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Budget 2021 Live Blog: All eyes on Sitharaman as India hopes for Coronavirus bailout

Budget 2021 Live Blog: All eyes on Sitharaman as India hopes for Coronavirus bailout
Finance minister Nirmala Sitharaman  |  Photo Credit: Reuters
1 Feb, 2021

Finance minister Nirmala Sitharaman will present the budget today as prime minister Narendra Modi's government tries to bring the pandemic-hit economy back on track with 'game changer' plans to boost growth. Healthcare spending is expected to be a huge part of these plans with the government looking to bump up expenditure in the sector as a percentage of gross domestic product in the wake of the pandemic. Infrastructure spending could also hog limelight as the government looks to create jobs and reinvigorate an economy projected to contract 7.7% in the current financial year.

To be sure, amid all this talk and hope of big expenditure, the government faces limited fiscal headroom which may force it to make tough choices in the budget.

To fund the expenditure, the government could target big bucks from privatisation of a range of firms as well as the sale of minority stakes in large companies such as Life Insurance Corp. Also expected of the budget are a new infrastructure development bank, a "bad bank" that would soak up toxic assets of banks, and a recapitalisation of lenders. All these expectations come in the wake of the central bank’s projections of a sharp rise in bad loans in the banking system due to the pandemic.

Will the budget meet all the expectations? And how does the finance minister aim to deliver a game-changing budget given the limited fiscal headroom?

To find out, follow the live blog of the proceedings on budget day.

Budget 2021

1 February, 2021 12:45 PM

Startup incentives

In order to incentivise startups, FM proposes to extend the eligibility of claiming tax holidays by one more year, till March 31, 2022. To incentivise funding for startups, she proposes to extend the capital gains exemption for investment in startups by one more year till March 31, 2022.

1 February, 2021 12:44 PM

Domestic electronics manufacturing

Domestic electronic manufacturing has grown rapidly. For greater domestic electronic value-addition, we are withdrawing a few exemptions on parts of charger and sub-parts of mobiles. Some parts of mobiles will move from nil rate to a rate of 2.5%.

1 February, 2021 12:42 PM

Sops for small charitable trusts

FM says govt hopes to reduce compliance burden on small charitable trusts, running educational institutes and hospitals. So far there is a blanket exemption on such entities whose annual receipt does not exceed Rs 1 cr. Now FM proposes to increase this to Rs 5 cr.

1 February, 2021 12:41 PM

Ease taxpayer compliance

In order to ease compliance for taxpayer, details of salary income, tax payments, TDS, etc. will 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 and post offices will also be now pre-filled.

1 February, 2021 12:41 PM

Tax holiday

FM proposes to include tax holiday for capital gains for aircraft leasing cos; tax exemptions for aircraft lease rentals paid to foreign lessors; tax incentives to relocate the foreign fund in the IFSC (GIFT); and to allow tax exemptions to the investment divisions of foreign banks located in the IFSC.

1 February, 2021 12:40 PM

Customs duty

Budget proposes to cut customs duty on copper scrap to 2.5%; to raise customs duty on some auto parts ; to raise customs duty on cotton to 10%. More than 400 old exemptions to be reviewed this year and new customs duty exemptions will be announced in October. Any new customs duty exemptions will have validity up to March 31, following two years from the date of issue.

1 February, 2021 12:38 PM

Affordable and rental housing

In the July 2019 budget, FM provided additional deduction of interest, amounting to 1.5 lakh for loan taken to purchase an affordable house. FM now proposes to extend the eligibility of this condition by one more year to March 31, 2022. To keep up the supply of affordable houses, FM proposes that projects can avail a tax holiday of one more year till March 31 2022. FM also proposes to allow tax exemption for notified affordable rental housing projects.

1 February, 2021 12:36 PM

Infrastructure investment incentives

In order to ensure that a lot of large funds invest in India, FM proposes to relax conditions relating to prohibition on private funding, restriction on commercial activities, and direct investment -- in infrastructure. To encourage investments in Indian infrastructure, notified infrastructure debt funds will be allowed to raise funds by issuing of zero coupon bonds.

1 February, 2021 12:34 PM

Tax deduction for foreign portfolio investors

FM proposes deduction of tax for foreign portfolio investors on dividend income at lower treaty rate.

1 February, 2021 12:31 PM

Video conference based appeals

National Faceless Income Tax Appellate Tribunal Centre proposed for video conference-based appeals.

