Key highlights of Union Budget 2020 - 21



Presenting the first Union Budget of the third decade of the 21stcentury, Finance Minister -Smt. Nirmala Sitharaman, 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 Union Budget was structured on the overall theme of “ Ease of Living”. Further, three prominent themes of the budget are:-

  • 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.


Aspirational India


Sixteen Action Points for Agriculture, Irrigation and Rural Development :
  • 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.
  • Kisan Rail to be setup by Indian Railways through PPP to build a seamless national cold supply chain for perishables.
  • Krishi Udaan to be launched by the Ministry of Civil Aviation.
  • 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.
  • Integrated Farming Systems in rain-fed areas to be expanded.
  • PM – KUSUM to be expanded.
  • Village storage scheme to provide farmers with holding capacity. To be run by SHGs.
  • 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
  • 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.
  • Deen Dayal Antyodaya Yojana – 0.5crore households mobilized with 58 lakh SHGs for poverty alleviation.
  • In Livestock, doubling of milk production capacity, and increase in artificial insemination sought.



Wellness, Water and Sanitation

  • Jan Aushadhi Kendra Scheme to offer2000 medicines and 300 surgicals in all districts by 2024.
  • TB Harega Desh Jeetega campaign launched - commitment to end Tuberculosis by 2025.
  • Commitment to ODF-Plus in order to sustain ODF behaviour.
  • Rs. 69,000crore allocated for overall Healthcare sector.


Education and Skills
  • New Education Policy to be announced soon.
  • National Police University and National Forensic Science University proposed for policing science, forensic science, and cyber-forensics.
  • Up to 1-year internship to fresh engineers to be provided by Urban Local Bodies.
  • Ind-SAT proposed for Asian and African countries as a part of Study in India program.
  • Rs. 99,300 crore for education sector and Rs. 3000 crore for skill development in 2020-21 is allotted.


Economic Development for All

Industry, Commerce and Investment

  • Investment Clearance Cell proposed to be setup.
  • National Technical Textiles Mission to be setup to position India as a global leader in technical textile.
  • New scheme NIRVIK to be launched to achieve higher export credit disbursement.
  • All Ministries to issue quality standard orders as per PM’s vision of “Zero Defect-Zero Effect” manufacturing.
  • Rs.27,300 crore allocated for 2020-21 for development and promotion of Industry and Commerce.


Infrastructure
  • National Infrastructure Pipeline- 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.
  • National Skill Development Agency to give special thrust to infrastructure-focused skill development opportunities.
  • Rs.100 lakh crore to be invested on infrastructure over the next 5 years.


Highways
  • Accelerated development of highways to be undertaken.
  • Proposed to monetise at least 12 lots of highway bundles of over 6000 Km before 2024.


Indian Railways
  • 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.


Ports & Waterways
  • Economic activity along river banks to be energised as per Prime Minister’s Arth Ganga concept.
  • Corporatizing at least one major port and its listing on stock exchanges to be considered.

Airports

  • 100 more airports to be developed by 2024 to support Udaan scheme.

Electricity

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

Power

  • Expansion of national gas grid from the present 16200 km to 27000 km proposed.
  • Rs.22, 000 crore proposed for power and renewable energy sector in 2020-21.

New Economy

  • Policy to enable private sector to build Data Centre parks throughout the country.
  • Rs.6000 crore proposed for Bharat net programme in 2020-21.
  • Mapping of India’s genetic landscape-Two new national level Science Schemes to be initiated to create a comprehensive database.
  • Knowledge Translation Clusters to be set up across different technology sectors including new and emerging areas.
  • Rs.8000 crore proposed over five years for National Mission on Quantum Technologies and Applications.


CARING SOCIETY
Women & Child, Social Welfare
  • Proposed to appoint a task force to present its recommendations in six months on issue of age of girl entering motherhood.
  • 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.
  • Enhanced allocation of Rs. 9,500 crore provided for 2020-21 for senior citizens and Divyang.

