Key Highlights of Union Budget 2020-21

Presenting the first Union Budget of the third decade of 21^st century, Finance Minister Smt. Nirmala Sitharaman, today unveiled a series of far-reaching reforms, aimed at energizing the Indian economy through a combination of short-term, medium-term, and long-term measures.

The Key Highlights of Union Budget 2020-21 are as follows:

Three prominent themes of the Budget:-

• Aspirational India - better standards of living with access to health, education and better jobs for all sections of the society
• Economic Development for all - “Sabka Saath , Sabka Vikas , Sabka Vishwas”.
• Caring Society - both humane and compassionate; Antyodaya as an article of faith.
• Three broad themes are held together by:
  • Corruption free, policy-driven Good Governance.
  • Clean and sound financial sector.
• Ease of Living underlined by the three themes of Union Budget 2020-21.

Three components of Aspirational India:-

• Agriculture, Irrigation, and Rural Development
• Wellness, Water, and Sanitation
• Education and Skills

Sixteen Action Points for Agriculture, Irrigation and Rural Development:-

• Rs. 2.83 lakh crore to be allocated for the following 16 Action Points:
  • Rs. 1.60 lakh crore for Agriculture, Irrigation & allied activities.
  • Rs. 1.23 lakh crore for Rural development & Panchayati Raj.                          -
• Agriculture credit:
  • Rs. 15 lakh crore target set for the year 2020-21.
  • PM-KISAN beneficiaries to be covered under the KCC scheme.
  • NABARD Re-finance Scheme to be further expanded.
• Comprehensive measures for 100 water-stressed districts proposed.
• Blue Economy:
  • Rs. 1 lakh crore fisheries’ exports to be achieved by 2024-25.
  • 200 lakh tonnes fish production targeted by 2022-23.
  • 3477 Sagar Mitras and 500 Fish Farmer Producer Organisations to involve youth in fisheries extension.
  • Growing of algae, sea-weed and cage culture to be promoted.
  • Framework for development, management and conservation of marine fishery resources.
• Kisan Rail to be setup by Indian Railways through PPP:
  • To build a seamless national cold supply chain for perishables (milk, meat, fish, etc.
  • Express and Freight trains to have refrigerated coaches.
• Krishi Udaan to be launched by the Ministry of Civil Aviation:
  • Both international and national routes to be covered.
  • North-East and tribal districts to realize Improved value of agri-products.
• One-Product One-District for better marketing and export in the Horticulture sector.
• Balanced use of all kinds of fertilizers - traditional organic and innovative fertilizers.
• Measures for organic, natural, and integrated farming:
  • Jaivik Kheti Portal – online national organic products market to be strengthened.
  • Zero-Budget Natural Farming (mentioned in July 2019 Budget) to be included.
  • Integrated Farming Systems in rain-fed areas to be expanded.
  • Multi-tier cropping, bee-keeping, solar pumps, solar energy production in non-cropping season to be added.

• PM-KUSUM to be expanded:
  • 20 lakh farmers to be provided for setting up stand-alone solar pumps.
  • Another 15 lakh farmers to be helped to solarise their grid-connected pump sets.
  • Scheme to enable farmers to set up solar power generation capacity on their fallow/barren lands and to sell it to the grid.
• Village Storage Scheme:
  • To be run by the SHGs to provide farmers a good holding capacity and reduce their logistics cost.
  • Women, SHGs to regain their position as Dhaanya Lakshmi.
• NABARD to map and geo-tag agri-warehouses, cold storages, reefer van facilities, etc.
• Warehousing in line with Warehouse Development and Regulatory Authority (WDRA) norms:
  • Viability Gap Funding for setting up such efficient warehouses at the block/taluk level.
  • Food Corporation of India (FCI) and Central Warehousing Corporation (CWC) to undertake such warehouse building.
• Financing on Negotiable Warehousing Receipts (e-NWR) to be integrated with e-NAM.
• State governments who undertake implementation of model laws (issued by the Central government) to be encouraged.
• Livestock:
  • Doubling of milk processing capacity to 108 million MT from 53.5 million MT by 2025.
  • Artificial insemination to be increased to 70% from the present 30%.
  • MNREGS to be dovetailed to develop fodder farms.
  • Foot and Mouth Disease, Brucellosis in cattle and Peste Des Petits ruminants (PPR) in sheep and goat to be eliminated by 2025.
• Deen Dayal Antyodaya Yojana – 0.5 crore households mobilized with 58 lakh SHGs for poverty alleviation.

