Union Budget 2020-21 Key Takeaways

The Union Budget of India, also referred to as the Annual Financial Statement in Article 112 of the Constitution of India, is the annual budget of the Republic of India. It was presented by the Finance minister on 1st February 2020 in Parliament. Here are some of the important announcements.

1. The theme of the budget was - "Ease of living"

The budget is woven around three prominent things -

a. Aspirational India to boost the standard of living

b. Economic development for all

c. Building a humane and a compassionate society

2. Currently, India is 5th largest economy.

1st - USA(21.4 Tn) 2nd - China(14.1 Tn) 3rd - Japan(5.2 Tn) 4th - Germany(3.9 Tn) 5th -India(2.9 Tn)

3. Average growth - 7.4 %(2014-19)

4. Average inflation - 4.5 %(2014-19)

5. 271 mn people raised out of poverty(2006-16).

6. 40 crore income tax returns have been filed.

7. Insured 6.11 crore farmers under Pradhan Mantri Fasal Bima Yojana.

8. Central govt's debt has come down to 48.7% in March 2019 from 52.2% in March 2014.

9. FDI in India rises to USD $284 billion during 2014-19 compared to $190 billion during 2009-14.

10. At the elementary level, girl enrollment is currently at 94.32 percent compared to 89.28 percent for boys.

Let us discuss the sources of the government's income and expenditure.

Let us discuss sector-wise schemes and allocation of funds.

1.Agriculture

• 16-points action plan to help farmers, Farm markets need to be liberalized.
• FY21 agriculture allocation 1.38 lakh crore.
• By 2022-23 fish production to be 200 lakh tonnes.
• 3477 Sagarmitras and 500 fish farmers.
• Agri credit target for the year 2020-21 has been set at 15 lakh crore rupees.
• Expansion of "PM KUSUM" Scheme under which 20 lakh farmers would be provided funds to set up standalone solar pumps.
• Civil Aviation Ministry to launch 'Krishi Udaan' for agricultural exports.
• Finance Ministry will allocate 2.83 crores for agriculture and irrigation.
• MGNREGA to be used to develop fodder farms.
• Milk capacity processing capacity 53.5 Mn MT to 108 Mn MT.
• Village storage scheme run by SHGs. They will be named as "Dhanya Lakshami"
• NABARD geo-tag agri-warehouses.

2. Education and Skill Development

• Rs 1 lakh Crore push for education.
• Rs 99,300 crore outlay for the education sector in 2020-21 and Rs 3,000 crore for skill development.
• Govt proposes National Police University and National Forensic University.
• An allocation of Rs 8,000 crore for National Mission on Quantum Computing and Technology.
• 150 higher education institutions to offer apprenticeship diplomas by March 2021.
• The government will promote the 'Study In India' initiative.
• FDI in the education sector.
• IND-SAT exam for Asian & African students to study in India.

3. Water and Sanitation

• Action plan to ease India's water problems starts with helping 100 districts.
• Govt proposes Rs 3.6 lakh crore towards piped water supply to households.
• Allocation for Swachh Bharat for 2020-21 stands at Rs 12,300 crore.
• Committed to Open Defecation Free (ODF) plus in order to sustain ODF behavior and to ensure no one is left behind.

4. Healthcare

• Govt to expand Mission Indradhanush, add hospitals to Ayushman Bharat.
• Allocated Rs 69,000 crore to Healthcare, inclusive of Rs 6,400 crore for Jan Arogya Yojana.
• Hospitals will open in tier 2 and tier 3 cities covered under Aspirational districts scheme which still do not have an Ayushman-empanelled hospital.
• The government has aimed at spending target of 2.5 percent of GDP till 2025.
• “TB harega desh jeetga" campaign to eliminate tuberculosis by 2025.
• Opening of "Jan Ausadhi Kendra" for medicine supply.

5. Employment and Entrepreneurship

• FM makes entrepreneurs' lives easier with new investment clearance cells.
• National Logistics Policy will be revealed soon to make MSMEs more competitive.
• Govt plans to boost the manufacturing of mobile phones, electronic equipment.
• Single investment clearance window to be set up for promoting entrepreneurship.
• Govt to set up a national recruitment agency(NRA) for the recruitment of non-gazetted posts.
• Amendments to be made to enable NBFCs to extend invoice financing to MSMEs.
• Audit threshold for MSMEs raised to ?5 crore from ?1 crore.

