New Budget 2021
Today let's discuss something over the new budget announce by our finance minister Smt. Nirmala Sitharaman for 2021.
Before discussing the budget, let's discuss some of the problems depending upon which the budget has been created.
1.Getting domestic demand back on track
2.Creating descent jobs
3.Reviving the animal spirit
4.Ending the credit drought
5.Raising spending without raising inflation
Now let's discuss the major points from the Budget discussed in this financial year by our finance minister.
1.Infrastructure Sector: Basically a huge amount is kept for the construction of many road projects. A large amount of money has been earmarked for ongoing and new economic corridors and expressways, and Rs 1,10,055 crore have been allocated to the Railways, of which Rs 1,07,100 crore is for capital expenditure with a promise to complete 100% electrification of broad gauge routes by December 2023. This will not help in increasing the economy of the country by providing better roads/ highways to tourists and also for the people living in the country, but it will also help in increasing the job opportunities in our country. In my opinion, this was one of the best factors that are being considered.
In a developing and infrastructure deficient country like India, public investment in infrastructure, which is labor-intensive, crowds in private investment and is the best way to give a boost to demand. Overall, the infrastructure sector is the winner in this year’s Budget. However, its success lies in its effective implementation and focusing on projects with quick turnaround time.
2.Health Sector: Now the second big factor is your health sector as Amid all these developments, the life sciences and pharma sector has been at the forefront in recent times while managing the Covid-19 crisis. Given the historically low public expenditure on healthcare in our country, hovering around 1.3% of GDP, there was broad consensus that the sector deserved an increased budgetary allocation. The National Health Policy 2017’s target of public health expenditure was to hit 2.5% of GDP by 2025. There were also expectations regarding Covid-19 vaccine allocation, higher tax deductions for research and development (R&D), reduced import duties, etc.
The Budget has largely met the sector’s expectations on the budgetary allocations, though it is better to view the exercise as just one step in a series of mini Budgets announced over a period of 12–18 months. The current Budget has carried the momentum from the earlier mini Budgets to further accentuate the focus on better health infrastructure and increased access to universal affordable healthcare.
Health & Wellbeing was clearly the most important one among the six pillars of Budget outlined by the finance minister.
1) The finance minister announced ₹2.83 lakh crore for the health and wellness sector, an increase of 137% over last year. This includes ₹35,000 crores on Covid-19 vaccine development and inoculation.
2) A new centrally sponsored scheme, ‘PM AtmaNirbhar Swasth Bharat Yojana’ with an outlay of ₹64,180 crores over six years was launched to develop and strengthen capacities across primary, secondary, and tertiary healthcare systems.
3) Another initiative that the government has proposed is a national institution for One Health which is envisioned as a research platform for the WHO South East Asia region.
3.Privatization of banks: The government last year consolidated 10 public sector banks into four and as a result, the total number of PSBs came down to 12 from 27 in March 2017. In a first three-way merger, Bank of Baroda merged Vijaya Bank and Dena Bank with itself in 2019. SBI had merged five of its associate banks State Bank of Patiala, State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Travancore, and State Bank of Hyderabad- and also Bharatiya Mahila Bank effective April 2017. Simultaneously, a move to divest a stake in one non-life insurance company enables the government to target higher revenue without forsaking strategic objectives.
Privatization will reduce fiscal pressure as the Centre has been infusing capital year after year even though the market valuation of government-owned banks has shrunk. Many expect a merger with a large private lender to be one of the options.
4.Scraping policy: With special emphasis on enhancing domestic manufacturing, the government’s decision on allocating Rs 1.97 lakh crore for PLI schemes is a promising move that will help create manufacturing global champions in India across 13 sectors, including the automotive sector.
The new vehicle scrapping policy will be implemented in the country on 1st April 2022. In January this year, the government released a statement:
“The Minister approved the policy of deregistration and scrapping of vehicles owned by Government department and PSU, which are above 15 years in age. It is to be notified and will come into effect from 1 April 2022.”
The government will introduce a voluntary vehicle scrapping policy to incentivize people to replace their older vehicles with newer ones, Finance Minister Nirmala Sitharaman said in her Budget speech on Monday. Moreover, there will be a fitness test conducted after 20 years for personal vehicles and after 15 years for commercial vehicles. The Ministry of Road, Transport, and Highways will provide details for the vehicle scrapping policy. Lauding the introduction of a new scrapping policy, Sudin Sabnis, Partner, Nangia Andersen said that an age limit of 15 and 20 years, respectively for CVs and PVs to undergo fitness test for scrapping is a welcome step.
Again this will help in increasing the GDP and will reduce the environmental pollution
5.Others: Of course, there are a few more areas that the Budget could have targeted:
a. Incentivised R&D by additional tax deductions to further support greater investments in new drug developments.
b. Reduced GST on life-saving and essential drugs as they currently attract 12%.
c. A structured road map intervention supported by strong policies to promote the telemedicine industry would have been helpful.
d.Upgradation of MSME to WHO-GMP norms by way of interest subvention on capital goods investment as well as investment on upgrading quality assurance systems.
e. According to the 2021–22 Budget documents presented by finance minister Nirmala Sitharaman in Parliament, the allocation for defense services was increased to Rs 4.78 lakh crore compared to Rs 4.71 lakh crore in the 2020–21 Budget. Out of total allocation in the Defense Budget, Rs 1.35 lakh crore has been set aside for capital outlay to purchase new weapons, aircraft, warships, and other military hardware
In the end, I will say the budget has included all the major aspects including infrastructure, health, and education to defense. Along with this, the use of unuse resources is also kept in mind, which will help to boost the GDP of the economy and also help in providing job opportunities.
Keep Reading, Keep smiling
Jai Hind…
Reference:
1. https://www.financialexpress.com/budget/budget-2021-govt-announces-scrapping-policy-fitness-test-for-personal-commercial-vehicles/2183850/
2. https://www.firstpost.com/india/defence-budget-2021-increased-capital-expenditure-much-needed-step-in-context-of-rising-chinese-threat-9266471.html#:~:text=According%20to%20the%202021%2D22,in%20the%202020%2D21%20Budget.
3.https://www.indiatoday.in/education-today/news/story/union-budget-2021-a-look-at-some-important-quotes-1764946-2021-02-01
