India is being proposed to
be augmented from `500 crores
to `30,000
crores through Finance Bill.
142.
In accordance with the views of the 15th Finance
Commission, we are allowing a normal ceiling of net borrowing for the states at
4% of GSDP for the year 2021-2022. A portion of this ceiling will be earmarked
to be spent on incremental capital expenditure. Additional borrowing ceiling of
0.
5% of GSDP will also be provided subject to
conditions. States will be expected to reach a fiscal deficit of 3% of GSDP by
2023-24, as recommended by the 15th Finance
Commission.
143.
In the July 2019-2020 Budget, I introduced the
Statement 27 on Extra Budgetary Resources – it disclosed the borrowings of
Government agencies that went towards funding GoI schemes, and whose repayment
burden was on the Government. In my 2020-2021 Budget, I enhanced the scope and
coverage of the Statement, by including the loans provided by
Government
to the FCI. Taking a step further in this direction, I propose to discontinue
the NSSF Loan to FCI for Food Subsidy and accordingly Budget Provisions have
been made in RE 2020-21 and BE 2021-22. The Extra Budgetary Resources details
are at Annexure VI.
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144.
We know that the FRBM Act mandates fiscal deficit of
3% of GDP to be achieved by 31st March
2020-2021. The effect of this year’s unforeseen and unprecedented circumstances
has necessitated the submission of a deviation statement under Sections 4 (5)
and 7 (3) (b) of the FRBM Act which I am laying on the Table of the House as
part of the FRBM Documents.
145.
Towards achieving Central Government fiscal deficit
along the broad path that I have already indicated; I will be introducing an
amendment to the FRBM Act.
146.
On 9th December
2020, the 15th Finance Commission submitted its final report,
covering the period 2021-2026 to the Rashtrapati ji. The Government has laid
the Commission’s report, along with the explanatory memorandum in the
Parliament retaining the vertical shares of the states at 41%. We recognise our
commitment to fiscal federalism and propose therefore to adhere to this
recommendation. Jammu and Kashmir in the 14th Finance
Commission was entitled to get devolution being a State. Now, the funds to the
UTs of Jammu and Kashmir and Ladakh would be provided by the Centre. I have
also provided, on the Commission’s recommendation, `1,18,452
crores as Revenue Deficit Grant to 17 states in 2021-2022, as against `74,340
crores to 14 States in 2020-2021.
I would, now, move to Part B
of my speech.
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PART B
147.
Honourable Speaker, the world is facing a serious
challenge of the pandemic and its aftershock. In these trying times, when many
economies are struggling to revive, our people and our industry have exhibited
remarkable resilience.
148.
As I mentioned already, post-pandemic, a new world
order seems to be emerging, one in which Asia is poised to occupy a prominent
position and India will have a leading role therein. In this scenario, our tax
system has to be transparent, efficient, and should promote investments and
employment in our country. At the same time it should put minimum burden on our
tax payers.
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ற 385 |
A King/Ruler is the one who creates and
acquires wealth, protects and distributes it for common good.
- Thirukkural 385
Direct Tax Proposals
149.
Keeping this in mind, our Government introduced a
series of reforms in the Direct tax system for the benefit of our taxpayers and
economy. Few months prior to the pandemic, in order to attract investments we
slashed our Corporate tax rate to make it among the lowest in the world. The
Dividend Distribution Tax too was abolished. The burden of taxation on small
taxpayers was eased by increasing rebates. In 2020, the return filers saw a
dramatic increase to 6.48 crore from 3.31 crore in 2014.
150.
In the Direct Tax administration, we had recently
introduced the Faceless Assessment and Faceless Appeal. I now seek to take
further steps to simplify the tax administration, ease compliance, and reduce
litigation.
29
Relief to Senior Citizens
151.
I begin my direct tax proposals by offering my pranaam to our senior citizens. Many of
them, despite having foregone several basic necessities of their own, have
strived to build our nation.
152.
Now in the 75th year of Independence
of our country, when we continue our endeavour with renewed vigour, we shall
reduce compliance burden on our senior citizens who are 75 years of age and
above. For senior citizens who only have pension and interest income, I propose
exemption from filing their income tax returns. The paying bank will deduct the
necessary tax on their income.
