Union Budget 2020-2021: Key Highlights

Finance Minister Nirmala Sitharaman presented the first Union Budget of the third decade of the 21st century in Parliament today. The Union Budget was structured on the overall theme of "Ease of Living". She announced three prominent themes of the budget and they 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.

Highlights of the Union Budget theme-wise:

Aspirational India: Sixteen Action Points for Agriculture, Irrigation and Rural Development

Agriculture credit:

• Rs15 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:

• Rs1 lakh crore fisheries' exports to be achieved by 2024-25.
• 200 lakh tonnes of 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 set up 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 withholding 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 the 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 surgical in all districts by 2024.
• TB Harega Desh Jeetega campaign launched - a commitment to end Tuberculosis by 2025.
• Commitment to ODF-Plus to sustain ODF behaviour.
• Rs69,000 crore allocated for the 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 the Study in India program.
• Rs99,300 crore for the education sector and Rs3000 crore for skill development in 2020-21 is allotted.

Economic Development for All

Industry, Commerce and Investment

• Investment Clearance Cell proposed to be set up.
• National Technical Textiles Mission to be set up 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.
• Rs27,300 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.
• Rs100 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 16,200 km to 27,000 km proposed.
• Rs22, 000 crores proposed for power and renewable energy sector in 2020-21.

New Economy

• Policy to enable the private sector to build Data Centre parks throughout the country.
• Rs6,000 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.
• Rs8,000 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 the issue of the age of a girl entering motherhood.
• Financial support for wider acceptance of technologies, identified by the Ministry of Housing and Urban Affairs to ensure no manual cleaning of sewer systems or septic tanks, to be provided.
• Enhanced allocation of Rs9,500 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)

Other announcements

• 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 a population above one million to be encouraged.

Governance

• Companies Act to be amended to remove criminal liability for certain civil acts.
• National Recruitment Agency (NRA) to be set up for the 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.
• A 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 the use of the 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 Rs30,757 crore provided for the financial year 2020-21.
• The Union Territory of Ladakh has been provided with Rs5,958.

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 Rs5 lakh from Rs1 lakh per depositor.
• Cooperative Banks to be strengthened by amending Banking Regulation Act.
• NBFCs eligibility limit for debt recovery reduced from:
• Rs500 crore to Rs100 crore asset size.
• Rs1 crore to Rs50 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 the 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 the 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 the XV Finance Commission (FC) accepted in substantial measure.

Direct Tax

·Proposals - To stimulate growth, simplify the 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 up to Rs100 crore to enjoy100% deduction for 3 consecutive assessment years out of 10 years.

MSMEs - Turnover threshold for audit increased to Rs5 crore from Rs1 crore for businesses carrying out less than 5% business transactions in cash to boost less cash economy.

Cooperative societies – They are exempted from Alternate Minimum Tax (AMT) just like Companies are exempted from the Minimum Alternate Tax (MAT).

Affordable Housing - Additional deduction up to Rs1.5 lakh for interest paid on loans taken for an affordable house extended till March 31, 2021.

Tax facilitation measures:

• 'Vivad Se Vishwas' scheme, with a deadline of June 30, 2020, to reduce litigations indirect 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 are also being made domestically.
• Lower customs duty on certain inputs and raw materials like a fuse, chemicals, and plastics.

Trade policy measure:

• Customs Act is 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 the National Infrastructure Pipeline.
• Risk mitigation through Disaster Resilience.
• Social security through Pension and Insurance penetration.