The important Big Budget takeaways

Context

• Finance Minister Nirmala Sitharaman’s Budget presented the budget on 1 Feb.

 Important Budget takeaways

• Enhanced Expenditure:A fiscal impulse is imparted in 2021-22. Compared with a capex of Rs 4.12 lakh crore in Revised Estimate (RE) of 2020-21, it is hiked by 34.46 per cent to Rs 5.54 lakh crore in 2021-22.
• Reforms signals:Two public-sector banks and one state-owned general insurance company to be lined up for disinvestment. FDI in insurance to be hiked to 74% from 49% now. LIC IPO.
• Focus on Growth:Despite being a tough year, the FM has avoided giving any income tax relief. No increase in standard deduction, no raise in the tax slabs.
• Health Centric:In a year of the Covid-19 pandemic, FM gives priority to Health. Its allocation jumped 137% to Rs 2,23,846crore in 2021-22 compared with Rs 94,452 crore in 2020-21. Rs 35,000 crore are allocated for the Covid-19 vaccine, and promised to provide further funds, if required.
• Bad Bank: The government has finally decided to set up an asset reconstruction company that will take over the bad loans of banks, giving them flexibility to finance the economic recovery.
• Development Finance Institutions (DFI): To provide debt to long gestation projects, a new DFI with a capital of Rs 20,000 crore. It will have statutory backing, but will be professionally managed. Lending portfolio of Rs 5 lakh crore within three years.
• Asset Monetisation: National Monetisation Pipeline of potential assets of NHAI, PGCIL, Railways, airports, warehouses, sports stadiums.
• Strategic Disinvestment:NITI Aayog asked to short list non-core PSUs for strategic sale. After a poor show in 2020-21, the government has estimated disinvestment receipts at Rs 1,75,000crore.
• Growth Vs Prudence:Fiscal deficit estimated at 6.8 per cent of GDP in 2021-22; it is estimated to touch 9.5% in 2020-21. It will be brought down to 4.5 per cent of GDP by 2025-26.