Finance Minister Nirmala Sitharaman on Monday announced a slew of measures in her third Budget speech to revive the pandemic-hit Indian economy. She proposed doubling healthcare spending to Rs 2,23,846 crore, increasing Foreign Direct Investment in the insurance sector from 49% to 74%, and warned that the fiscal deficit for the financial year of 2021-’22 will be wider than expected.
While the income tax slabs were not changed, the finance minister said that pensioners who are above 75 years will no longer be required to file tax returns. The government also announced infrastructure projects in West Bengal, Kerala, Tamil Nadu and Assam – four states which will go to the polls in the next couple of months.
She also introduced a vehicle scrapping policy, recapitalisation of public-sector banks and divestment of some state-owned lenders. Most of her Budget speech focused on the Centre’s Atmanirbhar Bharat vision to make India self-reliant.
Here are the top updates of the day:
9.16 pm: Punjab Chief Minister Amarinder Singh says the Budget only reflects the central government’s “persistent efforts to sideline” non-BJP states, reports PTI. Singh also says that not enough has been allocated for defence in the Budget even as tensions with neighbouring countries are growing, reports Republic.
9.12 pm: The Delhi government claims the Budget is aimed at benefiting only a few big companies and that the Capital has not been provided proper attention in it, reports PTI.
8.55 pm: Congress leader Sachin Pilot tells India Today that the “human aspect of the Budget is completely missing.” “A large chunk of our society has been left unaddressed,” he says.
8 pm: Bihar Chief Minister Nitish Kumar says the new Budget is clear and balanced, ANI reports. “I congratulate finance minister for bringing such a Budget despite the adverse impacts of Covid-19,” he adds.
6.48 pm: Madhya Pradesh Chief Minister Shivraj Singh Chouhan hails the Budget using hashtag “Atmanirbhar Bharat ka Budget [The budget of self-reliant India].”
“Under the sensitive leadership of Prime Minister Narendra Modi, the world’s largest vaccination campaign was started in India,” he tweets. “Under his guidance Covid-19 is going to end. For the year 2021-’22, Rs 35,000 crores has been allocated for vaccination.
6.44 pm: Bharat Biotech calls the allocation of Rs 35,000 crore for Covid-19 vaccination in the Union Budget a “far reaching” initiative, reports PTI. It says that the decision would help the country become free of the infection.
Serum Institute of India Chief Executive Officer Adar Poonawalla says the initiative will help India recover rapidly from this pandemic. “Hopefully, this will also encourage more innovation and expansion in the sector,” he adds.
6.42 pm: Federation of Indian Chambers of Commerce & Industry President Uday Shankar says the 2021 Budget is a clear-headed and growth-oriented one that lays a strong foundation for an Aatmanirbhar Bharat, or self-reliant India, reports PTI. “The fact that government chose growth over fiscal consolidation is indeed heartening,” he says. “There is a sharp focus on capital expenditure.”
6.41 pm: Mahindra Group Chairperson Anand Mahindra says in a time of unprecedented economic stress, the government’s responsibility was to spend enough to revive the economy or else face enormous human suffering. “So I had one expectation from this budget: that we should be very liberal in terms of the targeted fiscal deficit. Box ticked,” he tweets.
6.36 pm: Vedanta Resources Executive Chairperson Anil Agarwal describes the Union Budget as “very reformist.” He says the thrust on infrastructure will boost growth.
“By increasing spending and not imposing any additonal direct taxes, the government has delivered the right stimulus to the economy,” Agarwal says.
6.31 pm: India Inc hails the Union Budget, reports PTI. Bharti Enterprises Chairperson Sunil Bharti Mittal says the the budget boldly spells the government’s growth agenda and a march towards building a new and prosperous India. “The budget clearly has the stamp of our Prime Minister with a clarion call for ‘Sabka Saath Sabka Vikas’ and ‘Vocal for Local’,” he says.
6.30 pm: Minister of State for Finance Anurag Thakur says the government, in its 2021 Budget, has focused on Micro, Small and Medium Enterprises sector and infrastructure and is are going to spend a huge sum of money on the healthcare sector, reports ANI. “We’ve allocated around Rs 1.10 lakh crores for roadways and railways each,” he says. “This budget will bring in a positive change for investors, businesses and general public.”
