BUDGET FY2021-22
  • Growth, inflation and fiscal deficit are the components that the finance minister
    tries to balance
  • India’s nominal GDP in 2020 is projected at $2.46 lakh crore at current prices.
    This projection would make India the 6th largest economy globally; one position
    down compares to the 5th spot in 2019, 3rd (PPP; 2020)
  • GDP GROWTH: Q1= -23.9 Q2=-7.5 Q3= 0.4
  • Expenditure: The government proposes to spend Rs 34,83,236 crore in 2021-22.  As
    per the revised estimates, the government spent Rs 34,50,305 crore in 2020-21, 13% higher than the budget estimate.
  • Receipts: The receipts (other than borrowings) are expected to be Rs 19,76,424 crore in 2021-22, which is 23% higher than the revised estimates of 2020-21. In 2020-21, revised estimates for receipts were 29% lower than budget estimates.  Given the impact due to COVID-19, it is useful to see the growth from 2019-20, an annual increase of 6%.
    ●  GDP growth:  Nominal GDP is expected to grow at of 14.4% (i.e., real growth plus
    inflation) in 2021-22. -7.7 for 20-21
  • Deficits: Revenue deficit is targeted at 5.1% of GDP in 2021-22, which is lower than the revised estimate of 7.5% in 2020-21 (3.3% in 2019-20).  Fiscal deficit is targeted at 6.8% of GDP in 2021-22, down from the revised estimate of 9.5% in 2020-21 (4.6% in 2019-20). The government aims to steadily reduce fiscal deficit to 4.5% of GDP by 2025-26.  The target for primary deficit (which is fiscal deficit excluding interest payments) is 3.1% of GDP.

Revenue Receipts :The earnings made by the government which neither create liabilities or reduce assets of the government. For example, receipts from tax collections, interest on investments, dividend earnings and earnings from services provided.

Capital Receipts: The earnings made by the government which creates liabilities (borrowing from the public in form of PPF and small saving deposits, National Pension Scheme etc.) or reduce assets (divesting stake in a particular company, called disinvestment or recovering loans made to state governments.)

Revenue expenditure: It is the expenditure made by the government on a recurring basis such as administrative expenses, interest payments on loan taken by the government, pensions, subsidies etc.

Capital expenditure: It is a productive, asset-creating (or liability reducing) long-period, non-recurring expenditure expenditure of the government. For example; expenditure on creating the infrastructure(roads, electricity dams etc.), loans made to state governments and repayment of loans by the central government (reducing liability).

Fiscal deficit = Total Expenditure – Revenue receipts – Capital receipts excluding

  • Ministry allocations: Among the top 13 ministries with the highest allocations, the
    highest annual increase over 2019-20 is observed in the Ministry of Jal Shakti (64%), followed by the Ministry of Consumer Affairs, Food and Public Distribution (48%) and the Ministry of Communications (31%).
  • The ministries with the 13 highest allocations account for 53% of the total budgeted expenditure in 2021-22.  Of these, the Ministry of Defense has the highest allocation in 2021-22 at Rs 4,78,196 crore (14% of the total budgeted expenditure of the government). Other Ministries with high allocation include: (i) Consumer Affairs, Food and Public Distribution, (ii) Home Affairs, (iii) Rural Development, and (iv) Agriculture and Farmers’ Welfare
  • Education- 93,000 crore
    Health- 73,923 crore
    Agriculture-1,31,531 crores
    Women and child dev: 24,435 crore Defence, 4,78,196 cr
    I- Infrastructure
    H- Health care and human capital A-Affordable housing
    P-Proposals for rationalissation
    Y-Yojna’s (social measure)
INFRASTRUCTURE(Rs. 20,000 crore for Infrastructure)
  • Govt increased allocation on capex by 26% to Rs. 5.54 trn.
  • The spending covers wide ambit of capacity building infrastructure, basic amenities and industry (through PLI schemes)

❖ 16% increase in spending on roads and rational highways at Rs. 1 trn.

