Union Budget 2020-21

Union Budget 2020-21

The Union Budget 2020-21 was presented by Hon’ble Finance Minister, Ms. Nirmala Sitharaman on 1st February 2020. The 161-minute-long speech was the longest ever delivered by any Finance Minister of India. Some of the key challenges that the FM had in front of her before presenting the budget were:

  1. Lowest GDP (4.5%) in the last decade.
  2. Consumption Expenditure Growth lower than the GDP.
  3. Growth in bank loans on an all-time low.
  4. Retail inflation spiked above 7 percent.

Union Budget 2020-21: Overall Budget Allocation

Union Budget

Union Budget 2020-21: Three Themes

In the words of the FM, “the budget is dedicated to provide “Ease of Living” to all citizens.” Union Budget 2020-21 is woven around three prominent themes:

  1. Aspirational India – To provide better standard of living

    Agriculture, Irrigation and Rural Development

     

    Wellness, Water and Sanitation

     

    Education and Skills

     

    1. Rs. 2.83 lakh crore à 16-point action à Increase overall wealth of farmers by 2022
    2. PM KUSUM – Cover 20 lakh farmers for stand-alone solar pumps.
    3. Integration of e-NWR with e-NAM
    4. Kisan Rail, Krishi Udaan à To be launched à efficient transport of perishable items
    5. Agricultural credit àReach 15 lakh crore for 2020-21
    6. Fish production and fishery exports à Increase by 2022-23 and 2024-25 respectively
    7. Rs. 85000 crores à welfare of SC and OBCs

     

    1. PM Jan Arogya Yojna à 20 000 empanelled hospitals
    2. Launch Fit India Movement
    3. Nikshay Poshan Yojana à Coverage up to 35 Lakhs
    4. Eliminate TB à 2025
    5. Set up hospitals in PPP mode
    6. Jan Aushadhi Kendra à Expand by 2024 to all districts
    7. Focus à Liquid and grey water management and waste management.
    1. Higher allocation of budget for education: 

    Budget 2019-20 (In Rs. Crores)

    Budget 2020-21 (In Rs. Crores)

    94800

    99300

     

    1. Rs. 3000 crores à allocated for skill development initiatives.
    2. 150 higher educational institutions à Apprenticeship embedded courses.
    3. Internship opportunities for fresh engineers à Urban local bodies.
    4. Special bridge courses à Reskill teachers & nurses to fulfil global demand.
    5. Study in India à Ind-SAT to be conducted in Asia & Africa
    6. Full-fledged online courses à To be launched by top 100 ranking institutions.
    7. Proposal à National Police University, National Forensic Science University, Medical Colleges à Existing district hospitals
    8. New Education Policy à TBA soon

     

     

    1. Economic Development – Based on PM’s vision of ‘Subka Sath, Subka Vikas, Subka Vihwas’

    Industry, Commerce and Investment

     

    Infrastructure

     

    New Economy

     

    1. Rs. 27,300 crores à Development of industry & commerce
    2. Encourage manufacturing of mobile phones, electronic equipment and semi-conductor packaging.
    3. Investment Clearance Cell à Provide end-to-end facilitation
    4. Invoice financing to MSMEs through TReDs
    5. National Textile Mission à proposed Rs. 1480 crores
    1. 150 passenger trains à PPP mode
    2. National Logistics Policy à launched soon
    3. Building of highways, redevelopment of four railway stations and 100 more airports
    4. National Gas Grid à 27,000 km
    5. Economic corridor à 9000 kms
    6. National infrastructure Pipeline projects à Rs. 103 lakh crores
    7. 5 new SMART cities à 2025
    1. Scaling of technology clusters à For test beds and small-scale manufacturing facilities
    2. Rs. 8000 crores à Proposed for National Mission on Quantum Technologies
    3. Efforts to build skills à Analytics, machine learning, robotics, bio-informatics and Artificial Intelligence.
    4. Rs. 6000 crores à Bharatnet programme in 2020-21

