Detailed Highlights of Union Budget for 2020-21

FY21 ESTIMATES

• Fiscal deficit seen at 3.5% of GDP
• Net market borrowing pegged at 5.36 trln rupees
• Gross market borrowing at 7.8 trln rupees
• Pegs nominal GDP growth at 10%
• Receipts seen at 22.46 trln rupees
• Total spending seen at 30.42 trln rupees
• ETNow: Pegs divestment target at 2.1 trln rupees

FY20 REVISED

• Net market borrowing pegged at 4.99 trln rupees
• Fiscal deficit seen at 3.8% of GDP
• Receipts 19.32 trln rupees
• Spending revised to 26.99 trln rupees

FISC HEALTH

• Expected tax buoyancy will take time
• Good part of govt borrowing to be used for capex
• Fully provided for all flagship schemes of govt
• To activate FRBM Act escape clause on structural reforms
• Fundamentals of economy strong
• Centre’s debt down to 48.7% of GDP Mar 2019 vs 52.2% Mar 2014

GROWTH, INFLATION

• India now 5th largest economy in the world
• FY14-19 average GDP growth 7.4%
• Financial structure must keep evolving to become $5-trln economy
• Stable, predictable business environment a key objective
• Reliable, robust, clean financial sector critical for economy

DIRECT TAX

• Looking at inverted duty structure under GST
• Introducing Aadhaar-based verification for indirect taxes
• Instant allotment of PAN on basis of Aadhaar
• To amend Income Tax Act to help merged PSU banks to absorb losses
• To waive interest on tax disputes if amount paid by Mar 31
• Propose scheme to settle old direct tax cases
• To amend laws to allow faceless tax appeals
• Propose to abolish dividend distribution tax
• Dividend to be taxed only in hands of recipient
• Revenue forgone on dividend distribution tax 250 bln rupees
• To review, rationalise tax exemptions over next few years
• New power cos to attract 15% corporate tax
• Cooperatives can be taxed at 22% without exemptions
• Concessional 4% withholding tax on bonds listed in GIFT City
• Proposes some tax sops on ESOPs of staff at startups
• Deferring tax payment on sale of ESOP for 5 yrs in start-ups
• Concessional 5% withholding tax extended to municipal bonds
• Can avail new tax rates if not availing some exemptions
• Tax holiday for affordable housing extended by 1 year
• Turnover threshold for audit of MSMEs hiked to 50 mln rupees
• Tax on income above 1.5 mln rupees at 30%
• Person with income of 1.5 mln rupees to get 78,000-rupee relief
• No tax on income below 500,000 rupees
• Cut tax on income of 1.25-1.50 mln rupees to 25%
• Cut tax on income of 1.00-1.25 mln rupees to 20%
• Cut tax on income of 750,000-1 mln rupees to 15%
• Cut tax on income of 500,000-750,000 rupees to 10%
• New direct tax scheme optional for taxpayers
• Large benefits for taxpayers under new direct tax regime
• Propose to significantly reduce income tax in new regime
• To bring simplified personal income tax regime
• Tax proposals to bring ease of compliance, reduce litigation
• Tax proposals focused on simulating growth
• Want to enshrine taxpayers’ charter into statute
• Tax harassment can’t be tolerated
• 100% tax exemption on sovereign wealth funds’ infra investment
• Removed 70 of 100 income tax exemptions in new regime
• Revenue foregone on income tax cut at 400 bln rupees/year

INDIRECT TAX

• Propose nominal health cess on import of medical devices
• Customs duty on footwear, furniture raised
• To review remaining customs duty exemptions
• Some customs duty exemptions being withdrawn
• To review rules of origin for imports under free trade deal
• Amending laws to ensure no undue gains for imports under FTA
• To transfer FY17, FY18 cess balance to GST compensation fund
• GST compensation to states to be limited to cess collection
• GST helped add 6 mln tax payers in 4 years
• Average household saves 4% of monthly spend due to GST
• Effective tax for all commodities came down due to GST
• GST did face certain challenges
• Turnaround time for trucks cut by 20% due to GST
• Inspector Raj has vanished due to GST
• GST has resulted in efficiency gains
• GST has been gradually maturing
• GST has facilitated formalisation of economy
• GST extended 1-trln-rupee benefit annually to consumers

