Union Budget Speech 2021

Union budget speech’s 2021

The Union Government on Monday announced a panoramic Union Budget which promises a higher spending by the government on key areas such as health care and infrastructure and did not bring any proposals to the key areas that seek an expansion on the direct tax revenue base. The finance minister Nirmala Sitharaman on her budget speech announced an establishment of the new centrally sponsored scheme named “PM Atmanirbhar Swasth Bharat Yojana” which will have an outgoing of 64,180 crore rupees over the next six years and this scheme will be fully dedicated in developing the dimensions of ‘primary, secondary and tertiary health care systems.’

An announcement of 20,000 crore rupees was made by Finance Minister Sitharaman to capitalize the freshly announced Development Financial Institution and noted that the main aim of the institution will be to have a lending portfolio in the next 3 years of at least 5 lakh crore rupees. Apart from the relief to the senior citizens of above 75 years, who will no longer need to file an income tax return there are no major changes announced on the direct tax. The ‘agriculture, infrastructure and development’ CESS is anticipated to raise political eyebrows. Sitharaman said “I propose Agriculture Infrastructure Development Cess (AIDC) on a small number of items. However while applying this cess, we have taken care to not put additional burden on consumers on most items.”

The Finance Minister Sitharaman in her speech distinguished that the total expenditure for FY’21 under the Modi government was 35.50 lakh crore rupees which is higher than the originally estimated 30.42 lakh crore rupees. This increased spending was majorly due to the COVID-19, where the government tried to ensure that the expenditure quality did not get affected.

Sitharaman in her speech noted “The capital expenditure, estimated in RE is 4.39 lakh crore rupees in 2020-21 s against 4,12 lakh crore rupees in BE 2020-21. The fiscal deficit in RE 2020-21 is pegged at 9.5% of the GDP”. “For 2021-22, I propose a sharp increase in capital expenditure and thus we have provided 5.54 lakh crore rupees which is 34.5% more than the BE of 2020-21. Of this, I have kept a sum of more than 44,000 crore rupees 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 crore rupees to states and autonomous bodies for their capital expenditure” she further added.

The FY’22 target for fiscal deficit is consequently fixed at 6.8%of the GDP.