❖ 9% increase in budgetary allocation on roads in rural areas at Rs.150 trn

❖ A massive spending of Rs. 2.9 trn over next year on creation of infra to provide water to 29 mn households.

❖ Near rs. 1 trn spending on metro lines including metroLite and Metroneo (for tier 2 and tier 3 cities)

  • Development Finance Institution- DFI may be set up to boost lending to infrastructure sector and for long term capacity building. Setting up of a development finance institute for which INR200bn capital has been commissioned, this institute is expected to lend INR5tn in next 3 years.(focused on lending to infrastructure sector)


  • National monetization pipeline to be launched, with a dashboard to track the
    progress and provide visibility to investors
  • Laying out the roadmap for this initiative, NHAI & PGCIL will take lead in this.
    Transmission assets worth ₹7,000 crores will be transferred to PGCIL.
  •  Railways will monetize dedicated freight corridor assets.
  • The next lot of airports will be monetized for operation and management. Central
    Warehousing Corp, sports stadiums will also be monetized,
  • PSUs cant compete with the private sector, so they are privatising the PSUs


DEDICATED FREIGHT CORRIDORS (the lines carrying the freight will be privatised)
  • Dedicated Freight Corridors, one of the biggest infrastructure projects of the country, are all set to see enhanced private sector participation.
  • Dedicated Freight Corridors or DFCs as their name suggests will ensure dedicated lines for movement of rail freight, hence helping the national transporter prioritise movement of goods trains.
  • Indian Railways has said that DFCs will be game-changers for the logistics scenario in the country, ensuring reduced cost and faster transit. Freight operations is the big profit earner for railways, which helps it cross subsidise passenger fares.
  • With DFCs railways hopes to increase freight revenue and profitability, hence helping it earn more for capital investment in other projects.
  • Unsure if the govt would continue to use the freight corridors or if all of it would be privatised . Could be PPP (public private partnership)
  • Biggest disadvantage of privatisation- Might leads to cartelisation in certain important sectors and regulation issues.

Privatisation- when 51% or more of it is sold, its privatised
Disinvestment- any process in which the govt is selling certain stakes


HEALTH CARE (0.34% of GDP)
  • India proposed doubling healthcare spending in annual budget-Rs. 2.2 trn
  • India has two coronavirus vaccines available, and has begun safeguarding not only her own citizens against COVID-19 but also those of 100 or more countries.
  • She announced Rs 27 lakh crore COVID support measures, which amounts to almost 13 per cent of country’s GDP, and lauded the success of the Aatmanirbhar Bharat initiative.
  • Lifted caps on foreigners investing in its vast insurance market gone up to 74%.
  • The new scheme called Pradhan Mantri Atmanirbhar Swasth Bharat Yojana with
    an outlay of INR 64,180 crore will be running alongside the National Health
  • Over the next six years, the new scheme will develop primary, secondary and tertiary healthcare systems, strengthen the national institutions and create new institutions for new and emerging diseases. The commitment to increase healthcare outlay beyond Covid vaccine spends and no cess or additional taxes to fund the vaccine drive is an extremely positive one for the public healthcare and the economy. This will improve access to better healthcare facilities in the long run.
  • To boost the primary healthcare system, around 17,000 rural and 11,000 urban
    health and wellness centres will be set up. Integrated public health laboratories will be set up in districts, apart from 3,382 block public health units in 11 states.
  • Finance minister Sitharaman said that the budget outlay for health and wellbeing
    has increased 137% – giving the impression that the government has somehow
    bridged this gap.This increase has a number of things not related to the Union
    budget on health. Of the Rs 2,23,846 crore, the expenditure on nutrition, water
    and sanitation – although important – can’t be accounted for as part of the
    health expenditure! Similarly, the Rs 35,000 crore announced for the COVID-19
    vaccines is a one-time expense and is not included as part of the regular health

