Context: Prioritizing growth over fiscal considerations, the Budget-2020 lays the foundation for a resilient economic recovery
Booster dose in Union Budget 2021-22:
Construction Based Recovery:
Capital expenditures:
5 % increase in budget allocation (Rs 5.54 lakh crore); will help create new jobs and trigger greater consumption and investments.
Provided more than Rs 2 lakh crore to states and autonomous bodies for capex.
Real estate sector:
Extension of tax holidays.
Allowing Foreign Portfolio Investments(FPIs) in the debt financing of Real Estate Investment Trusts (REITs).
Infrastructure activities:
Proposed setting up of a Development Finance Institution (DFI) to reinvigorate investment.
Allowing Foreign Portfolio Investments (FPIs) in the debt financing of Infrastructure Investment Trust (InVITs).
Propose to introduce a mechanism to nudge states to spend more on the creation of infrastructure – through tax incentives.
Banking and financial sector:
Resolving stressed assets: Setting up an Asset Reconstruction Company and Asset Management Company for a one-time resolution of large non-performing assets.
For strengthening the financial sector: Proposed privatization of two public sector banks and one general insurance company.
Insurance sector: to increase Insurance penetration, increased the Foreign Direct Investment(FDI) cap to 74 % from 49 % and allowed foreign ownership and control.
Attracting Foreign Investments: By providing additional tax incentives at the International Financial Services Centre (IFSC).
Agriculture sector:
More financial support: Increased allocations for agriculture credit and rural infrastructure and micro-irrigation fund and increased Minimum Support Price (MSP) procurement.
Reforms: Addition of 22 perishable crops under the “Operation Green Scheme” and proposal of an increase in the number of mandis under e-National Agriculture Market (e-NAM).
Atmanirbharta in Manufacturing:
Textile sector: Proposal to create seven mega-investment textiles parks to make Indian textiles globally competitive and create significant employment opportunities.
Micro Small and Medium Enterprises (MSMEs): Correction of the inverted duty structure on several products.
Ease of doing business: Through easier compliances and faceless tax assessment. (widen the tax base)
Incentivize privatization: Aligning policies of states with national priorities by introducing an incentive framework for states.
Funding Development Expenditure: By garnering more non-tax revenues through strategic disinvestment, privatization and monetization of non-core assets.