Union Budget 2021: Key highlights and takeaways from Nirmala Sitharaman's budget

Finance Minister Nirmala Sitharaman on Monday unveiled Union Budget 2021-22 that aims to shore up the Indian economy post coronavirus pandemic.

The Union Budget 2021-22 proposals rest on six pillars: Health and well-being, physical and financial capital and infrastructure, inclusive development for aspirational India reinvigorating human capital, innovation and R&D, minimum government and maximum governance.

Also read: Union Budget 2021: Key highlights of physical, financial capital and infrastructure reforms introduced

The economy is projected to contract 7.7 per cent in the current fiscal year, although the government forecasts growth of 11 per cent for the coming fiscal year, after a massive COVID-19 vaccination drive and a rebound in consumer demand and investments.

However, after a steep drop in the first two quarters, the Indian economy is seen to be recovering with positive GDP growth in the last two quarters. 

These are the highlights from Sitharaman's fiscal 2021-22 budget speech:

Deficit

* 2020/21 fiscal deficit seen at 9.5 per cent of GDP

* 2021/22 fiscal deficit seen at 6.8 per cent of GDP

* 2025/26 fiscal deficit target set at 4.5 per cent of GDP

Expenditure

* 2020/21 revised expenditure 4.39 trillion rupees ($60.14 billion)

* 2020/21 capital expenditure estimated at 5.54 trillion rupees ($75.90 billion)

* 2021/22 gross expenditure seen at 34.83 trillion rupees ($477.16 billion) in 2021/22

* To provide more than 2 trillion rupees ($27.40 billion)for states and autonomous bodies

Borrowing

* India says will need 800 billion rupees ($10.96 billion) in next two months from bond market

* 2021/22 gross market borrowing seen at 12 trillion rupees ($164.40 billion)

Healthcare

* India to allocate 2.2 trillion rupees ($30.20 billion) for healthcare in 2021/22

* Sitharaman says expect two or more COVID-19 vaccines soon

* India to launch new federal health scheme with outlay of around 641 billion rupees ($8.80 billion) over the next six years

* To allocate 350 billion rupees ($4.81 billion) for COVID-19 vaccines, and allocate more funds if needed.

Finance

* India to introduce bill for development financial institution with capital of 200 billion rupees ($2.74 billion)

* To infuse 200 billion rupees ($2.74 billion) for recapitalization of state-run banks in FY2022

* India to consolidate certain SEBI regulations for Securities Market Code

* To relax FDI cap for insurance sector to 74 per cent from 49 per cent

* Set up asset reconstruction company to take over toxic assets

* To cut money market requirement to 15 per cent from 25 per cent

* To allocate 15 billion rupees ($205.50 million) for scheme to incentivise use of digital payments

* India to incentivise incorporation of one-person companies

Taxation

* Proposes exemption to senior citizens for filing income tax returns

* Proposes changes in personal income taxes for non-resident Indian

* To set up dispute resolution panel for small taxpayers

Divestment

* India sets 2021/22 divestment target at 1.75 trillion rupees ($23.97 billion)

* India to divest two public sector banks and one general insurance company

* India to launch IPO of Life Insurance Corporation

* India to announce policy for privatisation of state-run companies

* To create new list of companies for divestment

* India to introduce new mechanism for privatisation of loss-running state-run companies

* To monetise surplus lands of public sector entities

Infrastructure

* To allocate 2.87 trillion rupees ($39.40 billion) for clean water supplies over the next five years

* To allocate 3 trillion rupees ($41.10 billion) for power sector for next five years

* To provide 10 billion rupees ($137.01 million)to Solar Energy Corporation of India

* Sitharaman says will move to end power distribution company monopolies

* To double ship recycling capacity by 2024

* India to monetise infrastructure assets

Transport

* Allocates 1.18 trillion rupees ($16.17 billion) for ministry of roads and highways

* Allocates 1.1 trillion rupees ($15.07 billion) for railways

* Railways to monetise freight corridors

* India to launch new vehicle scrapping policy

* Proposes tax holiday for aircraft leasing firms in India

Agriculture

* India allocates an estimated 1.7 trillion rupees ($23.29 billion) for paddy procurement

* Hikes enhanced agriculture credit target to 16.5 trillion indian rupees ($226.05 billion) in 2020/21

* To include loans for activities in allied sectors in agriculture

* To discontinue small savings fund loans to Food Corporation of India

Labour

* To launch database for gig economy, building and construction workers

* Social security benefits to be extended to gig economy workers