AFFORDABLE HOUSING (refers to house units affordable by the section whose income is below median household unit)
  • It is up to 65 lakhs taken in 6 metro cities, otherwise 50 lakhs
  • The tax exemption for affordable housing projects & deductions of interest (up to
    1,50,000) on loan taken for purchase of an affordable house has been extended to March 2022
  • Affordable housing projects can avail a tax holiday for one more year- till 31st
    March 2022 (tax holiday- for that period of time you wouldn’t have to pay tax)



  • The Union budget has earmarked ₹1,500 crore for a scheme to incentivize digital
    payments, which took off significantly in India following the coronavirus pandemic.
  • The newly announced fund could be the much sought-after “compensation” for
    the losses incurred by the industry on account of the waiver of Merchant Discount Rates (MDR) on UPI and RuPay transaction.
  • The government had first waived off MDR — or the fees accrued by the banks
    and payment operators from merchants — for processing digital payments from the UPI and RuPay modes of payments in 2019.(to boost online transactions)
  • The National Payments Corporation of India (NPCI), which operates both the systems, had pegged the losses for India’s payments industry at over Rs 2000 crore when the zero MDR regime first kicked in from January of 2020.



  • The following three acts are proposed to be consolidated into a rationalized
    single Securities Markets Code:

SEBI Act, 1992, Depositories Act, 1996
Securities Contracts (Regulation) Act, 1956
Government Securities Act, 2007.

  • Relief to senior citizens: older pensioners (age 75 or more) with only interest and
    pension income are exempted from filing taxes. (moved from 80 to 75)
  •  Reduction in time limits for re-opening of assessment: Being reduced to three
    years from the current six years (reassessment of fraud by income tax officers) ●  Faceless Income Tax Appellate Tribunal (ITAT): To provide a transparent tax appellate mechanism, the government has proposed to the make the Income Tax Appellate Tribunal faceless and jurisdiction-less (everything happens online and faster)
  • Custom Duty Rationalization: Revised the customs duty structure to make it free
    of distortions. The government will review more than 400 old exemptions this year.



  • 45 percent increase in the allocation to e-learning and the launch of a new scheme PM e-Vidya to provide multi-modal access to education for teachers and students
  • The proposal to create a platform for unorganised migrant workers to access
    benefits under various welfare schemes.
  • There is also a new target to digitise 125 civic services across 25 cities through
    the Smart Cities Mission.
  • Proposed to increase the agricultural credit to Rs 16.5 lakh crore-This credit can
    be used by smallholder farmers for CapEx, be for their vehicles or cold storage and other facilities that they require, and also as working capital during the crop cycle.
  • The Agriculture Infrastructure and Development Cess (AIDC) proposed in this
    year’s Budget can bring in good revenue to help farmers overcome these shortcomings by allowing them to store their produce in cold storages, stores or typical warehouses and get better value for their produce. (the burden of cess to be borne by the government indirectly)
  • A cess is a tax on the tax



In FY21, disinvestment target of Rs2.1trn (strategic divestments of Rs1.2trn and GOI stake in PSBs/ Fis of Rs900bn). In FY22, divestment target is reduced to Rs1.75trn with
strategic stake disinvestment target down to Rs750bn with focus on BPCL & Concor
continuing and GOI stake in PSBs/Fis of Rs1.0trn mainly from IPO of LIC,sale of stake
in general insurance company and stake in two PSBs. Revised BE of disinvestment was
to Rs320bn.