Wellness, Water and Sanitation:-

• Rs. 69,000 crore allocated for overall Healthcare sector.
• Rs. 6400 crore (out of Rs. 69,000 crore) for PM Jan Arogya Yojana (PMJAY):
  • More than 20,000 hospitals already empanelled under PM Jan Arogya Yojana (PMJAY).
  • Viability Gap Funding window proposed for setting up hospitals in the PPP mode.
  • Aspirational Districts with no Ayushman empanelled hospitals to be covered in the first phase.
  • Targeting diseases with an appropriately designed preventive regime using Machine Learning and AI.
• Jan Aushadhi Kendra Scheme to offer 2000 medicines and 300 surgicals in all districts by 2024.

• TB Harega Desh Jeetega campaign launched - commitment to end Tuberculosis by 2025.

• Rs. 3.60 lakh crore approved for Jal Jeevan Mission:
  • Rs. 11,500 crore for the year 2020-21.
  • Augmenting local water sources, recharging existing sources, and promoting water harvesting and de-salination.
  • Cities with million-plus population to be encouraged to achieve the objective during the current year itself.
• Rs.12, 300 crore allocation for Swachh Bharat Mission in 2020-21:
  • Committment to ODF-Plus in order to sustain ODF behaviour.
  • Emphasis on liquid and grey water management.
  • Focus also on Solid-waste collection, source segregation, and processing.

Education and Skills:-

• Rs. 99,300 crore for education sector and Rs. 3000 crore for skill development in 2020-21.
• New Education Policy to be announced soon.
• National Police University and National Forensic Science University proposed for policing science, forensic science, and cyber-forensics.
• Degree level full-fledged online education program by Top-100 institutions in the National Institutional Ranking Framework.
• Up to 1-year internship to fresh engineers to be provided by Urban Local Bodies.
• Budget proposes to attach a medical college to an existing district hospital in PPP mode.
• Special bridge courses to be designed by the Ministries of Health, and Skill Development:
  • To fulfill the demand for teachers, nurses, para-medical staff and care-givers abroad.
  • To bring in equivalence in the skill sets of the workforce and employers’ standards.
• 150 higher educational institutions to start apprenticeship embedded degree/diploma courses by March 2021.
• External Commercial Borrowings and FDI to be enabled for education sector.
• Ind-SAT proposed for Asian and African countries as a part of Study in India program.

Economic Development:-

Industry, Commerce and Investment

• Rs. 27,300 crore allocated for 2020-21 for development and promotion of Industry and Commerce.
• Investment Clearance Cell proposed to be set up:
• To provide “end to end” facilitation and support.
• To work through a portal.

• Five new smart cities proposed to be developed.
• Scheme to encourage manufacture of mobile phones, electronic equipment and semi-conductor packaging proposed.
• National Technical Textiles Mission to be set up:
• With four-year implementation period from 2020-21 to 2023-24.
• At an estimated outlay of Rs 1480 crore.
• To position India as a global leader in Technical Textiles.

• New scheme NIRVIK to be launched to achieve higher export credit disbursement, which provides for:
• Higher insurance coverage
• Reduction in premium for small exporters
• Simplified procedure for claim settlements.

• Turnover of Government e-Marketplace (GeM) proposed to be taken to Rs 3 lakh crore.
• Scheme for Revision of duties and taxes on exported products to be launched.
• Exporters to be digitally refunded duties and taxes levied at the Central, State and local levels, which are otherwise not exempted or refunded.

• All Ministries to issue quality standard orders as per PM’s vision of “Zero Defect-Zero Effect” manufacturing.

Infrastructure:-

• Rs.100 lakh crore to be invested on infrastructure over the next 5 years.
• National Infrastructure Pipeline:
• Rs. 103 lakh crore worth projects; launched on 31st December 2019.
• More than 6500 projects across sectors, to be classified as per their size and stage of development.

• A National Logistics Policy to be released soon:
• To clarify roles of the Union Government, State Governments and key regulators.
• A single window e-logistics market to be created
• Focus to be on generation of employment, skills and making MSMEs competitive.

• National Skill Development Agency to give special thrust to infrastructure-focused skill development opportunities.
• Project preparation facility for infrastructure projects proposed.
• To actively involve young engineers, management graduates and economists from Universities.

• Infrastructure agencies of the government to involve youth-power in start-ups.
• Rs.1.7 lakh crore proposed for transport infrastructure in 2020-21.

Highways:-

• Accelerated development of highways to be undertaken, including:
• 2500 Km access control highways.
• 9000 Km of economic corridors.
• 2000 Km of coastal and land port roads.
• 2000 Km of strategic highways.
• Delhi-Mumbai Expressway and two other packages to be completed by 2023.
• Chennai-Bengaluru Expressway to be started.
• Proposed to monetise at least 12 lots of highway bundles of over 6000 Km before 2024.

