The Union Budget of India for 2020–2021 was presented by the Finance Minister, Nirmala Sitharaman on 1 February 2020 as her second budget. There are three prominent themes of this budget – Aspirational India, Economic Development, and Caring Society.
Before moving on to some important announcements let us first have a look at some facts related to this budget. With the speech duration of 2 hours 41 minutes, Nirmala Sitharaman delivered the longest budget speech ever by Finance Minister of India. Nirmala Sitharaman is also only the second women to present the budget for a second time after Indira Gandhi.
Significant Announcements
Financial Sector
- Deposit insurance coverage to increase from ₹1 lacs to ₹5 lacs per depositor.
- Eligibility limit for NBFCs for debt recovery under SARFAESI Act proposed to be reduced to asset size of ₹100 crore or loan size of ₹50 Lacs.
- New debt ETF proposed mainly for government securities.
- FPI limit for corporate bonds to be increased to 15 percent.
- Proposal to sell balance holding of government in IDBI Bank.
- Separation of NPS trust for government employees from PFRDAI.
Tax Proposals
- Simplified and New Income Tax Regime as an option to the old regime. While the tax rates and slabs look attractive under the new regime, the condition that you will not be able to claim exemptions and deductions, which help you bring down your taxable income, acts as a deterrent.
- Concessional corporate tax rate of 15 per cent to new domestic companies in manufacturing and power sector.
- Extension of time limits pertaining to the tax benefits for affordable housing.
- Issuance of Unique Registration Number to all charity institutions for easy tax compliance.
- Health cess to be imposed on imports of medical equipment given these are made significantly in India.
- The dividend distribution tax (DDT) has been removed and the "shareholder based taxation system" returns.
Agriculture, Irrigation and Rural Development
- Expansion of PM KUSUM Scheme under which 20 lakh farmers would be provided funds to set up standalone solar pumps.
- Integration of negotiable warehousing receipts (e-NWR) and National Agricultural Market (e-NAM). This is likely to help facilitate seamless trading of agricultural products across the country.
- “Kisan Rail” and “Krishi Udaan” to be launched by Indian Railways and Ministry of Civil Aviation respectively for a seamless national cold supply chain for perishables.
- Elimination of FMD and brucellosis in cattle and PPR in sheep and goat by 2025.
- Doubling of milk processing capacity by 2025.
- Fish production target of 200 lakh tonnes by 2022-2023.
Wellness, Water and Sanitation
- More than 20 000 empanelled hospitals under More than 20,000 empanelled hospitals under PM Jan Arogya Yojana.
- A campaign to eliminate tuberculosis by 2025 was announced in the budget speech called TB Harega, Desh Jeetega.
- Expansion of Jan Aushadhi Kendra Scheme to all districts by 2024.
- Focus on liquid and grey water management along with waste management.
Education and Technology
- New policy to enable private sector to build Data Centre parks throughout the country.
- Fibre to the Home (FTTH) connections through Bharatnet to link 100,000 Gram Panchayats by 2020.
- Finance minister Nirmala Sitharaman has proposed Rs 6,000 crore for Bharatnet programme in 2020-21.
- Early life funding proposed, including a seed fund to support ideation and development of early stage start-ups.
- Budget 2020 proposes Rs 8,000 crore over five years for National Mission on Quantum Technologies and Applications.
- Up to 1-year internship to fresh engineers to be provided by Urban Local Bodies.
- 150 higher educational institutions to start apprenticeship embedded degree/diploma courses by March 2021.
Infrastructure
- 100 more airports to be developed under UDAAN.
- Efforts to replace conventional energy Efforts to replace conventional energy meters by prepaid smart meters.
- Expand National Gas Grid to 27,000 km.
- ₹103 lakh crore National infrastructure Pipeline projects announced.
- Four station redevelopment projects 150 passenger trains through PPP mode.
Sectoral Budget Allocation
Reactions
Experts: Moody’s Investors Service has said that the "budget highlights the challenges to fiscal consolidation". PWCs noted that there were "some positives from a tax perspective". NASSCOM also reaffirms this and notes that the tax harassment for taxpayers was something the government was committed to remove. Head of Research at Geojit Financial Services, rated the Budget 'below par'. Swaminathan Aiyer called the budget "reasonable". Satish Reddy said that the budget showed the continued focus of the government's in healthcare.
Stock Markets: As the Union budget was presented in the parliament, Nifty fell by over 3% (373.95 points) while Sensex fell by more than 2% (1000 points). But now that one week has passed, the stock markets have recovered to their pre-budget numbers.
Written By: Harshit Agarwal
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