6.27 pm: The Communist Party of India criticises the 2021 Budget, claiming it is pro-corporate and has nothing for the poor, reports PTI. “This Budget is the continuation of the aggressive, pro- corporate economic policies the Modi government has been pursuing,” CPI General Secretary D Raja says. “It is a pro-corporate, pro-big businesses Budget. It is pro-international finance capital, the FDI [foreign direct investment]. So, this Budget has nothing for the poor, for the suffering masses.”
6.25 pm: Karnataka Chief Minister BS Yediyurappa hails the Union Budget as a catalyst that can revive this sluggish economy, reports PTI. “The Union Finance Minister has announced necessary strategies for economic revival as well as containment of the pandemic,” he says. “The Budget has provided a platform to double the farmer’s income by 2022 as per the aspiration of Hon’ble Prime Minister Narendra Modiji.”
6.23 pm: West Bengal Chief Minister Mamata Banerjee calls 2021 Budget an “anti-people” one, reports PTI. “They [Bharatiya Janata Party] lectures others on nationalism, but in practice, they are the ones who are selling the nation,” Banerjee says. “They are selling everything from PSUs [public sector units], Insurance, Railways and Ports. This is a budget to deceive the masses. It’s an anti- farmer, anti-people and anti-country budget.”
6.21 pm: Congress leader Rahul Gandhi says the government plans to handover India’s assets to Prime Minister Narendra Modi’s “crony capitalist friends”.
6.07 pm: The Nationalist Congress Party calls the 2021 Budget “disappointing” and a move towards “privatisation”, reports PTI. Shiv Sena claims that the budget ignored Maharashtra.
6.02 pm: Punjab Finance Minister Manpreet Singh Badal alleges that the 2021 Budget seeks to sell India’s precious assets. In a series of tweets, he also claims that north India has been ignored in the Budget as it is not going to polls. Badal says that the government was silent on various matters, including unemployment, agricultural unrest and revenue generation.
“Halving of Agriculture Income instead of announcing proposals of doubling agricultural income, the NDA [National Democratic Alliance] budget will effectively reduce earnings by half,” he says.
5.58 pm: Congress leader P Chidambaram says Finance Minister Nirmala Sitharaman deceived the public, especially poor, working class, migrants and farmers, reports PTI. He says Sitharaman also deceived listening to her 2021 Budget speech, especially MPs, who had no clue she imposed cess on many products.
4.12 pm: Rashtriya Janata Dal leader Tejashwi Yadav says 2021 Budget is not for the development of India, but for its sale, reports ANI. “Earlier, they sold Railways, Air India, Bharat Petroleum, and others,” he adds. “This budget is about more such entities that will be sold including gas pipeline, stadium, roadways and warehouses.”
3.53 pm: Nirmala Sitharaman says dialogue with the government is the only way to resolve the stalemate over the farm laws. “Government is and has always been open to dialogue with farmers,” she says. “The agriculture minister has been ready to have clause-by-clause discussion with farmers on the farm laws Hence we believe that dialogue is the way forward.”
3.49 pm: Nirmala Sitharaman says the change in vertical devolution to states from 42% to 41% is a result of Jammu and Kashmir becoming a Union Territory.
3.43 pm: The finance minister says ceiling of tax exemption on employees’ provident fund interest will not affect most workers.
3.40 pm: “Accounting of government expenditure and revenue statements are now a lot more transparent and open,” says Nirmala Sitharaman.
3.37 pm: Nirmala Sitharaman says the government is “absolutely upfront” with the fiscal deficit.
3.35 pm: Tarun Bajaj also says FY22 fiscal deficit will definitely be within 6.8%, or may be even lower.
3.33 pm: “Revenue figures are understated and not overstated this time,” says Economic Affairs Secretary Tarun Bajaj at the press conference.
3.30 pm: Nirmala Sitharaman says not only is the government spending more, but they have ensured that the spending is not delayed. “We have spent, we have spent, and we have spent,” she adds.
3.29 pm: The finance minister says there has been a 37% increase in infrastructure spending, and Rs 2.23 lakh crore on healthcare.
