Focusing on revival of all the sectors, Finance Minister Nirmala Sitharaman presented India’s first paperless annual budget. Considering the health of population and battered economy during pandemic period that pressed countries in the world including India into almost economic recession, Finance Minister Nirmala Sitharaman, presented India’s annual budget for a huge expenditure provisions. Budget buoyed market sentiments with the BSE Sensex posting a gain of 5% — witnessed as the sharpest surge on a Budget day in more than two decades.
Finance minister included protective measures for the domestic industry by levying customs duty on a range of products including electronic items, compressors for refrigerators and ACs, automobile parts such as electric motors and relays, etc. As a result consumers could see many goods becoming expensive.
Focus on infrastructure, wealth and wellness
Prime Minister Narendra Modi said the budget was aimed at creating “wealth and wellness” in a country that is battling the world’s second highest coronavirus caseload after the United States. “It carries the vision of Atmanirbharta…The government gave proper attention towards fiscal sustainability while increasing the size of the Budget,” he added.
Budget proposals for 2021-22 rests on six pillars.
- Health and Wellbeing
- Physical & Financial Capital, and Infrastructure
- Inclusive Development for Aspirational India
- Reinvigorating Human Capital
- Innovation and R&D
- Minimum Government and Maximum Governance.
Key highlights
A large number of used items, including refrigerators, air conditioners, LED lights and mobile phones, will become more expensive due to hike in customs duty on imported parts. The Budget announced a 2.5% customs duty on certain mobile phone parts and power banks, while that on gold and silver will be rationalized.
- For compressors used in ACs and refrigerators, customs duty will be hiked to 15 % from 12.5 %. This means that the prices of refrigerators and ACs will go up by 2.5 % from April 1.
- All compressors used in manufacturing ACs and refrigerators are imported from abroad. Hence a customs duty hike would directly impact the prices of the finished products.
- To tackle air pollution Rs. 2,217 crore for 42 urban centers with a milliom-plus population is provided.
- To contain pollution fitness tests in automated fitness centers after 20 years in case of personal vehicles, and after 15 years in case of commercial vehicles.
- Focus on saving lives and livelihoods. She hiked the allocation for health and wellbeing by 137% from 86,259 in 2019-20 to Rs 2,23,846 crore in 2021-22.; reflecting deep imprint of global pandemic.
- Estimates of Rs. 34.83 lakh crore BE for expenditure in 2021-2022 including Rs. 5.5 lakh crore as capital expenditure, an increase of 34.5% to give required push to economy.
For a green and sustainable future, budget proposed to launch a National Hydrogen Energy Mission in 2021-22 for generating Hydrogen from green power sources fulfilling the announcement made by Prime Minister in November 2020.
Innovation need of the hour: India’s gross domestic expenditure on R&D at 0.65% of GDP much lower than that of the top 10 economies (1.5-3% of GDP). Indian residents contributed only 36% of total patents filed in India; 62% on average in top 10 economies. India must ramp up investment in R&D, that needs major thrust by business sector. Moreover, to strengthen the overall research ecosystem of the country, the Budget FY 2021-22 announced a slew of new initiatives to boost Innovation and R&D in the country. An outlay of Rs 50,000 crore, spread over five years is proposed for National Research Foundation. “It will ensure that the overall research ecosystem of the country is strengthened with focus on identified national-priority thrust areas.”
For start-ups capital gains exemption for investment has been extended till 31st March, 2022. A provision for capital infusion of Rs. 1,000 crore to Solar Energy Corporation of India and Rs. 1,500 crore to Indian Renewable Energy Development Agency.
Jal Jeevan Mission
A contribution of Rs. 2,87,000 crore over five years is made for Jal Jeevan Mission (Urban) – to be launched with an aim to provide:2.86 crore household tap connections; universal water supply in all 4,378 Urban Local Bodies and liquid waste management in 500 AMRUT cities.
Urban Swachch Bharat, Swasth Bharat mission
Budget provisions focus toward water supply across the urban local bodies, sustainable water, sludge management and wastewater management with a contribution of 1,41,678 crore for Urban Swachh Bharat Mission 2.0. Besides effectively, source segregation of garbage and reduction in single-use plastic, the mission focuses upon reduction in air pollution by effectively managing waste from construction-and-demolition activities as well as Bio-remediation of all legacy dump sites.
