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Highlights: India unveils budget aimed at boosting pandemic-hit economy

India’s Finance Minister Nirmala Sitharaman (C) stands next to Minister of State for Finance and Corporate Affairs Anurag Thakur… ANUSHREE FADNAVIS February 01, 2021 

NEW DELHI – Finance Minister Nirmala Sitharaman on Monday unveiled the budget for fiscal 2021-22, that aims to shore up an economy badly-hit by the novel coronavirus pandemic.

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The economy is projected to contract 7.7% in the current fiscal year, although the government forecasts growth of 11% for the coming fiscal year, after a massive COVID-19 vaccination drive and a rebound in consumer demand and investments.

These are the highlights from Sitharaman’s fiscal 2021-22 budget:

DEFICIT/GROWTH

* 2020/21 fiscal deficit seen at 9.5% of GDP

* 2021/22 fiscal deficit seen at 6.8% of GDP

* 2025/26 fiscal deficit target set at 4.5% of GDP

* 2021/22 nominal GDP growth seen at 14.4% YoY

EXPENDITURE

* 2020/21 revised expenditure 4.39 trillion rupees ($60.14 billion)

* 2021/22 capital expenditure estimated at 5.54 trillion rupees ($75.90 billion)

* Revised revenue expenditure to 34.5 trillion rupees ($472.70 billion) in 2020/21

* 2021/22 gross expenditure seen at 34.83 trillion rupees ($477.16 billion) in 2021/22

* To provide more than 2 trillion rupees ($27.40 billion)for states and autonomous bodies

* 2021/22 fertiliser subsidy seen at 795.30 billion rupees ($10.88 billion)

* 2020/21 food subsidy allocation revised to 4.23 trillion rupees ($57.88 billion) from 1.16 trillion rupees ($15.87 billion) estimated earlier

* 2021/22 food subsidy seen at 2.43 trillion rupees ($33.25 billion)

* 2021/22 petroleum subsidy seen at 129.95 billion rupees ($1.78 billion)

RECEIPTS

* 2021/22 revenue receipts seen at 17.88 trillion rupees ($244.98 billion)

* 2020/21 revenue receipts revised to 15.55 trillion rupees ($213.06 billion) from 20.21 trillion rupees ($276.91 billion)projected earlier

* Aims to get 6.3 trillion rupees ($86.32 billion) from goods and services tax in 2021/22

* Revised 2020/21 goods and services tax collection to 5.15 trillion rupees ($70.56 billion) from 6.91 trillion rupees ($94.68 billion) projected earlier

* Aims to get 1.04 trillion rupees ($14.25 billion) from dividends and profit in 2021/22

* Aims to get 535.11 billion rupees ($7.33 billion) dividend from Reserve Bank of India and financial institutions in 2021/22

BORROWING

* To raise 2.5 trillion rupees ($34.25 billion) via cash management bills in 2021/22

* 2021/22 gross market borrowing seen at 12 trillion rupees ($164.40 billion)

* India says will need 800 billion rupees ($10.96 billion) in next two months from bond market

HEALTHCARE

* India to allocate 2.2 trillion rupees ($30.20 billion) for healthcare in 2021/22

* Sitharaman says expect two or more COVID-19 vaccines soon

* India to launch new federal health scheme with outlay of around 641 billion rupees ($8.80 billion) over the next six years

* To allocate 350 billion rupees ($4.81 billion) for COVID-19 vaccines, and allocate more funds if needed.

FINANCE

* India to introduce bill for development financial institution with capital of 200 billion rupees ($2.74 billion)

* To infuse 200 billion rupees ($2.74 billion) for recapitalization of state-run banks in FY2022

* India to consolidate certain SEBI regulations for Securities Market Code

* To relax FDI cap for insurance sector to 74% from 49%

* Set up asset reconstruction company to take over toxic assets

* To cut money market requirement to 15% from 25%

* To allocate 15 billion rupees ($205.50 million) for scheme to incentivise use of digital payments

* India to incentivise incorporation of one-person companies

DUTY

* Basic customs duty of 1.4rs/litre on petrol, 1.8rs/liter on diesel

* Proposes agricultural cess of 2.5rs/litre on petrol, 4 rs/litre on diesel

* To withdraw a few exemptions on some mobile components

* Cuts customs duties to 7.5% on semis, some steel products

* Revokes customs duties on some steel products

* Rationalising customs duties on gold and silver

* Cuts tax on gold ore to 6.9% from 11.85%

* Raises import tax on solar inverters and lanterns

* Raising customs duties on some auto parts

* Raises customs duties on cotton to 10%

* To review more than 400 old exemptions for customs duty

* Proposes agricultural infrastructure and development cess

* Reduces customs duty on naphtha to 2.5%

* Proposes 17.5% cess on crude palm oil

* Proposes 20% cess on crude soybean and sunflower oil

INCOME TAX

* Proposes exemption to senior citizens for filing income tax returns

* Proposes changes in personal income taxes for non-resident Indian

* To set up dispute resolution panel for small taxpayers

DIVESTMENT

* India sets 2021/22 divestment target at 1.75 trillion rupees ($23.97 billion)

* India to divest two public sector banks and one general insurance company

* India to launch IPO of Life Insurance Corporation

* India to announce policy for privatization of state-run companies

* To create new list of companies for divestment

* India to introduce new mechanism for privatization of loss-running state-run companies

* To monetizes surplus lands of public sector entities

INFRASTRUCTURE

* To allocate 2.87 trillion rupees ($39.40 billion) for clean water supplies over the next five years

* To allocate 3 trillion rupees ($41.10 billion) for power sector for next five years

* To provide 10 billion rupees ($137.01 million)to Solar Energy Corporation of India

* Sitharaman says will move to end power distribution company monopolies

* To double ship recycling capacity by 2024

* India to monetizes infrastructure assets

* To extend tax holiday on low cost housing projects for one more year

TRANSPORT

* Allocates 1.18 trillion rupees ($16.17 billion) for ministry of roads and highways

* Allocates 1.1 trillion rupees ($15.07 billion) for railways

* Railways to monetizes freight corridors

* India to launch new vehicle scrapping policy

* Proposes tax holiday for aircraft leasing firms in India

AGRICULTURE

* India allocates an estimated 1.7 trillion rupees ($23.29 billion) for paddy procurement

* Hikes enhanced agriculture credit target to 16.5 trillion Indian rupees ($226.05 billion) in 2020/21

* To include loans for activities in allied sectors in agriculture

* To discontinue small savings fund loans to Food Corporation of India

LABOUR

* To launch database for gig economy, building and construction workers

* Social security benefits to be extended to gig economy workers

($1 = 73.0762 Indian rupees)

Reuters

February 1, 2021

Compiled by Alasdair Pal; Editing by Euan Rocha

Our Standards: The Thomson Reuters Trust Principles.

https://www.reuters.com/article/india-budget-highlights/highlights-india-unveils-budget-aimed-at-boosting-pandemic-hit-economy-idUSKBN2A11F3

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