1 February, 2021 12:29 PM

Reduction in timelines for I-T proceedings proposed

Assessment can be reopened in up to six years or in serious fraud cases up to 10 years. The time limit for re-opening assessments reduced to three years from six. If there is evidence of concealment of income of Rs 50 lakh or more in a year, it can be re-opened for up to 10 years with approval.

1 February, 2021 12:28 PM

Senior citizens exempt from filing I-T returns

Direct tax announcement to ease compliance and reduce litigation. Exemption from filing I-T returns for senior citizens of 75 years and above with only pension and interest income. 

1 February, 2021 12:27 PM

More income tax returns filers

In 2020, the number of income tax returns filers rose to 6.28 crore from 3.31 crore in 2014.

1 February, 2021 12:25 PM

Budget estimate for expenditure in FY22

To ensure that the economy is given the required push, our budget estimate for expenditure in FY22 is Rs 34.83 lakh crore. This includes Rs 5.54 crore as capex, up 34.5% from a year ago. Fiscal deficit is estimated to be 6.8% of GDP in FY22.

1 February, 2021 12:25 PM

Funds for J&K

Funds for the union territory of Jammu & Kashmir and Ladakh to be provided by the Centre. A sum of Rs 1.18 lakh cr as revenue deficit grant to be given to 17 states in 2021-22 as against Rs 73,240 cr to 14 states in 2020-21.

1 February, 2021 12:23 PM

Fiscal deficit below 4.5% of GDP by FY26

Gross borrowing from the market for the next year would be Rs 12 lakh crore. We plan to continue with our path of fiscal consolidation, and intend to reach the fiscal deficit below 4.5% of the GDP by FY26, says FM.

1 February, 2021 12:21 PM

Assam tea workers

Rs 12,000 crore outlay for tea workers in Assam.

1 February, 2021 12:19 PM

Digital census

First digital census in the history of India. Outlay for this is Rs 3,768 crore for coming fiscal.

1 February, 2021 12:18 PM

New Space India Ltd

Newly formed PSU, New Space India Ltd, will execute PSLV-PS51 launch carrying Amazonia satellite from Brazil along with smaller Indian satellites.

1 February, 2021 12:17 PM

Mininum government, maximum governance

Rationalise functioning of tribunals; introduce a national commission for allied healthcare professional bill in Parliament; National Nursing and Midwifery Commission Bill will be introduced.

1 February, 2021 12:16 PM

Indian astronauts

Four Indian astronauts are being trained in Russia. Unmanned launch slated for December

1 February, 2021 12:15 PM

Digital payments

To give further boost to digital transactions, Rs 1,500 cr earmarked for proposed scheme for providing financial incentive to promote digital payments.

1 February, 2021 12:13 PM

Research outlays

National Research Foundation (NRF) outlay of Rs 50,000 crore over five years. Overall research ecosystem will be strengthened.

1 February, 2021 12:12 PM

Umbrella body for higher education

FM says will introduce legislation for an umbrella body for higher education for standard setting, accreditation, regulation and funding.

1 February, 2021 12:11 PM

Apprentice training scheme

Skilling -- Govt proposes to revamp the apprentice training scheme. Outlay of Rs 3,000 crore. 

1 February, 2021 12:10 PM

15K schools to be strengthened

More than 15,000 schools will be qualitatively strengthened to include all aspects of National Education Policy. 

1 February, 2021 12:09 PM

Sainik schools

100 new Sainik schools to be set up in partnership with NGOs and other schools

1 February, 2021 12:07 PM

Standup India benefit for women, SC/ST categories

Margin money requirement for Standup India benefitting women, SC and ST categories reduced from 25% to 15%.

1 February, 2021 12:06 PM

Night shifts allowed across categories for women

Women to be allowed to work in all categories including night-time shifts. Compliance burden on employers to be reduced with single registration and licensing and online returns.

1 February, 2021 12:06 PM

Portal for gig workers

A portal for gig workers to be launched.

1 February, 2021 12:02 PM

Rural Infrastructure Development Fund

Rural Infrastructure Development Fund enhanced from from Rs 30,000 crore to Rs 40,000 crore. Doubled the Rs 5,000 cr rural irrigation fund with NABARD.

1 February, 2021 11:59 AM

FM skips Farm Bills mention

FM doesn’t mention farm bills but gives a comparison of how much the MSP has increased since 2014. MSP for cotton farmers -- from Rs 90 crore payment in FY14 to Rs 25,974 crore in FY21. More than 40 times increase from 2014 for pulses. 
 

1 February, 2021 11:56 AM

Multi-state cooperatives

Government says committed to development of multi-state cooperatives. Separate administrative structures to be set up for them.