REFORMS

• Accepted substantial recommendations of 15th finance panel
• To improve quality of life through national infra pipeline
• Already provided 220 bln rupees for national infrastructure pipeline
• To encourage states to follow model laws made by Centre

FINANCIAL SECTOR, MARKETS

• Propose to divest LIC via IPO
• GIFT City to set up international bullion exchange
• To enhance credit guarantee scheme for NBFCs
• To allow NRIs to buy certain govt securities
• To float new debt ETF comprising primarily of gilts
• Some gilts to be completely available to overseas investors
• FPI limit in corporate bonds to be raised to 15% from 9%
• To amend Factoring Regulation Act to cover NBFCs
• Asked RBI to mull extending MSME recast window by 1 more year
• Encourage PSU banks to approach capital mkt for fund raising
• Have robust system to check health of scheduled commercial banks
• To amend Banking Regulation Act to strengthen co-op banks
• “Depositors money absolutely safe”
• Deposit insurance cover hiked to 500,000 rupee/depositor
• To sell govt stake in IDBI Bank to private investors
• FY14-19 saw twin focus on structural reforms, inclusive growth
• Banks saw clean-up, recapitalisation during FY14-19
• Aim for seamless delivery of svcs via digital governance
• Recognise need to support energised spirit of entrepreneurs
• Note there is global discussion on monetary policy efficacy
• To carry out governance reforms in PSU banks
• To mull strengthening National Contracts Act
• Propose new national policy on national statistics
• To ensure civil offence has no criminal penalty in Cos Act

INFRASTRUCTURE, INDUSTRY

• Allocate 273 bln rupees in FY21 to develop commerce, industry
• To allot 14.8 bln rupees on national technical textile mission
• Plan project preparation facility for infra pipeline
• India needs to boost domestic manufacturing
• To launch new export credit scheme NIRVIK
• NIRVIK to have higher insurance cover, lower premiums
• NIRVIK scheme for small exporters
• Moot new manufacturing scheme for medical devices
• Need to boost manufacturing of electronic items in India
• Scheme for mobile phone manufacture, semiconductor packaging
• Scheme also for electronic equipment manufacturing
• Plan five new smart cities via PPP mode
• Propose to set up an investment clearance cell
• Investment clearance cell to work through a portal
• To create single window for e-logistics market
• To soon release national logistics policy
• To digitally refund duties to exporters
• All ministries to issue quality standard orders
• Propose 1.7 trln rupees for transport infra FY21
• To seek external funds for Bengaluru suburban rail network
• To develop 100 more airports by 2024 to support UDAAN scheme
• To mull listing at least 1 key port on bourses
• Plan more Tejas-type trains to connect tourist locations
• Moot large solar capacity alongside tracks on railway land
• To actively pursue Mumbai-Ahmedabad high-speed train
• Aim to achieve 27,000 km electrification for railway tracks
• Need commercialisation of highways for NHAI to raise funds
• To monetise over 12 lots of highway bundles before 2024
• Delhi-Mumbai expressway to be completed by 2023
• To start Chennai-Bengaluru Expressway
• Allocate 220 bln rupees for power, renewable sector in FY21
• To expand national gas grid to reach 27,000 km
• To announce more reforms for transparent price discovery in gas
• To develop Bengaluru city rail network for 186 bln rupees
• To take more steps to reform power distribution cos
• Intend to promote pre-paid smart electricity metering
• 100,000 gram panchayats to be linked with Bharat Net this year
• Propose 60 bln rupees for Bharat Net programme in FY21
• Policy to enable pvt sector to set up data centre parks
• Moots 80 bln rupees for quantum technology plan for 5 years
• Two national-level science schemes to map India genetic landscape
• Propose 25 bln rupees to promote tourism in FY21
• To provide 31.5 bln rupees for culture ministry in FY21
• Propose to set up tribal museum in Ranchi
• Propose 44 bln rupees for clean air in FY21
• Advised to shut thermal power units if emission above limit
• Propose to set up national recruitment agency
• Propose national recruitment agency for non-gazetted posts
• To decriminalise some norm violations under Companies Act
• To set up international bullion exchange in GIFT City