Atmanirbhar Bharat vision
The word AtmaNirbhar Bharat is an expression of 130 crore Indians who have full confidence in their capabilities and skills. The vision entails to create and nurture manufacturing global champions for an Aatmanirbhar Bharat and to help manufacturing companies become an integral part of global supply chains, possess core competence and cutting-edge technology.
Industry voices its views reacting to the budget …
Speaking on the steps taken toward the water industry, George said, “Grundfos India welcomes the additional allocation towards the Jal Jeevan Mission (JJM) by the Department of Drinking Water and Sanitation announced by the honorable Finance Minister. Given that the budget had a very sharp focus on the sustainable economic growth of the nation overall, it was great to see the focus on one of the crucial issues, that is urban water supply. Keeping the growing water crisis in mind, the decision to dedicate INR 2.87 lakh crore outlay over 5 years, for the renowned JJM, which is aimed at a universal water supply in all 4,378 urban local bodies, with 2.86 crore household tap connections and liquid waste management in 500 AMRUT cities is a good one. The move to include liquid waste management backed by the budget allocation of ₹ 1,41,678 crore for Urban Swachh Bharat Mission 2.0 is a great step forward to holistically look at sustainable water and wastewater management in India. We hope that this allocation will encourage public and private players to develop innovative solutions for JJM and provide an opportunity to contribute to resolving water issues in the country through advanced water technologies. Furthermore, knowing the fact that we are rich in renewable sources, it is a rational decision to level up the renewable energy allocations, by proposing an additional infusion of INR 1,000 crore to the Solar Energy Corporation of India and 1,500 crore to IREDA continuing to build on a solarized future.”
“Union Budgets provision for doubling the MSME allocation and setting aside Rs 15,700 crore in FY22, is a testament to the nation’s resolve towards strengthening its local manufacturing base and realising its vision for a self-reliant India. Further, the Rs. 1.97 lakh crore allocated over the next 5 years for Production Linked Incentive Schemes to create manufacturing global champions for an Aatmanirbhar Bharat Will nurture size and scale and create jobs for youth. The enhanced outlay of 1,18,101 crores announced for the development of the Roads and Highways infrastructure would benefit the corollary industries like cement, steel and transportation, showcasing potential for recovery from the slowdown presented by the lockdown. In light of the government’s move towards reducing air-pollution and the impetus provided to the renewable energy sector, sustainability-oriented products can be effective drivers of maximising energy efficiency and a big contributor to reduction in air pollution which were also the key highlights from the budget. The budget has attempted to strike a balance between supporting growth and a modest deficit reduction. “
Further, he says, “The Union Budget 2020-21 heralds a positive turn in the infrastructure ecosystem of the country. Further, the investments in infrastructure will be pivotal in enhancing the nation’s manufacturing prowess, thereby acting as a catalyst in India’s journey towards becoming a powerhouse for local production. The allocation of INR 1000 crores and 1500 crores for the solar and renewable energy sectors respectively is indeed a commendable move. The budgetary allocations towards reducing air pollution is a welcome step as it will incentivise firms to invest in low carbon technology and fasten their transition towards carbon neutrality. “
“The budget has been straight forward with the focus clearly on growth. The sectoral reforms announced are focused towards energizing and growing the economy with hardly any tinkering around the taxation. Push towards disinvestment and asset monetization, and, continuity of policies with major focus on infrastructure growth will rejuvenate the economy. It will help organizations and the economy to sail out smoothly from the COVID-19 impact and for our sector, which is the HVAC&R, in particular, the mention and allocation towards tackling the air pollution is a boon. Focus towards environmental reforms, green & sustainable solutions has only strengthened our industry say towards Indoor Air Quality, Ventilation etc. and the focus and global attention towards Make in India.”
“We expected more from the Union budget 2021-22. While the focus has been on infrastructure, FM has allocated Rs 93,400 Crores for roads only, no allocation has been made for development of Smart Cities. Though FM talked about double digit growth of the manufacturing sector for India to become $5 Trillion economy, no roadmap has been laid out for the same. We also need more clarity on how Rs 2217 Crores allocated for setting up 42 Urban centres to tackle pollution problem will be used. Change in definition of Small companies may benefit some Small-scale companies, provided more support for Small scale companies are announced.”
“The budget focuses on transition to alternative sources of energy and providing support to ailing power distribution companies. There has been no major announcement with respect to solar energy except a nominal increase in custom duty for solar inverters and lanterns to boost make in India mission. With more details coming in, we are hopeful that even the power ministry (MoP) will roll out pro-solar reforms including abolition of the restriction on net-metering.”