Reduction in Time for Income
Tax Proceedings
153.
Honourable Speaker, presently, an assessment can be
re-opened up to 6 years and in serious tax fraud cases for up to 10 years. As a
result,
taxpayers have to remain under uncertainty for a long time.
154.
I therefore propose to reduce this time-limit for
re-opening of assessment to 3 years from the present 6 years. In serious tax
evasion cases too, only where there is evidence of concealment of income of `50 lakh or
more in a year, can the assessment be re-opened up to 10 years. Even this
reopening can be done only after the approval of the Principal Chief
Commissioner, the highest level of the Income Tax Department.
Setting up the Dispute
Resolution Committee
155.
Honourable Speaker, it has been the resolve of this Government to
reduce litigation, which mars the present taxation system.
156.
The Government came out with the Direct Tax Vivad Se
Vishwas Scheme to give taxpayers an opportunity to settle long pending disputes
and be relieved of further strain on their time and resources. The response
from the taxpayers has been the best ever as over 1 lakh ten thousand taxpayers
have already opted to settle tax disputes of over `85,000
crores under this Scheme.
30
157.
To further reduce litigation for small taxpayers, I
propose to constitute a Dispute Resolution Committee for them, which will be
faceless to ensure efficiency, transparency and accountability. Anyone with a
taxable income up to `50 lakh and disputed income up to `10 lakh
shall be eligible to approach the Committee.
Faceless ITAT
158.
For ease of compliance and to reduce discretion, we
are committed to make the taxation processes faceless. The Government has
already introduced faceless assessment and appeal this year.
159.
The next level of income tax appeal is the Income Tax
Appellate Tribunal. I now propose to make this Tribunal faceless. We shall
establish a National Faceless Income Tax Appellate Tribunal Centre. All communication
between the Tribunal and the appellant shall be electronic. Where personal
hearing is needed, it shall be done through video-conferencing.
Relaxation to NRI
160.
When Non-Resident Indians return to India, they have
issues with respect to their accrued incomes in their foreign retirement
accounts. This is usually due to a mismatch in taxation periods. They also face
difficulties in getting credit for Indian taxes in foreign jurisdictions. I
propose to notify rules for removing their hardship of double taxation.
Exemption from Audit
161.
Currently, if your turnover exceeds `1 crore,
you have to get your accounts audited. In the February 2020 Budget, I had
increased the limit for tax audit to `5 crore for those who carry out 95%
of their transactions digitally. To further incentivise digital transactions
and reduce compliance burden, I propose to increase this limit for tax audit
for such persons from `5 crore to `10 crore.
Relief for Dividend
162.
In the previous Budget, I had abolished the Dividend
Distribution Tax (DDT) in order to incentivise investment. Dividend was made
taxable in the
31
hands
of shareholders. Now, in order to provide ease of compliance, I propose to make
dividend payment to REIT/ InvIT exempt from TDS. Further, as the amount of dividend
income cannot be estimated correctly by the shareholders for paying advance
tax, I propose to provide that advance tax liability on dividend income shall
arise only after the declaration/payment of dividend. Also, for Foreign
Portfolio Investors, I propose to enable deduction of tax on dividend income at
lower treaty rate.
Attracting foreign
investment into infrastructure sector
163.
In the last budget, for attracting foreign investment
in the infrastructure sector, we had granted 100% tax exemption, subject to
certain conditions, to foreign Sovereign Wealth Funds and Pension Funds, on
their income from investment in Indian infrastructure. We have noticed that few
of such Funds are facing difficulties in meeting some of these conditions. In
order to ensure that a large number of Funds invest in India, I propose to
relax some of these conditions relating to prohibition on private funding,
restriction on commercial activities, and direct investment in infrastructure.
164.
In order to allow funding of infrastructure by issue
of Zero Coupon Bonds, I propose to make notified Infrastructure Debt Funds
eligible to raise funds by issuing tax efficient Zero Coupon Bonds.
Affordable Housing/Rental
Housing
165.
This Government sees ‘Housing for All’ and affordable
housing as priority areas. In the July 2019 Budget, I provided an additional
deduction of interest, amounting to `1.5 lakh, for loan taken to
purchase an affordable house. I propose to extend the eligibility of this
deduction by one more year, to 31st March 2022. The additional deduction of `1.5 lakh
shall therefore be available for loans taken up till 31st March
2022, for the purchase of an affordable house.
