Union Budget 2021 presented by Finance Minister Nirmala Sitharaman was all about prioritizing key issues like creating more jobs, ramping up healthcare spending, and boosting economic growth.
Two of the biggest winners in the budget were healthcare and infrastructure as both got one of the biggest allocations in percentage terms. The allocation for the defense sector was also comparatively higher in the wake of the India-China conflict.
A host of announcements were also made on the government’s disinvestment strategy for the upcoming fiscal year starting April 1, 2021. It is also worth mentioning that no major tax changes were announced in the budget.
Having said that, here are key takeaways from the Union Budget 2021
Healthcare and infra get the biggest push
The funds allocated for infrastructure development and healthcare were the biggest highlights of Budget 2021. The decision is in line with the biggest hurdles India currently
Faces The Covid-19 Pandemic And Growth.
For healthcare, a new centrally-sponsored scheme, PM Atmanirbhar Swasth Bharat Yojana, will be launched with an outlay of about Rs 64,180 crores over 6 years.
According to finance minister Sitharaman, this will be used to develop capacities of primary, secondary, and tertiary care health Systems, strengthen existing national institutions and create new institutions, to cater to the detection and cure of new and emerging diseases. This will be in addition to the National Health Mission.
The total healthcare allocation in budget 2021 is Rs 2.23 lakh crore, which is a 135 percent hike over the previous budget.
Dr. Kanav Kahol, CEO, Divorce Labs, said, The budget has recognized the importance of health in India’s growth story. The total budget outlay for healthcare is 2.23 lakh crore, which is an increase of 137 percent from last year.
This shows the commitment by the government to address not only the healthcare’s immediate and urgent needs but fundamentally develop a program to strengthen the Indian healthcare system. This budget will set the precedent for future budgets which will use this year’s allocation as a baseline for future initiatives, he added.
Infrastructure was the next-biggest focus point of the Union Budget 2021-22. Stressing on the need to focus on local manufacturing for India’s USD 5 trillion economy dream, Sitharaman said that the government had already announced a production-linked incentive scheme (PLI) for 13 sectors.
For this, the government has committed nearly Rs 1.97 lakh crore, 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, said Sitharaman.
The Budget 2021 also focused on the National Infrastructure Pipeline (NIP), which was announced last year. Since it will require a major increase in funding both from the government and the financial sector, the finance minister has proposed to take three concrete steps to boost the NIP.
Firstly, through institutional structures secondly, by a big thrust on monetizing assets, and thirdly by enhancing the share of capital expenditure in central and state budgets
Defense Gets A 7% Boost
The defense allocation was also higher by over 7 percent in Union Budget 2021-22 as India has been locked in a prolonged conflict with China in eastern Ladakh. Finance Minister Nirmala Sitharaman allocated Rs 3.62 lakh crore, excluding pensions, for defense expenditure up by 7.4 percent from last year. The total outlay for the Defence Ministry in Budget 2021 is pegged at Rs 4,78,195.62 crore, with pension liabilities down by Rs 18,000 crore from the present fiscal.
The outlay for weapons and modernization has been increased from Rs 1,13,734 lakh crore last year to Rs 1,35,060 crore for 2021-22 a rise of 18 percent. The increased budget for modernization will help the armed forces equip themselves with new weapon systems and spares.
No Major Changes In Income Tax
This is one area that did not make it to the government’s priority spending list. In the Union Budget 2021, measures were proposed to ease tax compliance besides providing some relief to small taxpayers, homebuyers, and senior citizens. Click here to know the key income tax changes in the budget.
Divestment In Focus
Nirmala Sitharaman’s budget speech made it clear that the government is committed to boosting divestments in the fiscal year starting April 1, 2021. She has announced Rs 1.75 lakh crore as the disinvestment target for FY2021-22. Sitharaman said two PSBs and one general insurance company would be divested.
She said the strategic sale of IDBI Bank, BPCL, Shipping Corp, Container Corporation, Neelachal Ispat Nigam Ltd, Pawan Hans, Air India among others, would be completed in 2021-22 fiscal year beginning April 1. Also, amendments to the existing Act to facilitate LIC IPO would be brought in 2021-22, she said.
Barring four strategic areas, PSUs in other sectors will be divested. All disinvestments announced so far will be completed in FY22. The NITI Aayog has been asked to work on the next list of central public sector companies for disinvestment, Sitharaman said.
Cheaper And Costlier
Some items are likely to get more expensive as per the announcements made by Nirmala Sitharaman in the Union Budget 2021. Some consumer durables like refrigerators, air conditioners, LED lights and mobile phones are set to become expensive due to customs duty hike on some imported parts. Meanwhile, commodities like gold, silver, and other precious metals like platinum and palladium are like to get cheaper.