3.27 pm: “Agriculture has received emphasis in 2021 Budget, allocation for credit flow through NABARD increased, we are bringing in Agriculture Infrastructure Development Cess through restructuring, without consumers having to pay more,” says Sitharaman.
3.25 pm: Sitharaman says the Centre has taken “progressive” steps in the financial sector. “We have come up with a formulation to clean up NPAs in bank,” she adds.
3.22 pm: The finance minister says the government has chosen to spend big on infrastructure across a wide variety of sectors. She mentions the allocation for the health sector too.
3.20 pm: Nirmala Sitharaman in her post-Budget address says it was presented at a time when the government wanted to give greater impetus to the Indian economy. “We thought this impetus would be qualitatively spent well and give the needed demand push if we spend big on infrastructure,” she says.
3.13 pm: “It’s a pro-active budget that gives a boost to wealth as well as wellness,” says the prime minister. He also says that his government has given priority to Ease of Living in the 2021 Budget.
3.10 pm: Modi says the Budget presented by Finance Minister Nirmala Sitharaman talks of all-round development focusing on all parts of India. He also praises record increase in allocation for infrastructure building.
3.08 pm: The Budget focuses on increasing farmers’ income, says the prime minister amid a months-long agitation against the farm laws. “Several measures have been taken in this direction,” he adds. “Farmers will be able to get loans easily. Provisions have been made to strengthen APMC [Agricultural Produce Market Committee] markets with the help of Agriculture Infrastructure Fund.”
3.05 pm: Modi says many people thought the government will burden the common man with taxes. But the government focused on a transparent budget, he adds.
3.03 pm: “The principles in these budget include new opportunities for growth, for youth, new dimension to human resources, go towards progress,” says the prime minister.
3 pm: Prime Minister Narendra Modi says Budget 2021 will enhance India’s self-confidence. He adds that it was presented amid unprecedented circumstances.
2.55 pm: Congress spokesperson Jaiveer Shergill says the Budget has left the middle class “bruised and wounded” by not changing tax slabs, not increasing deductions, not making new deduction slots like home loans, not bringing fuel under GST, not sharing Rs 19 lakh crore gain from fuel taxes, and not reducing GST rates.
“Common man cheated and betrayed,” he tweets.
2.45 pm: Union minister Nitin Gadkari praises the vehicle scrapping policy announced in the Budget to tackle the problem of air pollution, reports ANI. “Scrapping these vehicles will reduce population of old and defective vehicles, 25-30% reduction in vehicular air pollutants and improve road safety,” he says.
2.37 pm: Citizens above the age of 75 will be exempted from filing income tax returns now.
Under the proposal, senior citizens who depend only on pension will no longer have to file I-T returns. “In the 75th year of Independence of our country, we shall reduce the compliance burden on senior citizens,” Sitharaman said while delivering her third Budget speech in the Lok Sabha. “For senior citizens who only have a pension and interest income, I propose exemption of filing of income tax returns.”
2.35 pm: Trinamool Congress spokesperson Derek O’Brien calls the 2021 Budget “100% visionless”.
“Theme of the fake budget is Sell India,” he tweets. “Rich get richer,nothing for middle class, poor get poorer.”
2.30 pm: Defence Minister Rajnath Singh says people were not expecting such a Budget as the Narendra Modi government had already presented five-mini budgets earlier, reports ANI. “Several packages were announced, of which Aatmanirbhar Bharat is also a part,” he adds. “It’s a superb Budget. The more it is praised, the less it is.”
2.20 pm: Senior Congress leader Shashi Tharoor also takes a swipe at the Centre over Budget 2021. He tweets, “This BJP government reminds me of the garage mechanic who told his client, ‘I couldn’t fix your brakes, so I made your horn louder.’”
2.12 pm: The Congress criticises the Union budget, saying Finance Minister Nirmala Sitharaman’s speech was oblivious to the declining Gross Domestic Product.
“The finance minister could have been brave but chose to be timid,” senior Congress leader and Deputy leader of Opposition in Rajya Sabha Anand Sharma tweets. “The nation needed a bold budget and more direct transfers to the weaker sections to revive demand, restart job creation.”
