Indian Politics

Important Takeaways From Indian Financial Budget 2021

Decluttering and explaining Indian PM Narendra Modi’s financial budget for the year 2021 and how it will affect rising fuel prices, farmers protests, Atmanirbhar Bharat and the upcoming elections.

Modi govt has always been under attack for lack of its inaction on the Indian Economy. This budget is relatively going to help the govt. shut the mouth of such critics. Despite the anti-govt arguments of excluding the common man, we can see an immense effort being brought into the budget to stimulate economic growth and push the Atmanirbhar Bharat programme (self-reliant India). Although we can see the government taking a couple of protectionist steps in the name of self-reliance which is not going to help us in the long run. (#opinion)

On February 1st 2021, the Finance Minister of India, Mrs Nirmala Sitharaman presented the financial budget for the financial year 2021–2022. It was a significant budget this time as the country is going through the biggest pandemic of the century. On 29th January, the minister had submitted the Economic Survey for the year 2021–2022.

Challenges to the budget

• Economic revival
• Increase public spending
• Employment generation
• Fiscal deficit (9.5%)
• Rising prices of fuel- petrol, diesel and LPG

The main takeaways from the budget

1. A major push for digitalisation, as the FM read out the budget from a Made in India tablet. An app was also unveiled for people to know and understand the budget as well.
2. The speech was just over one and a half hours.
3. Increase in Health spending for this year at Rs 2.2 lakh Cr and Rs 35,000 Cr for COVID-19 vaccination.
4. Introduction of PM Atmanirbhar Swasth Bharat Yojana for improving healthcare infrastructure.
5. No change in Income tax slabs this year.
6. Exemption for senior citizens from Income Tax returns.
7. Increase in customs duty on electronics, cars etc. These are aimed to reduce imports and promote indigenous products. Increase in customs duty on agricultural products as well.
8. Customs duty reduced on Shoes, Gold, Silver, Platinum, Iron and Copper.
9. MSP for agriculture to be at 1.5 times production cost.
10. A new portal for the unorganised sector.
11. Privatisation of PSUs, as well as disinvestment. Aimed at growth and employment generation.
12. Support for Startups and Small business. Including tax holidays.
13. Reduction in spending for the Education Sector.
14. Introduction of Agricultural (AIDC) cess in Petrol and Diesel. Rs 2 and Rs 4 respectively.
15. Support for fisheries and Seaweed cultivation.
16. More fund allocation for metros across the country, including Phase 2 of Kochi Metro.
17. Push for Road infrastructure in poll-bound states of Tamil Nadu, Kerala, Assam, West Bengal, etc.
18. Increase in FDI Insurance from 49 to 74%.
19. Fitness test for vehicles over 20 years and new vehicle scrapping policy.
20. Listing of LIC IPO.

Rising fuel prices

It has been the big buzz of the fortnight following the petrol prices crossing Rs 100 per litre in several states. The main reason for the hike has been attributed to the high amount of central and state tax imposed on a litre of fuel. Given that the majority of government revenue comes from this, both centre and state governments are hesitant to reduce the tax burden. In the long run, if this increase is not controlled it will lead to massive problems for the common man and inflation. The government in response gives us humorous replies like how they are efficiently using the money for welfare.

The budget didn’t in any way address the problem of rising prices. It was not discussed much then. Instead of removing the central excise duty on petrol, the government introduced an Agri cess of Rs 2.5 on petrol and Rs 4 on diesel per litre. The government mentioned that it won’t create any additional burden on the consumer.

Farmer Protests

With farmers protests gathering massive international attention, we can see the government taking slow steps to simmer down the anger. Although there was no actual mention of farmers protests or the agitation at large in the budget, we can see that farmer’s issue has been mildly addressed through specific clauses. Despite the big furore everywhere we can see a dip of 8% in the overall expenditure.

The first is about the declaration of MSP which is fixed at 1.5 times the production cost. The second is on the imposition of Agri cess as we discussed before. The third and final one will be the usual allocation of funds to the Rubber Board, Coffee Board, Cashew Board etc. Other than that there has no mention of agriculture elsewhere and no new schemes weren't announced.

Budget and elections

The elections to four states and one UT is at the doorstep. The government tactically included a lot of projects which are targeted at those poll-bound states. This mainly includes infrastructure push, construction of metros, highway projects, welfare for tea workers, migrants, tribals etc. It is be noted that BJP has the least foothold in these states in the entire country.

The government’s push for poll-bound states will help it give a pro-development, pro-infrastructure image and a big boost for the upcoming elections.

References

NDTV, Economic Times, Money Control, News18, The New Indian Express, Down to Earth, The Hindu.

Hope this list is helpful to you for understanding the crux of this budget. Let’s hope that the Indian economy will further improve in the coming months.

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Originally published at https://infodailybyjrp.blogspot.com on February 3, 2021.