     

     

    1. Caring Society – To build a humane and compassionate India.

    Women & Child, Social Welfare

     

    Culture and Tourism

     

    Environment and Climate Change

     

    1. Rs. 35600 Crores à Nutrition related programmes
    2. Rs. 28,600 crores à Programmes specific to women
    3. 6 Lakh Anganwadi workers à Equipped with smart phones
    4. Lower MMR cases à Special task force to be appointed

     

    1. Rs. 2500 crores à Tourism promotion
    2. 5 Archaeological sites to be developed à Haryana, UP, Assam, Gujrat & Tamil Nadu
    3. Numismatics and Trade museum, Tribal museum and Maritime museum to be established.
    4. Establish Indian Institute of Heritage and conservation
    1. September 2019 à Coalition for Disaster Resilient workers Infrastructure
    2. Rs. 12,300 crores à Allocated for Swachh Bharat Mission
    3. Rs. 4400 crores à allocated to states à clean air status (Delhi’s air pollution)

Union Budget 2020-21: Other Key Highlights

  1. Simplified and New Income Tax Regime as an option to the old regime. 70 (100+) income tax deductions and exemptions have been removed. Tax payers can choose: 

Income Tax Slabs (In Rs. Lakh)

New Tax Rate

Earlier Tax Rate

Forgo Exemptions and Pay as per New Tax Rates

Follow Old Regime and Claim Deductions

<= 5

NIL

NIL

5 – 7.5

10%

20%

7.5 – 10

15%

20%

10 – 12.5

20%

30%

12.5 – 15

25%

30%

>15

30%

30%

  1. Simplified GST return à Implemented from 1st April 2020.
  2. Refund process à Fully automated.
  3. No tax harassment anymore.
  4. Remove Dividend Distribution Tax à Adopt classical system of dividend taxation.
  5. Tax benefits to Start-ups à Deduction of 100% of their profits à Increasing turnover limit and period of eligibility.
  6. New domestic manufacturing & power sector companies à Concessional corporate tax rate to 15%
  7. Corporate Tax slashed for existing companies à 22%
  8. Tax concession à Sovereign wealth fund of foreign governments and other foreign investments.
  9. Investment limit for FPI in corporate bonds à Increased to 15% from 9%.
  10. New direct tax dispute settlement scheme – Vivaad se Vishwaas Scheme.
  11. Proposal to sell stake in LIC by way of Initial Public Offering
  12. Fiscal deficit target pegged at 3.8% of GDP à FY 2019-20
  13. Nominal GDP growth for 2020-21 estimated at 10%
  14. Insurance cover for bank deposits à increased from 1 lakh to 5 lakhs
  15. Banking Regulation Act to be amended to strengthen Cooperative banks
     

Union Budget 2020-21: Expensive V/s Cheap9

Expensive

Cheap

Cigarettes & Tobacco Products

Newsprint & Lightweight Coated Paper

Crude Palm Oil

Raw Sugar

Imported Medical Equipment

Purified Terephthalic Acid (PTA)

Imported Processed Food – Ghee, Butter, Cheese, Edible Oils

Agri-Based & Animal-Based Products, Tuna Bait, Skimmed Milk

Tableware and Kitchenware

Refrigerators, Air Conditioners, Wall Fans, Furniture

Automobiles

Imported footwear, toys

Union Budget 2020-21: Winners & Losers

Winners

Losers

Transport Infrastructure

Insurance

Rural Sector

State-Run Banks

Electronics Manufacturing

Fertilizer Companies

Water

Real Estate & Construction

Telecom

Logistic Players

IT Firms

Pipeline & City Gas Suppliers

Online Educators

Overall there were many announcements made to boost growth and increase the spending, investing and purchasing power of the common man. If executed properly, the various initiatives can help revive the dwindling Indian economy.

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