Budget aims to revive economy hit by Covid; doubling farmers’ income; strong infrastructure, healthy India, good governance, opportunities for youth, inclusive development among Sitharaman’s 8 focus areas
Spurred by the Covid-19 wake-up call, Finance Minister Nirmala Sitharaman kept her focus on reinvigorating the growth in her third Union Budget with a massive allocation for health and infrastructure sectors and measures to boost agriculture infrastructure with agri infra cess on many products.
While leaving the tax slabs unchanged in the first paperless Union Budget on Monday, the FM provided little joy to the salaried class, but she did open up her purse for the poll-bound States.
The Budget gave a huge push for disinvestment by aiming to garner Rs 1.75 lakh crore from stake sale in public sector companies and financial institutions, including 2 PSU banks and one insurance company, in the next fiscal year.
The FM spelled out eight key areas in the Budget as the “Sankalp of NATION FIRST”. These include doubling farmers’ income; strong infrastructure; healthy India; good governance; opportunities for youth; education for all, women empowerment, and inclusive development.
There was some good news for senior citizens of 75 years and above. They will be exempted from filing income tax returns for the financial year beginning April 1. They will also not be required to have pension income and interest from fixed deposit in the same bank. “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,” Sitharaman said.
Addressing reporters, Finance Secretary Ajay Bhushan Pandey said the exemption from filing income tax returns would be available only in case where the interest income is earned in the same bank where pension is deposited. “Persons whose age is above 75 years and who has pension income and interest from fixed deposit comes in the same bank and who has only interest income, they need not file income tax return.
“Bank will deduct the income tax which he has to pay and deposit to the Government. The condition is the person should have only pension income and interest from fixed deposit should accrue in the same bank,” he said at the post-Budget Press conference.
He added that if the senior citizen person has other incomes, he/she would be required to file income tax return (ITR). “Generally, persons of 75 years or more have mostly pension income and the money is parked in fixed deposit from which he earns interest. For them, filing return used to be complicated. So, we have made it simpler and said banks will deduct their income tax and they need not file ITR,” Pandey added.
Laying out the plan for disinvestment of banks, Sitharaman said, “For start ups, we are allowing 1 person company to grow without any restriction on their paid up capital. Other than IDBI we plan to take up two more banks for disinvestment. LIC IPO will come in 2022. All divestments announced so far, including Air India, BPCL, CONCOR, Pawan Hans, to be completed by 2022.”
The entire focus of the Budget is on reviving growth with levying additional tax burden. To achieve this, the Budget proposed to give boost to infrastructure and domestic manufacturing. The FM has raised the capital expenditure in the Budget by 26 per cent over the revised capital expenditure of FY21.
To finance infrastructure building, the Budget proposes to set up a Development Finance Institution. The focus on monetising existing assets will also provide greater funds for growth.
The Budget has also taken up the much-debated issue of setting up a “bad bank”, details of which will be announced soon. The increase in the FDI limit in insurance to 74 per cent and laying out of a roadmap to privatise the public sector companies as against the “disinvestment” are twin measure that could go a long way in meeting fund for infrastructure building.
Sitharaman said the Government will borrow about Rs 12 lakh crore in 2021-22. She said expenditure for the next fiscal year has been pegged at Rs 34.83 lakh crore, which includes Rs 5.54 lakh crore of capital spending.
Sitharaman also said States will get 41 per cent share of taxes as per the 15th Finance Commission recommendation and the Government has accepted the recommendation. From Rs 1.03 lakh crore highway projects for Tamil Nadu to Rs 65,000 crore works for Kerala – four poll-bound States found special mention in the Budget speech of Finance Minister Nirmala Sitharaman on Monday.
Sitharaman in her speech specifically announced Rs 2.27 lakh highway projects for four States – Tamil Nadu, West Bengal, Assam and Kerala amid approaching Assembly elections.
The Finance Minister said the Government will infuse Rs 20,000 crore into public sector banks (PSBs) in 2021-22 to meet the regulatory norms. For the current financial year also, the Government had made a provision of Rs 20,000 crore for recapitalisation.
“To further consolidate the financial capacity of PSBs, further recapitalisation of Rs 20,000 crores is proposed in 2021-22,” she said while presenting the Budget 2021-22 in the Lok Sabha.
The Budget also proposed to increase foreign direct investment (FDI) limit in the insurance sector to 74 per cent, a move aimed at attracting greater overseas capital inflows to help enhance insurance penetration in the country.
Sitharaman said under the new structure, the majority of directors on the board and key management persons would be resident Indians, with at least 50 per cent of directors being independent directors, and specified percentage of profits being retained as a general reserve.
Drawing inspiration from the recent performance of the Indian cricket team in Australia under trying circumstances, the Finance Minister Nirmala asserted that India is well-poised to truly be the land of promise and hope in the post-Covid-19 world.
The FM said as it had happened after the two World Wars, there are signs that the political, economic, and strategic relations in the post Covid-19 world are changing. She noted that the country’s fight against the pandemic continues into 2021 and the country is all set to bring in two more vaccines for the infectious disease.
“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 an added comfort to know that two or more vaccines are also expected soon,” Sitharaman said.
The Budget proposed that individuals whose provident fund contribution is Rs 2.5 lakh or more in a financial year, will not be able to seek tax exemption on the interest earned from the next financial year. While presenting Budget Sitharaman said, “In order to rationalise tax exemption for the income earned by high income employees, it is proposed to restrict tax exemption for the interest income earned on the employees’ contribution to various provident funds to the annual contribution of Rs 2.5 lakh.”
Currently, interest earned on provident fund is exempted from income tax.
“EPFO is for welfare of workers and workers will not be affected by this move. It is only for big ticket money which comes into EPFO which has tax benefit and also assured 8 per cent return,” Sitharaman said while addressing the post-Budget Press conference.
The Budget also unveiled the much-awaited voluntary vehicle scrapping policy to phase out old and polluting vehicles. The FM said that under voluntary vehicle scrapping policy, personal vehicles would undergo fitness test after 20 years while commercial vehicles would require it after completion of 15 years.
Welcoming the policy, Road Transport, Highways and MSMEs Minister Nitin Gadkari said the policy will lead to new investment of around Rs 10,000 crore and create as many as 50,000 jobs. He further said the policy would cover over 1 crore light, medium and heavy motor vehicles.
“The policy would cover an estimated 51 lakh light motor vehicles (LMVs) that are above 20 years of age, while another 34 lakh LMVs are above 15 years. It would also cover 17 lakh medium and heavy motor vehicles, which are above 15 years, and currently without valid fitness certificates,” Gadkari said. These vehicles are estimated to cause 10-12 times more pollution than the latest vehicles, he said.
Tuesday, 02 February 2021 | PNS | New Delhi