166.
Further, to keep up the supply of affordable houses, I
propose that affordable housing projects can avail a tax holiday for one more
year – till 31st March, 2022.
32
167.
We are committed to promote supply of Affordable
Rental Housing for migrant workers. For this, I propose to allow tax exemption
for notified Affordable Rental Housing Projects.
Tax incentives to IFSC
168.
As I mentioned in Part A of this speech, the
Government is committed to make the International Financial Services Centre
(IFSC) in GIFT City a global financial hub. In addition to the tax incentives
already provided, I propose to include, among others, tax holiday for capital
gains for aircraft leasing companies, tax exemption for aircraft lease rentals
paid to foreign lessors; tax incentive for relocating foreign funds in the
IFSC; and to allow tax exemption to the investment division of foreign banks
located in IFSC.
Pre-filling of Returns
169.
Honourable Speaker, in order to ease compliance for
the taxpayer, details of salary income, tax payments, TDS, etc. already come
pre-filled in income tax returns. To further ease filing of returns, details of
capital gains from listed securities, dividend income, and interest from banks,
post office, etc. will also be pre-filled.
Relief to Small Trusts
170.
We hope to reduce compliance burden on small
charitable trusts running educational institutions and hospitals. So far, there
is a blanket
exemption
to such entities, whose annual receipt does not exceed `1 crore. I
now propose to increase this amount to `5 crore.
Labour Welfare
171.
We have noticed that some employers deduct the
contribution of employees towards Provident funds, superannuation funds, and
other social security funds but do not deposit these contributions within the
specified time. For the employees, this means a loss of interest or income. In
cases where an employer later becomes financially unviable, non-deposit results
in a permanent loss for the employees.
33
172.
In order to ensure that employees’ contributions are
deposited on time, I reiterate that the late deposit of employee’s contribution
by the employer will not be allowed as deduction to the employer.
Incentives for Start-ups
173.
In order to incentivise start-ups in the country, I
propose to extend the eligibility for claiming tax holiday for start-ups by one
more year - till 31st March, 2022. Further, in order to
incentivise funding of the start-ups, I propose to extend the capital gains
exemption for investment in start-ups by one more year - till 31st March,
2022.
Indirect Tax Proposals
GST
174.
Before I come to my Indirect Tax proposals, I would
like to appraise the House on GST. The GST is now four years old, and we have
taken several measures to further simplify it. Some of the measures include:
i.
nil return through SMS,
ii.
quarterly return and monthly payment for small taxpayers,
iii.
electronic invoice system,
iv.
validated input tax statement,
v.
pre-filled editable GST return, and
vi.
staggering of returns filing.
The
capacity of GSTN system has also been enhanced. We have also deployed deep
analytics and Artificial Intelligence to identify tax evaders and fake billers
and launched special drives against them.
175.
The results speak for themselves. We have made record
collections in the last few months.
176.
The GST Council has painstakingly thrashed out thorny
issues. As Chairperson of the Council, I want to assure the House that we shall
take every possible measure to smoothen the GST further, and remove anomalies
such as the inverted duty structure.
Custom Duty Rationalization
177.
Our Custom Duty Policy should have the twin objective
of promoting domestic manufacturing and helping India get onto global value
chain and
34
export
better. The thrust now has to be on easy access to raw materials and exports of
value added products.
178.
Towards this, last year, we started overhauling the
Customs Duty structure, eliminating 80 outdated exemptions. I also thank
everyone who responded overwhelmingly to a crowd-sourcing call for suggestions
on this revamp. I now propose to review more than 400 old exemptions this year.
We will conduct this through extensive consultations, and from 1st October
2021, we will put in place a revised customs duty structure, free of
distortions. I also propose that any new customs duty exemption henceforth will
have validity up to the 31st March following two years from the date of its
issue.
Electronic and Mobile Phone
Industry
179.
Domestic electronic manufacturing has grown rapidly.
We are now exporting items like mobiles and chargers. For greater domestic
value addition, we are withdrawing a few exemptions on parts of chargers and
sub-parts of mobiles. Further, some parts of mobiles will move from ‘nil’ rate
to a moderate 2.5%.