2 pm: World Health Organization’s South-East Asia Regional Director Poonam Khetrapal Singh praises the government for focusing on health sector in the Budget.
The finance minister announced the Aatmanirbhar Health Yojana with an outlay of Rs 64,180 crore over six years. India, which has the world’s second highest coronavirus cases after the United States, currently spends about 1% of gross domestic product on health.
Singh says this is a testimony to India’s commitment to fight the coronavirus pandemic. “It also shows India’s commitment to build stronger health systems,” she adds. “Right from beginning, India has been pro-actively handling pandemic.”
1.57 pm: NITI Aayog Vice Chairperson Rajiv Kumar says Finance Minister Nirmala Sitharaman has fulfilled all the expectations with Budget 2021, reports ANI. “Given the current times, the budget is focussed on India’s growth and is tailored to accelerate the growth rate,” he adds.
1.55 pm: Finance Minister Nirmala Sitharaman will address a post-budget press conference at 3 pm today.
1.45 pm: Budget proposes 100% cess on customs component on alcoholic beverages
1.31 pm: Finance minister announces farm cess of Rs 2.50 per litre on petrol and Rs 4 per litre on diesel, reports Mint.
1 pm: The finance minister proposes raising customs duty on selected mobile phone parts from nil to 2.5% for “greater domestic value addition”.
12.56 pm: Government raises customs duty on selected auto parts to 15%.
12.52 pm: Government raises customs duty on cotton from nil to 10%.
12.43 pm: Details of capital gains, dividends and interest from banks and post office to be now pre-filled in income tax returns filing forms, says Nirmala Sitharaman.
12.42 pm: Non-resident Indians to be spared from double taxation and new rules will be introduced, says finance minister
12.41 pm: The Centre’s expenditure is pegged at Rs 34.83 lakh crore for 2021-’22, says finance minister
12.37 pm: The Centre’s gross borrowing from markets to go up to Rs 12 lakh crore in 2021-’22.
12.32 pm: The government increases contingency fund allocation from Rs 500 crore to Rs 30,000 crore.
12.31 pm: Senior citizens with only pension and interest income to be exempted from income tax returns filing.
12.30 pm: Finance minister allocates revenue deficit grant of Rs 1.18 lakh crore to states.
12.22 pm: The fiscal deficit is estimated at 9.5% of the Gross Domestic Product for 2020-’21, says the finance minister, reports Mint.
12.20 pm: Sitharaman says social security will be extended to gig and platform workers. This will be done via four new labour codes.
12.15 pm: “The government had launched the One Nation, One Ration card to help migrant workers,” says Nirmala Sitharaman. “I am happy to inform you that the plan is under implementation by 32 states and Union Territories, reaching about 59 crore beneficiaries.”
12.12 pm: An IPO of LIC will be debuted this year, says the finance minister.
12.10 pm: The government proposes setting up of a central university in Leh.
12.07 pm: The finance minister says definition of small companies to be revised by raising capital base to Rs 2 crore from current limit of Rs 50 lakh.
12.04 pm: Wheat farmers were given Rs 75,050 crore in 2020-’21 under Minimum Support Price scheme.
12.03 pm: The government allocates Rs 16.50 lakh crore for agriculture-related credit schemes.
12.01 pm: Two public sector banks and one general insurance company to be disinvested in the next financial year.
11.58 am: The government proposes a disinvestment target of Rs 1.75 lakh crore for financial year 2021-’22.
11.57 am: Pradhan Mantri Ujjwala Yojana, which has benefited 8 crore households so far, will now be extended to cover 1 crore more beneficiaries, she says.
11.56 am: Nirmala Sitharaman proposes a bill for launching Initial Public Offering of Life Insurance Corporation of India.
11.55 am: The finance minister says all disinvestment announcements made so far, will be completed in the financial year 2021-’22.
11.48 am: The government allocates Rs 20,000 crore for recapitalisation of public sector banks.
11.47 am: The finance minister announces Rs 3.05 lakh crore outlay for power sector.
11.46 am: The government proposes raising of Foreign Direct Investment limit in insurance sector from 49% to 74%.
