Highlights of Budget 2021-22

Union Budget for 2021-22 rest  on six pillars which are  health and well-being, physical, financial capital and infrastructure, inclusive development for aspirational India, reinvigorating human capital, innovation and R&D and minimum government and maximum governance.

This Year Modi Government presented a very bold and progressive budget where their complete focus was to incease capital expenditure which was the need of current situation. Their key focus area was agriculture and infrastructure which creates major jobs in india and has long tern impact.

Estimates were of that govt. of India will impose Covid cess and sum further tax on High income Individuals but govt. has not touched any of the tax structure instead income tax rate remain unchanged. Consequent to imposition of Agriculture Infrastructure and Development Cess (AIDC) on petrol and diesel, the Basic excise duty (BED) and Special Additional Excise Duty (SAED) rates have been reduced on petrol and diesel so either the prices will be at par or slightly below the current price so that overall consumer does not bear any additional burden but by doing this Govt. will get specific  fund for the  development  of Agriculture and  Infrastructure.

On Disinvestment front Govt. has  targeted 1.75 lakh crore which seems realstic next  year apart from this opening of insurance to foreign investors will bring fresh investments and  cleanup plan for stresssed asstes will improve confidence. ARC and AMC will be setup to consolidate and takeover existing stressed assets and mange thorugh alternative Investment fund. So, Overall the budget was ahead of expectation.

Indian Budget Highlights

Fiscal numbers:

  • FY21 fiscal deficit pegged at 9.5% of GDP. FY22 fiscal deficit target at 6.8% of GDP
  • Target to reach a fiscal deficit level below 4.5% of GDP by 2025-2026
  • Govt plans Rs 5.54 lakh cr capex for FY22 against Rs 4.39 lakh cr in FY21.
  • Gross market borrowing target is at Rs 12 lakh crore for FY22.
  • The Budget 2020-21 had estimated Rs 24.2 lakh crore gross tax collection.

Direct Taxes:

  • For senior citizens who only have pension and interest income, proposed exemption of filing of income tax returns.
  • Dividend payment by REITs and InvITs not subject to TDS.
  • Employee contribution not paid by employer will not be allowed as a deduction.

Economy and Finance:

  • Central government aims to garner Rs 1.75 lakh crore through divestments in 2021-22
  • Two public sector banks and one general insurance company to be privatised in FY22.
  • FDI limit in insurance has been hiked to 74 per cent from 49 per cent at present.
  • Strategic disinvestment of companies including BPCL, Air India, Pawan Hans, IDBI Bank, Container Corporation of India to be completed in 2021-22.
  • Niti Aayog to work on next list of strategic disinvestments
  • LIC IPO to come in FY22.
  • Announces further infusion of Rs 20,000 crore for public sector banks
  • A bill to set-up a development finance institution (DFI), capitalised with Rs 20,000 crore. Rs 5 lakh crore will be lent by DFI in three years’ time.
  • Reduction in residency limit for Indian citizens to set up one-person companies to 120 days from 182 days.

Agriculture, Irrigation and Rural Development:

  • Government sets agriculture credit target of Rs 16.5 lakh crore for FY22.
  • MSP provides an assured return of at least 1.5 times the cost of production across all commodities.
  • Government paid Rs 75060 crore for wheat versus Rs 62802 crore in 2019-20.
  • Allocation to rural infra development increased to Rs 40,000 cr in next fiscal from Rs 30,000 crore in FY21
  • Imposition of Agriculture Infrastructure and Development Cess (AIDC) on petrol and diesel, Basic excise duty.

Power and Energy :

  • A framework to give consumers alternatives to choose from more than one power distribution company.
  • Rs 1,000 crore to solar energy corporation and Rs 1,500 to renewable energy development agency.

Health and Sanitation:

  • The FY22 health and well-being spend has been pegged at 2.23 lakh crore
  • PM Atmabirbhar Swasth Bharat Yojana annouced which will spend Rs 64,180 crore on primary, secondary and tertiary healthcare over a period of six years.
  • 17,000 rural and 11,000 urban health and wellness centres to be set up
  • The Urban Swachh Bharat 2.0 Mission to be launched at outlay of Rs 1.41 lakh crore over 5 years
  • 35,000 crore has been earmarked for the Covid-19 vaccine
  • The Jal Jeevan Mission Urban to be launched at outlay of Rs 2.87 lakh crore
  • The highest ever budgetary allocation for healthcare, with a 137 percent year on year increase gives a right balance to boost health infrastructure as well as support the COVID-19-hit economy.

Transport and  Infrastructure:

  • For 2022, proposed a sharp increase in capital expenditure at 5.54 lakh crore, from Rs 4.39 lakh crore in 2021.
  • The National Infrastructure Pipeline, which was launched with 6,835 projects, has now expanded to 7,400 projects
  • NHAI and PGCIL to set up infrastructure investment trust to attract global funds.
  • Highway works proposed: 3,500 km corridor in Tamil Nadu. 1,100 km in Kerala at investment of Rs 65,000 cr. 675 km in West Bengal at a cost of Rs 95,000 cr. 1,300 km in Assam in the next 3 years.
  • FM announces Rs 18,000 cr scheme to augment public transport in urban areas
  • 5 operational roads with est. enterprise value of Rs 5,000 cr being transferred to NHAI InvIT

Automobile:

  • Announces voluntary scrapping policy. Fitness test after 20 years for personal vehicles; after 15 years for commercial vehicles.

Housing:

  • Extended the additional tax deduction of Rs 1.5 lakh on interest paid on housing loan for the purchase of affordable homes by one more year to March 31, 2022,

Textile:

  • Establishment of seven textile parks across the country.

City Gas Distribution:

  • The government will add another 100 cities to the City Gas Distribution network.
  • The Govt also announced the setting up of an independent gas transport system operator.
  • Ujwala Scheme to be extended to cover 1 crore more beneficiaries

PLI Push :

  • Aims to spend Rs 1.97 lakh crore on various PLI schemes over the next 5 years.

 Railways:

  • About Rs 1.10 lakh crore outlay for railways, of which Rs 1.7 lakh crore is for capital expenditure.
  • Railways to monetize dedicated fright corridor assets for operations and maintenance after commissioning.

 Education:

  • Over 15,000 schools to be qualitatively strengthened under National Education Policy.
  • A central university will also be set up in Leh for access to higher education in Ladakh.
  • 100 new Sainik schools to be set up in partnership with NGOs, private schools and states.

 Indirect Taxes:

  • Customs duty on certain auto parts to be increased to 15%.
  • Customs duty on gold and silver to be rationalised.
  • Customs duty on steel products to be reduced uniformly to 7.5%
  • Duty on copper scrap to be reduced to 2.5% from 5%; on naptha to 2.5%.
  • Increase in custom duty for up to 10 per cent on mobile chargers and some sub-parts of phones
  • Raised duty on solar invertors from 5% to 20%, and on solar lanterns from 5% to 15%.
  • Raised customs duty on cotton from nil to 10% and on raw silk and silk yarn from 10% to 15%
  • Duty on shrimp feed in increased to 15% from 5%.
  • The new Customs Duty structure will be put in place by October 1, 2021.

MSMEs:

  • Provision of ₹15,700 crore for the Micro, Small and Medium Enterprises (MSME) sector in the Union Budget 2021-22 more than double the previous year.
  • The customs duty on semis, flat, and long products of non-alloy, alloy, and stainless steels for the benefit of the MSMEs hard hit by the coronavirus pandemic has been reduced to 7.5 per cent uniformly.

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