Iron and Steel
180.
MSMEs and other user industries have been severely hit
by a recent sharp rise in iron and steel prices. Therefore, we are reducing
Customs duty uniformly to 7.5% on semis, flat, and long products of non-alloy,
alloy, and stainless steels. To provide relief to metal re-cyclers, mostly
MSMEs, I am exempting duty on steel scrap for a period up to 31st March,
2022. Further, I am also revoking ADD and CVD on certain steel products. Also,
to provide relief to copper recyclers, I am reducing duty on copper scrap from
5% to
2.5%.
Textile
181.
The Textiles Sector generates employment and
contributes significantly to the economy. There is a need to rationalize duties
on raw material inputs to manmade textiles. We are now bringing nylon chain on
par with polyester and other man-made fibers. We are uniformly reducing
35
the BCD rates on
caprolactam, nylon chips and nylon fiber & yarn to 5%.
This will help the textile industry, MSMEs, and exports, too.
Chemicals
182.
We have calibrated customs duty rates on chemicals to
encourage domestic value addition and to remove inversions. Apart from other
items, we are reducing customs duty on Naptha to 2.5% to correct inversion.
Gold and Silver
183.
Gold and silver presently attract a basic customs duty
of 12.5%. Since the duty was raised from 10% in July 2019, prices of precious
metals have risen sharply. To bring it closer to previous levels, we are
rationalizing custom duty on gold and silver.
Renewable Energy
184.
In Part A, we have already acknowledged that solar
energy has huge promise for India. To build up domestic capacity, we will
notify a phased manufacturing plan for solar cells and solar panels. At
present, to encourage domestic production, we are raising duty on solar
invertors from 5% to 20%, and on solar lanterns from 5% to 15%.
Capital Equipment and Auto
Parts
185.
There is immense potential in manufacturing heavy
capital equipment domestically. We will comprehensively review the rate
structure in due course. However, we are revising duty rates on certain items
immediately. We propose to withdraw exemptions on tunnel boring machine. It
will attract a customs duty of 7.5%; and its parts a duty of 2.5%. We are
raising customs duty on certain auto parts to 15% to bring them on par with
general rate on auto parts.
MSME Products
186.
We are proposing certain changes to benefit MSMEs. We
are increasing duty from 10% to 15% on steel screws and plastic builder wares.
On prawn feed we increase it from 5% to 15%. We are rationalizing exemption on
import of duty-free items as an incentive to exporters of
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garments,
leather, and handicraft items. Almost all these items are made domestically by
our MSMEs. We are withdrawing exemption on imports of certain kind of leathers
as they are domestically produced in good quantity and quality, mostly by
MSMEs. We are also raising customs duty on finished synthetic gem stones to
encourage their domestic processing.
Agriculture Products
187.
To benefit farmers, we are raising customs duty on
cotton from nil to 10% and on raw silk and silk yarn from 10% to 15%. We are
also withdrawing end-use based concession on denatured ethyl alcohol.
Currently, rates are being uniformly calibrated to 15% on items like maize
bran, rice bran oil cake, and animal feed additives.
188.
There is an immediate need to improve agricultural
infrastructure so that we produce more, while also conserving and processing
agricultural output efficiently. This will ensure enhanced remuneration for our
farmers. To earmark resources for this purpose, I propose an Agriculture
Infrastructure and Development Cess (AIDC) on a small number of items. However,
while applying this cess, we have taken care not to put additional burden on
consumers on most items.
Rationalization of
Procedures and Easing of Compliance
189.
For their judicious application, we propose certain
changes in the provisions relating to ADD and CVD levies. To complete Customs
investigations, we are prescribing definite timelines. In 2020, we rolled out
the Turant Customs initiative, which brought in Faceless, Paperless, and
Contactless Customs measures. With effect from September 2020, we have
implemented a new procedure for administration of Rules of Origin. This has
helped in putting a check on misuse of FTAs.
190.
The specific details of direct and indirect tax
changes proposed are listed in the Annexure to my speech.
191.
Mr. Speaker Sir, with these words I commend the Budget
to this august House.
COMMENTS