Impact of Budget 2021

Budget is to

• Boost economy in all fronts,
• Undertaking constructive activities on all aspects dealt with in the article & more required to
• Deliver people at large to
• Get the required benefits so as to obviate any big bad impact on GDP, budget deficit due to untoward impact lashed out by Corvid 19.

The budget in the light of sufferings gone through in the past one year or so because of COVID 19 and the government has no other option but perforce extend captivating doles under the scope of welfare measures to alleviate the miseries of the people at large. Apart from this, the government in the new Budget has rightly tailored to take a precise call to spot on certain issues to correct the pressing and critical demand of time.

Sources of Funds

From taxes: Taxes are collected in the form of direct and indirect ways.

Direct taxes include income tax, real property tax, personal property tax, or taxes on Assets-(Capital Gains Tax), Securities and Transaction Tax, Prerequisite Tax, Corporate Tax

Indirect taxes include GST, customs duty and tax deducted. In 2020-21, roughly, 28.5% of the revenue came from GST followed by corporate tax and personal income tax, 28.1% and 28.3% respectively.

• Excise: 11.5%
• Custom Duty: 5.7%

Non Tax Revenue

The top receipts under this are interest and dividends and profits received from public sector companies.

Companies under strategic sale or divestment

The government is selling off its 100 per cent stake in Air ... It also plans to sell its entire stake in Air India Express and 50 per cent stake in Air India SATS Airport Services Pvt ... Pvt Ltd. Tata Group is believed to have submitted an EoI for buying stakes in Air India...

Sale of a partial stake

Finance Minister said that government plans to sell a partial stake in LIC through IPO or an initial public offer. In her Budget proposal, she proposed that the government will sell its stake in IDBI Bank to private investors and also amend the Banking Regulation Act to strengthen co-op banks.

Increase foreign direct investment (FDI) limit

The government in the budget proposed to increase foreign direct investment (FDI) limit in the insurance sector to 74 percent from 49%, a move aimed at attracting greater overseas capital inflows to help enhance insurance penetration in the country.

There are no major changes in Direct Tax rates, though some reliefs provided as listed down:

Direct Taxes

• Exemption from filing tax returns for senior citizens over 75 years of age and having only pension and interest income; tax to be deducted by paying bank
• Time limit for re-opening cases reduced to3 years from 6 years
• Limit of turnover for tax audit increased toRs. 10 crores from Rs. 5 crore for entities carrying out 95% transactions digitally
• Additional deduction of interest, up to Rs. 1.5 lakh, for a loan taken to buy an affordable house extended for loans taken till March 2022
• Exemption limit of annual receipt revised from Rs. 1 crore to Rs. 5 crores for small charitable trusts running schools and hospitals

Indirect Taxes

GST

• Electronic invoice system; Pre-filled editable GST return
• Use of deep analytics and AI to identify tax evaders

Custom Duty Rationalization

• Proposal to review more than 400 old exemptions this year
• Customs duty reduced uniformly to 7.5% on semis, flat, and long products of non-alloy, alloy, and stainless steels
• Basic Customs Duty (BCD) on caprolactam, nylon chips and nylon fibre& yarn reduced to 5%
• Custom duty on gold and silver to be rationalized
• Duty on some parts of mobiles revised to 2.5% from 'nil' rate
• Customs duty on cotton increased from nil to 10% and on raw silk and silk yarn from 10% to 15%.

A glance through of the budget is clear that Fundraising is more through Companies under strategic sale or divestment, Sale of partial stake, Increase foreign direct investment (FDI) limit- etc.

Revenue Receipts/ Expenditure VS Capital Receipts/Expenditure

A glance through of the above table highlights Revenue receipts for 2021/22 are budgeted for an increase as against a decrease in provision for expenditure for reason obvious and understandable.

But, Provision for Capital expenditure speaks a different language for reason obvious.

Finance Minister should necessarily rise to the dictates of time- normal budget tracts may not work. To enlarge industrial activities, for fresh investments to generate and accelerate industrial activities with a strong fiscal stimulus and several micro level initiatives with a mix of welfare and infrastructure investments.

The following tables highlights various key reforms contemplated. It may be noted that the following measures noted in the table are programmed for more than for the present Budget year high lighting the rich intention of the government to ensure that the people's interests are taken care of with a chartered route.

Budget for Ministry of Road Transport and Highways

Rs. 1,18,101 lakh crore, highest ever outlay, for Ministry of Road Transport and Highways - of which Rs. 1,08,230 crores is for capital

• Under the Rs. 5.35 lakh crore Bharatmala Pariyojana, more than 13,000 km length of roads worth Rs. 3.3 lakh crore awarded for construction:
• 3,800 km have already been constructed
• Another 8,500 km to be awarded for construction by March 2022
• Additional 11,000 km of national highway corridors to be completed by March 2022
• Economic corridors being planned across states vis., Tamil Nadu

Budget for Railways

1,10,055 crores for Railways of which Rs. 1,07,100 crores is for capital expenditure

• National Rail Plan for India (2030): to create a 'future ready' Railway system by 2030
• 100% electrification of Broad-Gauge routes to be completed by December, 2023
• Broad Gauge Route Kilometers (RKM) electrification to reach 46,000 RKM, i.e. 72% by end of 2021
• Western Dedicated Freight Corridor (DFC) and Eastern DFC to be commissioned by June 2022, to bring down the logistic costs - enabling Make in India strategy Kerala, West Bengal, Assam etc.,

Urban areas by the expansion of metro rail network and augmentation of city bus service

- Rs. 18,000 crores for a new scheme, to augment public bus transport; Innovative PPP models to run more than 20,000 buses

- A total of 702 km of the conventional metro is operational and another 1,016 km of metro and RRTS is under construction in 27 cities PPP - public-private partnership; RRTS - Regional Rapid Transit System 9 U

New power distribution sector scheme

• Rs. 3,05,984 crore over 5 years for a revamped, reforms-based and result-linked new power distribution sector scheme
• A Comprehensive National Hydrogen Energy Mission 2021-22 to be launched

Petroleum & Natural GAS

• Extension of Ujjwala Scheme to cover 1 crore more beneficiaries
• To add 100 more districts to the City Gas Distribution network in next 3 years
• A new gas pipeline project in J&K
• An Independent Gas Transport System Operator to be set up for facilitation and coordination of booking of common carrier capacity in all-natural gas pipelines on a non-discriminatory open access basis.

Conclusion

The above Budget Provisions for road Constructions, Railways, Metro Net Work& city Bus Service, Power Distribution, & Petro and Natural Gas are the generators of development in all fronts. Constrictions of Roads, railways etc. have a great positive impact on cement industries, granite industries, steel industries, cable industries, electrical industries (including lighting) and what not including the labour of all bases and sources generating employment at local levels.

Extended provisions for health care will push at all levels.

It should be appreciated, on the top, these are generated mostly through very well thought out income from non-revenue sources as explained earlier.

Further, the Budget uniquely has proposed a BAD BANK through a national Asset Reconstruction Company (ARC).to take charge of NPAS as approved and taken on to provide space for affected companies The modus operendi is awaited.

The Government has to its credits many NEW for Budgets. The Budget is presented on the first week of February, Railway budget included in the Main Budget, Capital Gain computed for Shares/MFs based as on 31/01/2018, if purchased earlier, Dividend- income Taxable in the hands of the receivers in the interest of Capacity to pay (Previous Budget), the introduction of GST from 1 July 2017 that dispenses with the compliance of various Acts helping the customers