6. Infrastructure

• FY21 rural development allocation 1.23 lakh crore.
• Five new smart cities to be developed.
• Rs 20,000 crore for the renewable energy sector.
• Rs 6000 crore boost for internet connectivity.
• Rs 1.7 lakh crore has been provided for transport infrastructure.
• Privatization of some ports.
• Focus on the "Arth Ganga" model.

7. Road

• Outline a plan to invest Rs 1.05 lakh crore ($1.48 trillion) in infrastructure over the next five years.
• A single window e-logistics market with focus on MSMEs.
• Development of 2,500 km access-controlled highways and 2,000 km of strategic highways, 9000 km eco-development corridors.
• 12 lots of highway bundles spread over 6,000 km will be monetized before 2024.
• Delhi-Mumbai Expressway to be ready in 3 years.
• 6,500 new projects under NIP across sectors.

8. Railways

• 1,150 trains will run under the public-private partnership (PPP) mode.
• Four stations will be redeveloped with the help of the private sector.
• Indian Railways to set up a "Kisan Rail" through Public-Private Partnership for farmers.
• On the fast track: More Tejas-like trains between key stations.
• Develop solar capacity in Indian railways.
• Govt to launch ?18,600 crores worth the Bengaluru Suburban Transportation project.
• Focus to finish the Mumbai-Ahmedabad bullet train project.

9. Aviation

• 100 more airports to be developed by 2025.
• No. of aircraft will rise from 600 to 1200.

10. Culture & Tourism

• Rs 2,500 Crore to boost tourism.
• 5 archaeological sites to be developed with on-site museums.
• Establish of Indian Institute Of Heritage & Conservation.
• Tribal museum in Ranchi and Maritime museum in Lothal.

11. Textile and Exports

• Rs 1,480 Crore for National Textile Mission.
• Nirvik (Niryat Rin Vikas Yojana) scheme to provide enhanced insurance cover and reduce premium for small exporters and simplified procedures for claim settlements.

12. Social Welfare

• Enhance allocation of Rs 9000 Crore for senior citizens and 'Divyang’.
• Rs. 4,400 Crore allocated for cities to ensure clean air.
• Rs 53,700 Crore for the welfare of scheduled tribes.
• Rs 85,000 Crore for the welfare of SC and other backward classes.
• Deposit insurance coverage increased to 5 lakh from the existing ?1 lakh.

13. Women & Child Development

• 35600 crore for nutritional-related programs.
• 28600 crore for woman-specific programs.
• 6 lakh Anganwadi workers will be given smartphones.

14. Others

• Rs 100 crore allotted to prepare for hosting G20 presidency in 2022.
• Allocation of Rs 30,757 crores for 2020-21 for Jammu and Kashmir and Rs 5,958 crores for Ladakh.
• FY21 fiscal deficit target pegged at 3.5% of GDP.
• The government will bring LIC IPO. (Privatization)
• Government to sell part holding in LIC, also in IDBI.
• Govt to sell govt stake in IDBI Bank to private investors.
• FY21 divestment target pegged at Rs 2.1 lakh crore.
• The nominal GDP growth for FY21 revised to 10%.

15. Income Tax Highlights

• New simplified personal income tax regime (Lowest, Simplest, Smoothest)

• New income tax rates will be optional. That means if a person wants to avail deduction(HRA & other allowances) he/she has to stay with the existing tax rate. And if the person does not want to avail deduction he/she will go for a new tax rate.
• FM proposed to remove the deeply unpopular dividend distribution tax (DDT). It applies to the dividend that a company pays to its shareholders.
• Govt proposes a 100 percent tax concession to sovereign wealth funds on investment in infra projects.
• New power generation and manufacturing companies will have to pay just a 15 percent tax under the new corporate tax regime.
• Govt proposes deferment of tax payment by employees on ESOPs from startups by 5 years.
• Tax on Co-op societies to be reduced to 22% plus surcharge, as against current 30%. Only Asian country which has less tax than India is Thailand(20%). Even China and Malaysia have a 25% tax rate.
• Insurance coverage on deposits increased from 1% to 5%.
• Govt extends an additional Rs 1.5 lakh tax benefit on interest paid on affordable housing loans to March 2021.
• FM proposes a scheme to bring down litigation indirect taxation scheme; 4.83 lakh direct cases pending in various appellate forums.
• "Vivad se Vishwas" scheme for direct taxpayers whose appeals are pending at various forum.
• Under the "SARFAESI" scheme debt recovery at NBFCs reduced to asset size of INR 100 crore or loan size of INR 50 lakh.

*Note: Any edits, ideas or additions are highly appreciable. Thank you for reading!