Highlights and Impact Analysis of Union Budget 2021-22 By Axis Bank

The honorable finance minister presented the Union Budget 2021-22 amid the COVID-19 pandemic to give an impetus to the Covid-hit economy. The COVID-19 pandemic has led to massive economic disruptions worldwide while in India, we have witnessed a flattening of the curve. While there is still a long way to go but a ray of hope due to availability and distribution of vaccine has overcome the fear which prevailed in CY2020. We are witnessing a strong (albeit slow and gradual) opening up of the economy. This year’s budget has laid down a path for bringing the derailed economic activity and growth back on track. It has focused on the following key outlays, viz., health & wellness, physical infrastructure (roadways & railways), governance, inclusive growth and human capital. Get the full report
Fiscal Prudence and Management
  Fiscal deficit projected at 6.8% of GDP for 2021-22 BE with intent to reach a fiscal deficit level below 4.5% of GDP by 2025-26, with a fairly steady decline over the period. The fiscal deficit in RE 2020-21 is pegged at 9.5% of GDP.
  Total expenditure is pegged at Rs.34,83,236 crore up by 1% for FY22, whereas capital expenditure is set to see whooping rise by 34.5% and 26.2% over FY21BE and FY21RE, respectively.
Agriculture and Rural Economy
  Agricultural credit target enhanced to Rs 16.5 lakh crore in FY22, with focus on increased credit flows to animal husbandry, dairy, and fisheries.
  33% increase in Rural Infrastructure Development Fund.
  Micro Irrigation Fund doubled.
  ‘Operation Green Scheme’ to include 22 more perishable products.
Infrastructure Outlay
  Outlay of Rs.1.18 lakh crore for Ministry of Road Transport and Highways.
  Rs.1.41 lakh crore for Urban Clean India Mission.
  Rs.1.1 lakh crore for Railways in FY22.
  Proposes voluntary Vehicle Scrappage Policy.
  Rs.3.05 lakh crore outlay for power sector.
  Highways projects in Tamil Nadu, Kerala, West Bengal and Assam.
Healthcare Outlay
  Government to spend Rs.64,180 crore on healthcare over 6 years.
  Government sets aside Rs.35,000 crore for Covid-19 vaccine in FY22.
Financial Sector
  Government to set up a professionally managed Development Financial Institution (DFI) to act as a provider, enabler and catalyst for infrastructure financing.
  Government allots Rs.20,000 crore for bank recapitalization.
  NHAI and PGCIL to set up INVITs to attract global funds.
  Proposal to create a permanent institutional framework to instill confidence amongst the participants in the Corporate Bond Market and enhance liquidity.
  Proposal for New Rationalised Securities Markets Code.
  Increase the permissible FDI limit from 49% to 74% in Insurance Companies.
Tax Proposals
  Senior citizens above 75 years of age with only pension and interest income exempted from filing tax returns.
  Advance tax liability on dividend income shall arise only after payment of dividend
  Dividend payment by REITs and InvITs not subject to TDS
  Government to notify rules to eliminate double tax for NRIs on foreign retirement funds.
  Exemption from tax audit to Rs.10 crore turnover for companies transacting on digital mode.
  I-T return forms now to be pre-filled with Capital Gains and Bank Interest.
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