Union Budget of India:Article 112-Fiscal Policy-Transportation-Defence-MSMEs and Startups-Farm cess-dip of funding in Culture-Gold and Silver pricing

 Budget is not only about Revenue and Expenditure Receipts, it includes Aims, Mission, Expectations and lot more...

Recently, India's Finance Minister(FM) has presented an Expansionary Union Budget for the Financial Year of 2021-22. The Budget aimed to pull out the Indian Economy from the trap of COVID-19. It has provisions of increased spending on Infrastructure, Healthcare, Farm Sector etc. In this Article you will going to have a brief idea on Govt estimates of different Economic sectors such as Transportation, Telecommunication, Shipping, Automobiles, Farm Cess, Fiscal Deficit, Spending on MSMEs, Highways, Defence, Culture, Start-ups and lot more...Let's begin with definition of Budget.

Under Article 112 of Indian Constitution, it has been clearly stated that Union Budget of a year is referred to as the Annual Financial statement. Union Budget, contains broadly Annual Financial statement, Budget Speech, Finance Bill and many other documents such as receipts and expenditure as well as the Fiscal Deficit(FD), Revenue Deficit(RD), Effective Revenue Deficit(ERD), and the Primary Deficit(PD) of Govt of India. In addition to this, it also contains documents which contains the information of resources transferred to states and UTs with Legislature.

 Fiscal Policy:

Fiscal Deficit(FD), is the difference between the Revenue Receipts plus Non-Debt Capital Receipts and total Expenditure, or we can say that, it is equivalent to the total borrowing requirement of Govt. FD of the Financial year 2021 is at 9.5% which is well beyond the FRBM's proposed range of within 3% of the GDP. Govt has pegged the FD for 2021-22 at 6.8% of the GDP and aims to bring it back below 4.5% by 2025-26. On the other hand, the original FD target for 2020-21 was 3.5%, the surge in FD is due to the impact of the COVID-19 Pandemic, which include low revenue flows caused by Lock down and negative Economic growth and also due to high Govt spending to provide relief to vulnerable sections of society, as well as a stimulus package which was aimed to revive the demand. Financial Year(FY) 21 Deficit will going to be funded through Govt borrowings, multi-lateral borrowings, small saving funds and short-term borrowings. To cut the FD to 4.5% by FY26 Govt has proposed asset monetization and divestment of public sector entreprises.

Transportation:

Govt has proposed a Vehicle Scrappage Policy, under this a Voluntary Vehicle Scrappage provision has been made which aimed to phase out old and unfit vehicles, advantages cited, encouraging fuel-efficiency, environment friendly vehicles, reducing vehicular pollution and Oil Import Bill. To recognize the need for scrape every personal vehicle and commercial vehicle will undergo fitness tests after 20 years and 15 years respectively. Under the Bharatmala Project, more than 13,000 km of road constructions have been awarded and for that Govt has proposed more than 1 lakh crore to the Highway Ministry. On the other hand, Railways got Record high allocation of nearly 1.10 lakh crore, it amounts to nearly 33% increase in total Capital Expenditure for 2021-22 over 1.61 lakh crore(Revised Estimate) for the 2020-21. To enhance vital infrastructure, capacity building, passenger amenities and safety, this fund will going to play an important role. Doing all these may give a boost-up to the ATMANIRBHAR BHARAT Mission. In addition to this, Govt has proposed to privatize 7 major ports, which are estimated worth of nearly 2,000 crore, along with this, a subsidy scheme was also announced for a period of Five years, the subsidy is aimed to encourage more merchants ships with Indian Flag.

Defence:

In the wake of stand-off along LAC with Chinese troops and heavy military installments by Chinese Defence Forces on Chinese side of LAC, Indian Govt has decided to modernize the Indian Armed Forces. The allocation for Capital Expenditure in the Defence Budget saw an increase of nearly 19% from the Budget Estimate of 2020-21, along with this Armed Forces got an additional allocation of nearly 21,000 crore under the Capital Expenditure in 2020-21 for Emergency Procurement. In addition to this, Following the 15th Finance Commission recommendation, Govt has decided to set up a dedicated Non-Lapsable Modernization Fund for Defence and Internal Security(MFDIS) to bridge the gap between projected Budgetary requirement and allocation for the defence and internal security. However, Defence pensions have gone down significantly from the Budget estimate of 2020-21.

MSMEs and Start-ups:

In this Budget, Govt has allocated nearly 7,500 crore for Micro, Small and Medium Entreprises(MSMEs) and also promised to increase the allocation for the next financial year so that MSMEs will get the required acceleration to come back on the track. In addition to this, Govt has proposed to extend Tax Holiday for Start-ups until March-end next year. To encourage funding in the start-ups, Govt has decided to extend the capital gains exemption by another year. To promote one-person companies(OPCs), Budget has allowed them to grow without any restrictions on paid-up capital and turnover along with to change the type of the company at any time. To encourage NRIs to invest in startups, FM has brought down the residency limit to 120 days from previous 182 days.

Agriculture:

In this year's Budget, Govt has proposed to levy Farm cess, which aimed to enhance the remuneration for the farmers. The Cess will be applied on select items such as Petrol, Diesel, Apples, Alcohal. According to FM, it will boost-up agricultural infrastructure.

Sectors experienced dip in Funding:

Culture Ministry has to face cut in Expenditure Budget for 2021-22 by nearly 15% from the Budget estimate(BE) of 2020-21. On the other hand, Govt has lowered revenue estimates of the telecom sector.

Goods of Daily Use:

Prices of goods such as ACs, Refrigerators, Mobile Phones, Gold, Silver etc is dependent on the Country's Custom Duty. Govt has decided to lower down the Custom Duty on Gold, Silver that will going to lower the prices of these precious metals. On the other hand, Custom Duties will going to be higher for items like Refrigerators, ACs, Mobile Phones etc that may raise their price in near future.