Analysis of Union Budget 2021 - 22

Introduction

The Paperless Union Budget for the financial year 2021-22 is definitely one-of-a-kind budgets of this decade. With post pandemic situation the country was waiting for this Union Budget so as to get back into the track of achieving the pre pandemic stage. The country was looking for a balanced budget this time, with the health sector gaining most attention along with the other sectors too. No doubt the government succeeded to cover most of the sectors who were hoping for a relief from the budget 2021. The budget look to emphasize on health, infrastructure, disinvestments, FDI, custom duties and various exemptions to promote growth in the economy.

Highlights of Budget 2021

The Union Budget 2021-22 was focused more on Infrastructural spending to boost countries economy. The Budget 2021 which was being presented by our Finance Minister Nirmala Sitharaman said that the budget proposals for the financial year 2021-22 rest on six major pillars, which are Health, Infrastructure, Inclusive Growth, Human Capital, Innovation and minimum governing maximum governance. The six-pillar budget seems to boost local manufacturing, increase government revenues and ensure proper development for the next 5 years.

The experts were pretty much sure and certain about the large inclusion of health sector for the financial year 2021-22 and so did the government’s budget announcement reveal. With a rise of 137% in health care expenditures governments intent for the upcoming year in health was clear. The government announced to spent Rs 3500 Crore for vaccination and would indeed look to spent more if needed to carve the pandemic out of the economy. The government also introduced Mission Poshan 2.0 to ensure proper health care facilities around the country. The government not only introduced some new missions but also elaborated many existing one which are necessary for safe health of an individual. Under the universal coverage of water supply government aimed for tap connection to 2.86 crore households. The establishment of Virology Institutes in different parts of the country is one such positive towards the R&D sector.

The Manufacturing sector of the country was being hit badly by the pandemic and so did the government provide a key attention towards the manufacturing sector under the Aatmanirbhar Bharat, Make In India and Start Up India initiatives. The government gave big bonanza for the textile sector by announcing the infrastructural development of 7 textile parks all around the country in three years. Under the infrastructural development the government also focused on building infrastructure for better public transports. With 13000 KM of roads under construction and an additional 11.5 KM of highways the government intention to smoothen the roadways is clear. The government launched the National Railway Plan by 2030 which emphasized on expansion of new railway and metro tracks all around the cities of India. With a financial support of Rs 1,10,055 Crore to Railway the governments intention towards rail development is visible. The Union Budget also gave a booster to the power sector with announcement of the New Hydrogen Mission Project for the nation. The New Gas Pipeline Project for J&K seems to connect the union territory with the rest of the nation.

The budget looked to increase the government revenue which was being cut last year due to nation wide lockdown. The disinvestment of 2 Public Sector Banks created a special attention for the critics who were simply looking for a loop hole in this Union Budget. The Budget also announced release of IPO of some big companies like LIC this year. The government looks to be focused on disinvesting big government owned companies to generate 1.75 Crore. The government also gave relief to the foreign investors by just increasing the rate of FDI from 49% to 74% in the insurance sector. The Agricultural Sector seems to be static with the budget 2021 announced by Modi Government. The government is committed to make reforms in agricultural sector with boost on Animal Husbandry and 16.5 Lakh crore agricultural credits. The budget showed governments focus on boosting the fishing industry by setting 5 new fishing harbors. The Government also provided 15700 crores of direct and indirect benefit to the MSME sector.

The budget witnessed governments inclusion of the education sector into the society by providing more scopes for higher education. With an inclusive approach towards the digital India the governments plan to create 15000 more schools for proper education facilities. The Budget also mentioned about obtaining a fiscal deficit of 6.8% in the financial year 2021-22 from 9.5% in the previous year. The Union Budget saw increment in taxes as a form of custom duties of various products and services so as to increase the government revenue. The budget also witnessed certain tax exemptions for the senior citizens above 75 years of age and for the NRIs. The budget emphasized on increase in the custom duties of electronic and mobile products so as to put more stress on Aatmanirbhar Bharat.

Set Backs of Union Budget 

The Union Budget looks more an infra spending focused budget with lots of projects being introduced to enhance manufacturing and employment for a long time basis. The government aimed for providing a long time relief for the people which was certainly not important for the middle class people, as they were looking for a sure tax exemption from the government. The Budget also puts loot of pressure on Disinvestment and privatization which in general would help the government to decrease the fiscal deficit of the country and in turn stabilize the Indian Economy. But in that step government seems to be interested in disinvesting companies (like Air India, LIC, BPCL, etc.), railway fright corridors, ports, airports and many more which indeed is a difficult thing to do in a year. The major drawback of this Union Budget is not providing a proper support through policies towards the unemployed middle and lower class of the society. With over 12 crore people being unemployed and most of the employers being provided with less salary last year, the people were keen to look what government would come up with in this Budget 2021. But unfortunately, the government didn’t have any choice of exemptions.

Conclusion

The Union Budget announced by the Finance Minister is pretty much a balanced Budget aiming for a long term impact on the countries economy. The Budget was estimated to be a vaccine for the countries economy and eventually it proved that it is acting like a vaccine with the market cheering during the budget announcement. Yes, the budget was fruitful enough for most of the sectors but it could have certain more ailments for ease in common people’s living.

So, in short, the Union Budget is an effective post pandemic budget with a long term vision of growth for the country.