Culture & Tourism
  • 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)
  • Museum on Numismatics and Trade to be located in the historic Old Mint building in Kolkata.
  • 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.

Environment & Climate Change
  • 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 with population above one million to be encouraged.

GOVERNANCE
  • Companies Act to be amended to remove criminal liability for certain acts that are civil in nature.
  • National Recruitment Agency (NRA) to be set up for conduct of a computer-based online Common Eligibility Test for recruitment to Non-Gazetted posts in governments and public sector banks. A test-centre in every district, particularly in the Aspirational Districts would be set up.
  • Robust mechanism to be evolved for appointment including direct recruitment to various Tribunals and specialised bodies to attract best talents and professional experts.
  • 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.
  • 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
  • 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.
  • Cooperative Banks to be strengthen by amending Banking Regulation Act.
  • 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.
  • Government to sell its balance holding in IDBI Bank to private, retail and institutional investors through the stock exchange. 


Financial Market
  • FPI limit in corporate bonds increased to 15% from 9% of its outstanding stock.
  • Debt Based Exchange Traded Fund expanded by a new Debt-ETF consisting primarily of Government Securities.

Infrastructure Financing
  • 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
  • Overhaul of Centrally Sponsored Schemes and Central Sector Schemes necessary to ensure that scarce public resources are spent optimally.
  • For year 2020-21:Nominal growth of GDP estimated at 10%.
  • Fiscal deficit of 3.8% estimated in RE 2019-20 and 3.5% for BE 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%.
  • Recommendations of XV Finance Commission (FC) accepted in substantial measure.

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.

  • Around 70 of the existing exemptions and deductions (more than 100) to be removed in the new simplified regime.
  • Corporate Tax- Tax rate of 15% extended to new electricity generation companies.
  • Dividend Distribution Tax - DDT removed making India a more attractive investment destination.
  • Start-ups - Start-ups with turnover upto Rs. 100 crore to enjoy100% deduction for 3 consecutive assessment years out of 10 years.
  • MSMEs - Turnover threshold for audit increased to Rs. 5 crore from Rs. 1 crore for businesses carrying out less than 5% business transactions in cash inorder to boost less cash economy.
  • Cooperative societies exempted from Alternate Minimum Tax (AMT) just like Companies are exempted from the Minimum Alternate Tax (MAT).
  • Affordable Housing - Additional deduction up to Rs. 1.5 lakhs for interest paid on loans taken for an affordable house extended till 31st March, 2021.

Tax facilitation measures –
  • ‘Vivad Se Vishwas’ scheme,with a deadline of30th June, 2020, to reduce litigations in direct taxes.
  • Instant PAN to be allotted online through Aadhaar.
  • Faceless appeals to be enabled by amending the Income Tax Act.
  • Unique registration number (URN) to be issued to all new and existing charity institutions.
  • CBDT to adopt a Taxpayers’ Charter.

Indirect Tax :
  • GST rate structure being deliberated to address inverted duty structure.
  • Dynamic QR-code capturing GST parameters proposed for consumer invoices.
  • Simplified return with features like SMS based filing for nil return and improved input tax credit flow to be implemented from 1st April, 2020 as a pilot run.

Custom duties :
  • Higher customs duty on certain goods like auto-parts, chemicals, etc. which arealso being made domestically.
  • Lower customs duty on certain inputs and raw materials like fuse, chemicals, and plastics.

Trade policy measure:
  • Customs Act being amended to enable proper checks of imports under FTAs.
  • Excise duty proposed to be raised on Cigarettes and other tobacco products, no change made in the duty rates of bidis.
  • Anti-dumping duty on PTA abolished to benefit the textile sector.


Future Aim for sustaining India’s unique global leadership, driven by Digital Revolution
  • Seamless delivery of services through Digital Governance.
  • Improvement in physical quality of life through National Infrastructure Pipeline.
  • Risk mitigation through Disaster Resilience.
  • Social security through Pension and Insurance penetration.
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