FARM SECTOR

• Agri services need copious investments
• Farm markets need to be liberalised
• To unveil 16 action plans to focus on farm sector
• Committed to doubling farmers’ income by 2022
• To help 1.5 mln farmers to solarise grid connected pump sets
• Solar power from farms to be sent to grids
• Expanding KUSUM plan to 2 mln farmers for solar powered pumps
• Provided energy sovereignty through KUSUM scheme
• Moot comprehensive steps for 100 water stressed districts
• Rural road plan, fincl inclusion helped raise farm income
• To launch Krishi Udaan scheme for domestic, global routes
• Krishi Udaan to help value realisation in tribal areas
• Krishi Udaan to help value realisation in northeast
• Railways to form kisan rail for perishable cold supply chain
• Kisan rail for perishables’ cold supply chain through PPP
• Viability gap funding for warehousing at block, taluk levels
• NABARD to map, geo-tag farm warehouses, cold storage
• To further strengthen NABARD refinance
• Must change regime incentivising excessive chemical fertiliser use
• To have framework for development, mgmt of marine resources
• To raise fish output to 20 mln tn by FY23
• Target 500 fish farmer producer organisations
• To double milk processing capacity to 108 mln tn by 2025
• MGNREGA to be used to develop fodder farms
• To expand NABARD refinance scheme to NBFCs, co-operatives
• Negotiable warehousing receipts to be integrated with e-NAM
• Give support to states for cluster-based horticulture farm
• Agri credit target for FY21 set at 15 trln rupees
• To strengthen online national farm products market
• Zero-budget farming is govt’s focus area
• To support states adopting ‘one fruit for one district’ plan
• Integrated farming systems in rain-fed areas to be expanded
• To set up warehouse regulatory, development authority
• Allocation for farm, irrigation, rural development 2.83 trln rupee
• Farmer Producer Organisation to now include fish farmers

SOCIAL SECTOR, EDUCATION

• Allocate 690 bln rupees for health sector
• To allocate 30 bln rupees for skill development in FY21
• Allocate 993 bln rupees for education sector in FY21
• Jal Jeevan Mission allocation 115 bln rupees in FY21
• Swachh Bharat Mission allocation 123 bln rupees in FY21
• Govt scaled up programmes that aided poor, underprivileged
• Hope to address hopes, aspirations of youth, women, SC/STs
• Govt committed to serve people with humility
• 271 mln people out of poverty
• Strive to bring ease of living for every citizen
• A caring society, humane and compassionate, a Budget theme
• Economic development for all a theme for the Budget
• Antyodaya an article of faith
• Aspirational India a theme for the Budget
• To use proceeds from tax on medical devices for health infra
• Viability gap funding via PPP for setting up hospitals
• Allocate 1.23 trln rupees for rural development
• Indradhanush plan expanded to cover 12 new diseases
• To eradicate tuberculosis by 2025
• New education policy to be announced soon
• Holding talks with states on new education policy
• Want India to be preferred destination for higher education
• Moots 1-year internship for engineers by urban local bodies
• To take steps to enable FX borrow, FDI for education sector
• India to have largest working population in world by 2030
• Propose bridge courses for nurses, teachers for jobs abroad
• Viability gap funding for medical college-local hospital link
• Plan to attach medical college to district hospital via PPP
• To set up national police varsity, forensic varsity
• To have graduate-level online education plan for poor
• Allocate 95 bln rupees for senior citizens, handicapped FY21
• To provide 537 bln rupees for programmes for STs in FY21
• To allocate 850 bln rupees for schemes for SCs, OBCs in FY21
• To provide 286 bln rupees for women-specific plans in FY21
• Propose 356 bln rupees for nutrition-related plans in FY21
• Identified tech for eliminating manual cleaning of sewers

MISCELLANEOUS

• National security top priority
• “Wealth creators will be respected in this country”
• To host G20 presidency in 2022
• To allot 1 bln rupees for hosting G20 Summit in 2022
• To provide 307.6 bln rupees for J&K, Ladakh in FY21
• Five archaeological sites to be developed as iconic sites
• Aim to set up Indian Institute of Heritage and Conservation
• FY21 Budget woven around three themes
• Wish to open up vistas for vibrant economy
• To boost income, enhance purchasing power
• People have reposed faith in our economic policy
• PM Modi received massive mandate for economic stability
• Sitharaman tables Finance Commission’s report for FY21
• Sitharaman skips rest of the speech after feeling uneasy