11.45 am: Centre to provide Rs 2 lakh crore to states and autonomous bodies to meet capital expenditure, says Nirmala Sitharaman.
11.43 am: The finance minister announces voluntary vehicle scrapping policy to phase out old vehicles and proposes fitness tests after 20 years for personal vehicles.
11.39 am: The finance minister allocates Rs 1.18 lakh crore for highways and roads ministry.
11.38 am: Sitharaman announces new road infrastructure projects in states going to elections - Tamil Nadu, Kerala, West Bengal and Assam.
11.37 am: The finance minister allocates Rs 1,10,055 crore for Railways.
11.31 am: Budget 2021 proposals rest on six pillars – health and well-being, physical and financial capital and infrastructure, inclusive development for aspirational India, reinvigorating human capital, innovation and research and development, minimum government and maximum governance, says Nirmala Sitharaman.
11.28 am: The finance minister proposes a capital expenditure outlay of Rs 5.54 lakh crore in 2021-’22, over than 34% higher than the revised estimate of last financial year.
11.26 am: Urban Jal Jeevan Mission to be launched and implemented over 5 years with an outlay of Rs 2.87 lakh crore, says the finance minister.
11.25 am: Sitharaman announces setting up of an Development Finance Institution for infrastructure projects with outlay of Rs 20, 000 crore.
11.24 am: Urban Swachh Bharat scheme will be implemented with an outlay of over Rs 1.4 lakh crore, says Finance Minister Nirmala Sitharaman.
11.22 am: The government allocates Rs 35,000 crore for development of more vaccines in the country.
11.17 am: The total financial impact of all the Aatmanirbhar packages, including measures taken by the RBI, was about Rs 27.1 lakh crore, more than 13% of the GDP, says finance minister.
11.14 am: The finance minister announces Aatmanirbhar Health Yojana with outlay of Rs 64,180 crore.
11.13 am: The PM Garib Kalyan Yojana, the three Aatma Nirbhar Bharat packages and subsequent announcements were like five mini-budgets in themselves, says Sitharaman.
11.11 am: In May 2020, the government announced the Atma Nirma Bharat package to sustain the recovery and we rolled out two more Atma Nirbhar packages, says Finance Minister Nirmala Sitharaman. The total support, along with measures taken by the Reserve Bank of India, was estimated to be Rs 27.1 lakh crore, she says.
11.10 am: Two or more vaccines for coronavirus will be developed in India, says finance minister.
11.06 am: The Budget 2021 preparation was undertaken during a never before calamity, says Nirmala Sitharaman. She sats that no one could have predicted the upcoming health crisis when the last Budget was presented, and praises Indians for their discipline during pandemic-induced lockdowns.
11.05 am: Union Finance Minister Nirmala Sitharaman presents Union Budget 2021-’22.
10.34 am: Lok Sabha Speaker Om Birla arrives at Parliament ahead of the Budget, reports ANI.
10.33 am: Union Cabinet approves Budget for financial year 2021-’22, reports All India Radio.
10.31 am: Prime Minister Narendra Modi arrives at Parliament ahead of Budget presentation, reports Prasar Bharti News Services.
10.22 am: Sensex rises 400 points ahead of Budget, Nifty goes past 13,700-mark.
10.21 am: Union Cabinet meeting before Budget underway in Parliament, reports ANI.
10.19 am: Union Home Minister Amit Shah and Health Minister Harsh Vardhan reach Parliament ahead of Budget presentation, reports ANI.
10.07 am: Union Finance MInister Nirmala Sitharaman and Minister of State for Finance Anurag Thakur reach Parliament ahead of Budget presentation, reports ANI.
9.57 am: Sitharaman meets President Ram Nath Kovind ahead of the Budget presentation.
9.33 am: Expansionary Budget in the offing
The Economic Survey, which serves as a good indicator of the mood of the Union Budget, made one thing clear – the government was willing to spend more to provide impetus to the economy. “In order to sustain the recovery in aggregate demand, the government may have to continue with an expansionary fiscal stance,” the survey said. In fact, in an interview last month, the finance minister herself said that there was a “clear need to spend money” without worrying about the fiscal deficit.