1 February, 2021 11:56 AM

FM's third pillar: inclusive development

FM announces third pillar: inclusive development for aspirational India. Will cover agriculture and allied sectors. FM says total amount paid to farmers from 2013-14 (wheat) is Rs 33,874 crore. In 2019-20, Rs 62, 800 crore. In 2020-21, Rs 75,060 crore paid to farmers for wheat. 43.36 lakh farmers in wheat in FY21 compared with 35.56 lakh farmers in FY20.

1 February, 2021 11:55 AM

Central schemes reduction

Number of centrally sponsored schemes to be rationalised. 

1 February, 2021 11:51 AM

PSU disinvestment

Disinvestment and strategic sale of BPCL, Air India, Shipping Corporation of India, Container Corporation of India, Bharat Earth Movers, and Pawan Hans will be completed in 2022. Other than IDBI Bank, FM proposes to take public one general insurance company in 2022 

Govt will come out with the IPO of LIC also in 2022 (was announced last year). 

1 February, 2021 11:50 AM

'One person' cos

‘One person’ companies introduced. They can grow without any limit and conversion to other formats till 180 days from 120 days.

1 February, 2021 11:49 AM

LLP Act

Budget decriminalises Limited Liability Partners Act; proposes to revise definition under the Companies Act for small firms

1 February, 2021 11:48 AM

Bank recapitalisation

FM for bank recapitalisation worth Rs 20,000 cr for public sector banks in FY22
 

1 February, 2021 11:36 AM

Metro Lite and Metro Neo

Additional 116 km of metro and RRCS is under construction across 27 cities. Two new technologies -- Metro Lite and Metro Neo -- for Tier 2 cities and peripheral areas of Tier 1 cities at a lowered cost.

1 February, 2021 11:36 AM

Health; vehicle scrapping policy

137% rise in health allocation; voluntary vehicle scrapping policy to drive manufacturing; monetisation pipeline to fund infra projects

1 February, 2021 11:35 AM

Record outlay for railways

Record sum of Rs 1.1 lakh crore for railways of which Rs 1.07 lakh crore will be earmarked for capital infrastructure.

1 February, 2021 11:35 AM

Metro rail and city bus services expansion

Expansion of metro rail network and city bus services. New scheme launched at cost of Rs 18,000 crore for augmentation of public bus transport services. This will include private sector players as part of PPP model to acquire, maintain and deploy over 20,000 buses.

1 February, 2021 11:30 AM

Sops for poll-bound states

Rs 34,000 crore outlay for highways in Assam; Rs 25,000 crore for highways in Bengal.

1 February, 2021 11:20 AM

Seven textile parks on anvil

Seven textile parks to be launched; over Rs 2 trillion to states for capex; monetisation platform to fund infra projects

1 February, 2021 11:15 AM

Rs 35,000 crore for vaccines

Health first pillar of the budget; funds of Rs 35,000 crore for vaccines; 15 health emergency centres

 

1 February, 2021 11:00 AM

Five Mini budgets 

The budget speech opened with slogans from the opposition on “Jai Jawan”  but FM sets the context of the budget at the time of the pandemic. 

Sitharaman said the ‘Pradhan Mantri Garib Yojna’ and the   Atma Nirbhar Bharat Package I, II, III  were “five mini budgets”. 

The financial outlay for Atma NIrbhar Bharat Package was Rs 27.1 lakh crore -- amounting to 13% of the GDP. 

1 February, 2021 10:45 AM

Investor, startup demands

Indian investors want parity in long term capital gains tax (LTCG) through sale of shares in private companies. Currently, domestic investors are taxed at 20% while foreign investors need to pay only 10% in LTCG.  Fund managers also want the government to ease restrictions so more pension and insurance money can flow into domestic AIFs. The Indian Angel Network said that 'angel tax' is still a concern for startups. Indian fund managers, led by the industry body Indian Private Equity and Venture Capital Association (IVCA), are pushing for further guidelines  around the GIFT city. “We want the GIFT City in India to encourage fund managers in India with on-shoring benefits so that foreign capital coming into India does not get trapped.”

1 February, 2021 10:30 AM

High expectations

The Economic Survey last week said India could expect 11% growth in 2021-22 on the back of an expected V-shaped recovery. 

The annual survey advised the government to spend more for growth to reach pre-Covid growth levels.

Finance minister Nirmala Sitharaman also raised expectations when she addressed a Confederation of Industry Conference last month and commented on the historic nature of the budget, which will be presented to MPs in a virtual format because of the pandemic.