Indian Railways:-

• Five measures:
• Large solar power capacity to be set up alongside rail tracks, on land owned by railways.
• Four station re-development projects and operation of 150 passenger trains through PPP.
• More Tejas type trains to connect iconic tourist destinations.
• High speed train between Mumbai and Ahmedabad to be actively pursued.
• 148 km long Bengaluru Suburban transport project at a cost of Rs 18600 crore, to have fares on metro model. Central Government to provide 20% of equity and facilitate external assistance up to 60% of the project cost.
• Indian Railways’ achievements:
• 550 Wi-fi facilities commissioned in as many stations.
• Zero unmanned crossings.
• 27000 Km of tracks to be electrified.

Ports & Water-ways:-

• Corporatizing at least one major port and its listing on stock exchanges to be considered.
• Governance framework keeping with global benchmarks needed for more efficient sea-ports.
• Economic activity along river banks to be energised as per Prime Minister’s Arth Ganga concept.

Airports:-

• 100 more airports to be developed by 2024 to support Udaan scheme.
• Air fleet number expected to go up from present 600 to 1200 during this time.

Electricity:-

• “Smart” metering to be promoted.
• More measures to reform DISCOMs to be taken.

Power:-

• Rs.22, 000 crore proposed for power and renewable energy sector in 2020-21.
• Expansion of national gas grid from the present 16200 km to 27000 km proposed.
• Further reforms to facilitate transparent price discovery and ease of transactions.

New Economy:-

• To take advantage of new technologies:
• Policy to enable private sector to build Data Centre parks throughout the country to be brought out soon.
• Fibre to the Home (FTTH) connections through Bharatnet to link 100,000 gram panchayats this year.
• Rs.6000 crore proposed for Bharatnet programme in 2020-21.
• Measures proposed to benefit Start-ups:
• A digital platform to be promoted to facilitate seamless application and capture of IPRs.
• Knowledge Translation Clusters to be set up across different technology sectors including new and emerging areas.
• For designing, fabrication and validation of proof of concept, and further scaling up Technology Clusters, harbouring test beds and small scale manufacturing facilities to be established.
• Mapping of India’s genetic landscape- Two new national level Science Schemes to be initiated to create a comprehensive database.
• Early life funding proposed, including a seed fund to support ideation and development of early stage Start-ups.
• Rs.8000 crore proposed over five years for National Mission on Quantum Technologies and Applications.

Caring Society:-

• Focus on:
• Women & child,
• Social Welfare;
• Culture and Tourism
• Allocation of Rs. 35,600 crore for nutrition-related programmes proposed for the FY2020-21.
• Rs.28, 600 crore proposed for women specific programs.
• Issue about age of a girl entering motherhood - proposed to appoint a task force to present its recommendations in six months’ time.
• Financial support for wider acceptance of technologies, identified by Ministry of Housing and Urban Affairs to ensure no manual cleaning of sewer systems or septic tanks, to be provided.
• Rs. 85, 000 crore proposed for 2020-21 for welfare of Scheduled Castes and Other Backward Classes.
• Rs. 53, 700 crore provided to further development and welfare of Scheduled Tribes.
• Enhanced allocation of Rs. 9,500 crore provided for 2020-21 for senior citizens and Divyang.

Culture & Tourism:-

• Allocation of Rs. 2500 crore for 2020-21 for tourism promotion.
• Rs.3150 crore proposed for Ministry of Culture for 2020-21.
• An Indian Institute of Heritage and Conservation under Ministry of Culture proposed; with the status of a deemed University.
• 5 archaeological sites to be developed as iconic sites with on-site Museums:
• Rakhigarhi (Haryana)
• Hastinapur (Uttar Pradesh)
• Shivsagar (Assam)
• Dholavira (Gujarat)
• Adichanallur (Tamil Nadu)
• Re-curation of the Indian Museum in Kolkata, announced by Prime Minister in January 2020.
• Museum on Numismatics  and Trade to be located in the historic Old Mint building in Kolkata.
• 4 more museums from across the country to be taken up for renovation and re-curation.
• Support for setting up of a Tribal Museum in Ranchi (Jharkhand).
• Maritime museum to be set up at Lothal- the Harrapan age maritime site near Ahmedabad, by Ministry of Shipping.
• State governments expected to develop a roadmap for certain identified destinations and formulate financial plans during 2021 against which specified grants to be made available to the States in 2020-21.