9.30 am: In March, the Modi government imposed a lockdown to prevent the spread of the Covid-19 pandemic. While containment measures had been used by many other countries, the scale of India’s restrictions were unique, bringing the country of more than 1.3 billion people to a sudden halt.
Unsurprisingly, the economic hit this caused was staggering. No other major economy was as badly affected by Covid-19 as India’s. To counter this economic doom and gloom, the Modi government has pushed the idea that the Indian economy will rebound very rapidly. It will be a “V-shaped recovery”.
Does this mean that the Covid-19 contraction was only a blip and the things will get back to the pre-pandemic path soon? That is unlikely.
9.22 am: This year’s Budget will be paperless in view of the coronavirus pandemic. Finance Minister Nirmala Sitharaman will present the Budget in Parliament on a digital tab instead of the traditional “bahi khata”. The tablet is reportedly made in India.
9.20 am: Finance Minister Nirmala Sitharaman and Minister of State for Finance Anurag Thakur leave from Ministry of Finance.
9.10 am: Union Finance Minister Nirmala Sitharaman arrives at the ministry, reports ANI.
8.50 am: Minister of State for Finance Anurag Thakur tells ANI that this year’s Budget will be in accordance with people’s expectations.
8.48 am: Minister of State for Finance Anurag Thakur arrives at the Ministry of Finance ahead of the presentation of the Union Budget.
What is a ‘V-shaped recovery?’
The Economic Survey has projected a called a “V-shaped recovery” for India’s economy. A V-shaped recovery means that the economy bounces back quickly to its baseline before the crisis, with no obstacles along the way. Growth continues at the same rate as before. This is one of the most optimistic recovery patterns because it implies that the downturn did not cause any lasting damage to the economy.
However, experts have expressed their reservations about whether this was possible in India’s context.
For instance, in a column for The Indian Express on Sunday, former Finance Minister P Chidambaram wrote that if there is to be “any recovery of sorts”, it will be “K-shaped”. This kind shows a portion of the population and businesses recover quickly and fully, while another suffers a great deal. Given the impact of Covid-19 and how it has disproportionately impacted certain sectors of the economy, it isn’t hard to realize that this is the type of recovery India might be experiencing
As things stand
The Economic Survey for the financial year 2020-’21 tabled in the Parliament on Friday predicted that India’s Gross Domestic Product growth rate will contract by 7.7% in this fiscal (2020-’21). It projected an 11% growth in 2021-’22, in what the Survey called a “V-shaped recovery”.
If the actual GDP figures for this year indeed come at -7.7%, it will mark the sharpest annual decline in the country’s economy since Independence. Growth rate projections, however, saw positive revisions in the second half of the fiscal. On the other hand, if the next financial year indeed witnesses an 11% growth, it might not be as good as it sounds. In terms of plain math, next year’s figures will come on a lowest-ever base, due to this year’s poor numbers.
What about coronavirus vaccines?
Among the most-watched figures in this year’s Budget would be the expenditure on vaccination in 2021-’22, which could be shared between the central government, state governments and households, according to PTI. India approved two coronavirus vaccines for emergency use on January 3, and the vaccination drive began on January 16.
As part of the first phase of this inoculation, the government has procured 1.1 crore doses of Serum Institute of India’s Covishield, manufactured from the master seed of the Oxford-AstraZeneca vaccine. It has also bought 55 lakh doses of Covaxin, India’s homegrown vaccine manufactured by Bharat Biotech.
Focus on healthcare?
In a Budget that comes in the backdrop of the coronavirus pandemic, the expenditure on health is expected to double from the current 1% of the GDP and is likely to be raised to 4% of the GDP by 2025, according to Reuters. Experts of Kotak Economic Research also made similar predictions, while speaking to Bloomberg. Multiple reports suggested that the government is also deliberating a “coronavirus cess” on high-income earners and some indirect taxes, to fund the health budget.
8.30 am: Finance Minister Nirmala Sitharaman will present the Union Budget for 2021-’22 in Parliament today. This will be a significant budget as it comes at a time when the coronavirus pandemic has severely impacted India’s growth this year, sending its already-teetering economy to brand-new lows.