  • There was broader focus on agriculture credit, irrigation, and marketing of
    agriculture produce was promoted.
  • Additional funding and marketing support will enhance farmers’ incomes and
    (indirectly) demand for agriculture over the medium- to long-term.
  •  Agriculture credit target was enhanced to Rs 16,500bn with a focus on animal  husbandry, dairy, and fisheries. Allocation towards rural infrastructure development fund increased to Rs 400bn from Rs 300bn. Additional allocation of Rs 50bn was made towards a micro-irrigation fund under NABARD.
  • 1000 more mandis are to be integrated with e-NAM to have transparency and competitiveness. An additional allocation of Rs 4.5bn was done to promote and form FPOs (Farmers Producers Organisation).
  • Fertiliser subsidy allocation for FY21 was revised to Rs 1,339bn, as expected,
    with additional allocation of Rs 650bn. Subsidy allocation for FY22 is Rs 795bn.
    Customs duty on urea, DAP, and MOP (major product of imports) was reduced to nil (from 5%)


  • Setting up of ARCs/AMCs to consolidate and take over the existing stressed debt
    and then manage and dispose of assets to Alternate Investment Funds and other potential investors – for eventual value realization
  • Privatisation of 2 PSU Banks (Other than IDBI) by FY22.
  • To consolidate the financial capacity of PSBs even further, recapitalization of an
    additional Rs 200bn is proposed in 2021-22.
  • Insurance FDI limit hiked to 74% from 49%; foreign ownership and control
    allowed, with safeguards.
  • Tax-free income on provident funds: It is proposed to restrict tax exemption for
    interest income earned on employees’ contribution to various provident funds to an annual contribution of Rs 0.25mn
  • MGNREGS (73,000)
  • PM-KISAN (65,000)
  • Jal Jeevan Mission (Earlier known as the National Rural Drinking Water Mission)
  • National Health Mission
  • National Education Mission
  • Pradhan Mantri Awas Yojana
  • Integrated Child Development Services
  • Pradhan Mantri Fasal Bima Yojana
  • Pradhan Mantri Gram Sadak Yojana
  • National Livelihood Mission



Is it a “good” budget? The stock market is certainly buoyant as the dreaded “COVID Cess” or a “Billionaire/Wealth Tax” did not materialise; in fact, there are no major tax changes, other than simplification in the direct tax regime. Additionally, there is a reiteration of the privatisation goal, always music to the stock market’s ears.
One of the key issues in the last two budgets has been that the actual expenditure was below the estimated expenditure, at a time when the need of the hour was a strong fiscal stimulus to boost growth which has been falling even before the COVID-19 pandemic hit.

It is imperative to pump more money in the economy through fiscal stimulus, so that then
people would spend more and it would address the low capacity utilisation of the
companies. Accelerating the growth cycle. Providing more credit to the corporation
would not be fruitful unless more money is given in the hands of people who are the real

Nothings been declared for the hospitality sector which has lost
The second related question is that the aggregate numbers look very different when these are unpacked. For instance, last year the government announced a stimulus of Rs 20 lakh crore, which, at first glance, appeared to be a strong fiscal boost, until it turned out that a large component of it was not a fiscal stimulus but additional liquidity. Some estimates place the actual outflow at less than 1 per cent of GDP in dismal contrast to the planned 10 per cent of GDP.

the expenditure on MGNREGA, the main safety net provision in rural India. The need of the hour would be to increase allocations to this as it provides some succour for the rural unemployed workers. Yet, there is no increase in expenditure on MGNREGA. An announcement in the budget increasing the currently pitifully low minimum wage for ASHA, anganwadi and ANM (auxiliary nurse midwife) workers would have been an excellent and much-needed tribute to the sterling role played by frontline health workers, who worked long hours, under hazardous and arduous conditions, risking personal attacks due to the stigma associated with COVID-19.
There was no clear statement in the budget on boosting employment, especially female employment, which has been falling over the last several years. Infrastructure spending (which, not unsurprisingly, was targeted towards poll-bound states) might boost employment to a certain extent, but it is not clear that the increased outlay is sufficient to meet the massive employment challenge.

Medium, small and micro enterprises (MSMEs) employ a very large part of the non-agrarian workforce. These enterprises, several already precarious, have been struggling to survive during the economic recession. The budget would have been the right forum to announce big-bang support and revival policies for this sector.



2.5-5 lacs: 5%

5-10 lacs:20%

10 lacs+: 30%