Environment & Climate Change:-

• Allocation for this purpose to be Rs.4400 crore for 2020-21.
• Proposed to advise the utilities to close the running old thermal power plants with carbon emission above the pre-set norms.
• States that are formulating and implementing plans for ensuring cleaner air in cities above one million to be encouraged.
• PM launched Coalition for Disaster Resilient Infrastructure (CDRI) with Secretariat in Delhi. Second such international initiative after International Solar Alliance.

Governance:-

• Clean, corruption-free, policy driven, good in intent and most importantly trusting in faith.
• Taxpayer Charter to be enshrined in the Statute will bring fairness and efficiency in tax administration.
• Companies Act to be amended to build into statues, criminal liability for certain acts that are civil in nature.
  • Other laws with such provisions are to be corrected after examination.
• Major reforms in recruitment to Non-Gazetted posts in Government and Public sector banks:
  • An independent, professional and specialist National Recruitment Agency (NRA) for conducting a computer-based online Common Eligibility Test for recruitment.
  • A test-centre in every district, particularly in the Aspirational Districts.
• A robust mechanism to be evolved for appointment including direct recruitment to various Tribunals and specialised bodies to attract best talents and professional experts.
• Contract Act to be strengthened.
• New National Policy on Official Statistics to:
  • Promote use of latest technologies including AI.
  • Lay down a road-map towards modernised data collection, integrated information portal and timely dissemination of information.
• A sum of Rs. 100 crore allocated to begin the preparations for G20 presidency to be hosted in India in the year 2022.
• Development of North East region:
  • Improved flow of funds using online portal by the Government.
  • Greater access to financial assistance of Multilateral and Bilateral funding agencies.
• Development of Union Territories of J&K and Ladakh:
  • An amount of Rs. 30,757 crore provided for the financial year 2020-21.
• The Union Territory of Ladakh has been provided with Rs. 5,958.

Financial Sector:-

• Reforms accomplished in PSBs :
  • 10 banks consolidated into 4.
  • Rs. 3,50,000 crore capital infused.
• Governance reforms to be carried out to bring in transparency and greater professionalism in PSBs.
• Few PSBs to be encouraged to approach the capital market to raise additional capital
• Deposit Insurance and Credit Guarantee Corporation (DICGC) permitted to increase Deposit Insurance Coverage to Rs. 5 lakh from Rs.1 lakh per depositor.
• Scheduled Commercial Bank’s health under monitoring through a robust mechanism, keeping depositors’ money safe.
• Cooperative Banks to be strengthen by amending Banking Regulation Act for:
  • Increasing professionalism.
  • Enabling access to capital.
  • Improving governance and oversight for sound banking through the RBI.
• NBFCs eligibility limit for debt recovery reduced from:
  • Rs. 500 crore to Rs 100 crore asset size.
  • Rs 1 crore to Rs 50 lakh loan size.
• Private capital in Banking system:
  • Government to sell its balance holding in IDBI Bank to private, retail and institutional investors through the stock exchange.
• Easier mobility in jobs:
  • Auto-enrolment in Universal Pension coverage.
  • Inter-operability mechanism to safeguard the accumulated corpus.
• Pension Fund Regulatory Development Authority of India Act to be amended to:
  • Strengthen regulating role of PFRDAI.
  • Facilitate separation of NPS trust for government employees from PFRDAI.
  • Enable establishment of a Pension Trust by the employees other than Government.
• Factor Regulation Act 2011 to be amended to:
  • Enable NBFCs to extend invoice financing to the MSMEs through TReDS
• New scheme to provide subordinate debt for entrepreneurs of MSMEs by the banks
  • Would be counted as quasi-equity.
  • Would be fully guaranteed through the Credit Guarantee Trust for Medium and Small Entrepreneurs (CGTMSE).
  • The corpus of the CGTMSE would accordingly be augmented by the government.
• Window for MSME’s debt restructuring by RBI to be extended by one year till March 31, 2021.
  • More than five lakh MSMEs have already been benefitted.
• An app-based invoice financing loans product for MSMEs to be launched.
  • To prevent the problem of delayed payments and consequential cash flows mismatches.
• Export promotion of MSMEs:
  • For selected sector such as pharmaceuticals, auto components and others.
  • An Rs 1000 crore scheme anchored by EXIM Bank together with SIDBI.
• Hand holding support for technology upgradations, R&D, business strategy etc.

Financial Market:-

• Deepening Bond Market.
  • Certain specified categories of Government securities to be opened fully for non -resident investors also.
  • FPI limit in corporate bonds increased to 15% from 9% of its outstanding stock.
• New legislation to be formulated for laying down a mechanism for netting of financial contracts.
  • Scope of credit default swaps to expand.
• Debt Based Exchange Traded Fund expanded by a new Debt-ETF consisting primarily of Government Securities.
  • To give attractive access to retail investors, pension funds and long-term investors.
• A Partial Credit Guarantee scheme for the NBFCs formulated post the Union budget 2019-20 to address their liquidity constraints.
  • New mechanism to be devised to further this.
• Government support to securities so floated.

Infrastructure Financing:-

• Rs.103 lakh crore National Infrastructure Pipeline projects earlier announced.
• Rs 22,000 crore to cater to the equity support to Infrastructure Finance Companies such as IIFCL and a subsidiary of NIIF.
• IFSC, GIFT city: full of potential to become a centre of international finance as well as a centre for high end data processing:
• An International Bullion exchange(s) to be set up as an additional option for trade by global market participants with the approval of regulator.

Disinvestment:-

• Government to sell a part of its holding in LIC by way of Initial Public Offer (IPO).

Fiscal Management:-

• XV Finance Commission (FC):
• XV Finance Commission has given its first report for FY2020-21
• Recommendations accepted in substantial measure
• Its final report for five years beginning 2021-22 to be submitted during the latter part of the year.
• GST Compensation Fund:
• Balances due out of collection of the years 2016-17 and 2017-18 to be transferred to the Fund, in two instalments.
• Hereinafter, transfers to the fund to be limited only to collection by way of GST compensation cess.
• Overhaul of Centrally Sponsored Schemes and Central Sector Schemes necessary:
• To align them with emerging social and economic needs of tomorrow

To ensure that scarce public resources are spent optimally:-

• On the recent debate over transparency and credibility of projected fiscal numbers, it is assured that procedure adopted is compliant with the FRBM Act.
• For the FY 2019-20:
• Revised Estimates of Expenditure: at Rs.26.99 lakh crore
• Revised Estimates of Receipts: estimated at Rs.19.32 lakh crore.
• For year 2020-21:
• Nominal growth of GDP estimated at 10%.
• Receipts: estimated at Rs.22.46 lakh cr
• Expenditure: at Rs.30.42 lakh cr.
• Significant tax reforms for boosting investments recently undertaken. However, expected tax buoyancy expected to take time.

Fiscal deficit of 3.8% estimated in RE 2019-20 and 3.5% for BE 2020-21:-

• It comprises two ingredients;
• 3.3% for year 2019-20 and 3% for the 2020-21 budget estimate.
• Deviation of 0.5%, consistent with Section 4(3) of FRBM Act, both for RE 2019-20 and BE 2020-21. (Section 4 (2) of the FRBM Act provides for a trigger mechanism for a deviation from the estimated fiscal deficit on account of structural reforms in the economy with unanticipated fiscal implications.)
• Return path, committing to fiscal consolidation without compromising needs of investment out of public funds, is laid in Medium Term Fiscal Policy cum Strategy Statement.
• Market borrowings: Net market borrowings: Rs.4.99 lakh crore for 2019-20 and Rs.5.36 lakh crore for 2020-21.
• A good part of the borrowings for the financial year 2020-21 to go towards Capital expenditure that has been scaled up by more than 21%.

Direct Tax:-

Direct Tax Proposals - To stimulate growth, simplify tax structure, bring ease of compliance, and reduce litigations.

• Personal Income Tax:
  • Significant relief to middle class taxpayers.
  • New and simplified personal income tax regime proposed:

Around 70 of the existing exemptions and deductions (more than 100) to be removed in the new simplified regime.

• • Remaining exemptions and deductions to be reviewed and rationalised in coming years.
  • New tax regime to be optional - an individual may continue to pay tax as per the old regime and avail deductions and exemptions.
  • Measures to pre-fill the income tax return initiated so that an individual who opts for the new regime gets pre-filled income tax returns and would need no assistance from an expert to pay income tax.
  • New regime to entail estimated revenue forgone of Rs. 40,000 crore per year.
• Corporate Tax:
  • Tax rate of 15% extended to new electricity generation companies.
  • Indian corporate tax rates now amongst the lowest in the world.
• Dividend Distribution Tax (DDT):
  • DDT removed making India a more attractive investment destination.
  • Deduction to be allowed for dividend received by holding company from its subsidiary.
  • Rs. 25,000 crore estimated annual revenue forgone.
• Start-ups:
  • Start-ups with turnover up to Rs. 100 crore to enjoy 100% deduction for 3 consecutive assessment years out of 10 years.
  • Tax payment on ESOPs deferred.

• MSMEs to boost less-cash economy:
  • Turnover threshold for audit increased to Rs. 5 crore from Rs. 1 crore for businesses carrying out less than 5% business transactions in cash.

• Cooperatives: