UNION BUDGET 2020-21

UNION BUDGET 2020-21

GOVERNMENT OF INDIA

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KEY HIGHLIGHTS OF UNION BUDGET 2020-21

New Delhi, 1st February 2020

Presenting the first Union Budget of the third decade of 21st century, Finance Minister Smt. Nirmala Sitharaman, today 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 Key Highlights of Union Budget 2020-21 are as follows:

Three prominent themes of the Budget

 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; Antyodaya as an article of faith.

 Three broad themes are held together by:

o Corruption free, policy-driven Good Governance.

o Clean and sound financial sector.

 Ease of Living underlined by the three themes of Union Budget 2020-21.

 

Three components of Aspirational India

 Agriculture, Irrigation, and Rural Development

 Wellness, Water, and Sanitation

 Education and Skills

 

Sixteen Action Points for Agriculture, Irrigation and Rural Development

 Rs. 2.83 lakh crore to be allocated for the following 16 Action Points:

o Rs. 1.60 lakh crore for Agriculture, Irrigation & allied activities.

o Rs. 1.23 lakh crore for Rural development & Panchayati Raj. -

 Agriculture credit:

o Rs. 15 lakh crore target set for the year 2020-21.

o PM-KISAN beneficiaries to be covered under the KCC scheme.

o NABARD Re-finance Scheme to be further expanded.

 Comprehensive measures for 100 water-stressed districts proposed.

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 Blue Economy:

o Rs. 1 lakh crore fisheries‟ exports to be achieved by 2024-25.

o 200 lakh tonnes fish production targeted by 2022-23.

o 3477 Sagar Mitras and 500 Fish Farmer Producer Organisations to involve youth in fisheries extension.

o Growing of algae, sea-weed and cage culture to be promoted.

o Framework for development, management and conservation of marine fishery resources.

 Kisan Rail to be setup by Indian Railways through PPP:

o To build a seamless national cold supply chain for perishables (milk, meat, fish, etc.

o Express and Freight trains to have refrigerated coaches.

 Krishi Udaan to be launched by the Ministry of Civil Aviation:

o Both international and national routes to be covered.

o North-East and tribal districts to realize Improved value of agri-products.

 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:

o Jaivik Kheti Portal – online national organic products market to be strengthened.

o Zero-Budget Natural Farming (mentioned in July 2019 Budget) to be included.

o Integrated Farming Systems in rain-fed areas to be expanded.

o Multi-tier cropping, bee-keeping, solar pumps, solar energy production in non-cropping season to be added.

 PM-KUSUM to be expanded:

o 20 lakh farmers to be provided for setting up stand-alone solar pumps.

o Another 15 lakh farmers to be helped to solarise their grid-connected pump sets.

o Scheme to enable farmers to set up solar power generation capacity on their fallow/barren lands and to sell it to the grid.

 Village Storage Scheme:

o To be run by the SHGs to provide farmers a good holding capacity and reduce their logistics cost.

o Women, SHGs to regain their position as Dhaanya Lakshmi.

 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:

o Viability Gap Funding for setting up such efficient warehouses at the block/taluk level.

o Food Corporation of India (FCI) and Central Warehousing Corporation (CWC) to undertake such warehouse building.

 Financing on Negotiable Warehousing Receipts (e-NWR) to be integrated with e-NAM.

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 State governments who undertake implementation of model laws (issued by the Central government) to be encouraged.

 Livestock:

o Doubling of milk processing capacity to 108 million MT from 53.5 million MT by 2025.

o Artificial insemination to be increased to 70% from the present 30%.

o MNREGS to be dovetailed to develop fodder farms.

o Foot and Mouth Disease, Brucellosis in cattle and Peste Des Petits ruminants (PPR) in sheep and goat to be eliminated by 2025.

 Deen Dayal Antyodaya Yojana – 0.5 crore households mobilized with 58 lakh SHGs for poverty alleviation.

 

Wellness, Water and Sanitation

 Rs. 69,000 crore allocated for overall Healthcare sector.

 Rs. 6400 crore (out of Rs. 69,000 crore) for PM Jan Arogya Yojana (PMJAY):

o More than 20,000 hospitals already empanelled under PM Jan Arogya Yojana (PMJAY).

o Viability Gap Funding window proposed for setting up hospitals in the PPP mode.

o Aspirational Districts with no Ayushman empanelled hospitals to be covered in the first phase.

o Targeting diseases with an appropriately designed preventive regime using Machine Learning and AI.

 Jan Aushadhi Kendra Scheme to offer 2000 medicines and 300 surgicals in all districts by 2024.

 TB Harega Desh Jeetega campaign launched - commitment to end Tuberculosis by 2025.

 Rs. 3.60 lakh crore approved for Jal Jeevan Mission:

o Rs. 11,500 crore for the year 2020-21.

o Augmenting local water sources, recharging existing sources, and promoting water harvesting and de-salination.

o Cities with million-plus population to be encouraged to achieve the objective during the current year itself.

 Rs.12, 300 crore allocation for Swachh Bharat Mission in 2020-21:

o Committment to ODF-Plus in order to sustain ODF behaviour.

o Emphasis on liquid and grey water management.

o Focus also on Solid-waste collection, source segregation, and processing.

 

Education and Skills

 Rs. 99,300 crore for education sector and Rs. 3000 crore for skill development in 2020-21.

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 New Education Policy to be announced soon.

 National Police University and National Forensic Science University proposed for policing science, forensic science, and cyber-forensics.

 Degree level full-fledged online education program by Top-100 institutions in the National Institutional Ranking Framework.

 Up to 1-year internship to fresh engineers to be provided by Urban Local Bodies.

 Budget proposes to attach a medical college to an existing district hospital in PPP mode.

 Special bridge courses to be designed by the Ministries of Health, and Skill Development:

o To fulfill the demand for teachers, nurses, para-medical staff and care-givers abroad.

o To bring in equivalence in the skill sets of the workforce and employers‟ standards.

 150 higher educational institutions to start apprenticeship embedded degree/diploma courses by March 2021.

 External Commercial Borrowings and FDI to be enabled for education sector.

 Ind-SAT proposed for Asian and African countries as a part of Study in India program.

 

Economic Development

Industry, Commerce and Investment

 Rs. 27,300 crore allocated for 2020-21 for development and promotion of Industry and Commerce.

 Investment Clearance Cell proposed to be set up:

o To provide “end to end” facilitation and support.

o To work through a portal.

 Five new smart cities proposed to be developed.

 Scheme to encourage manufacture of mobile phones, electronic equipment and semi-conductor packaging proposed.

 National Technical Textiles Mission to be set up:

o With four-year implementation period from 2020-21 to 2023-24.

o At an estimated outlay of Rs 1480 crore.

o To position India as a global leader in Technical Textiles.

 New scheme NIRVIK to be launched to achieve higher export credit disbursement, which provides for:

o Higher insurance coverage

o Reduction in premium for small exporters

o Simplified procedure for claim settlements.

 Turnover of Government e-Marketplace (GeM) proposed to be taken to Rs 3 lakh crore.

 Scheme for Revision of duties and taxes on exported products to be launched.

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o Exporters to be digitally refunded duties and taxes levied at the Central, State and local levels, which are otherwise not exempted or refunded.

 All Ministries to issue quality standard orders as per PM‟s vision of “Zero Defect-Zero Effect” manufacturing.

 

Infrastructure

 Rs.100 lakh crore to be invested on infrastructure over the next 5 years.

 National Infrastructure Pipeline:

o Rs. 103 lakh crore worth projects; launched on 31st December 2019.

o 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:

o To clarify roles of the Union Government, State Governments and key regulators.

o A single window e-logistics market to be created

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o Focus to be on generation of employment, skills and making MSMEs competitive.

 National Skill Development Agency to give special thrust to infrastructure-focused skill development opportunities.

 Project preparation facility for infrastructure projects proposed.

o To actively involve young engineers, management graduates and economists from Universities.

 Infrastructure agencies of the government to involve youth-power in start-ups.

 Rs.1.7 lakh crore proposed for transport infrastructure in 2020-21.

 

Highways:

 Accelerated development of highways to be undertaken, including:

o 2500 Km access control highways.

o 9000 Km of economic corridors.

o 2000 Km of coastal and land port roads.

o 2000 Km of strategic highways.

 Delhi-Mumbai Expressway and two other packages to be completed by 2023.

 Chennai-Bengaluru Expressway to be started.

 Proposed to monetise at least 12 lots of highway bundles of over 6000 Km before 2024.

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Indian Railways:

 Five measures:

o Large solar power capacity to be set up alongside rail tracks, on land owned by railways.

o Four station re-development projects and operation of 150 passenger trains through PPP.

o More Tejas type trains to connect iconic tourist destinations.

o High speed train between Mumbai and Ahmedabad to be actively pursued.

o 148 km long Bengaluru Suburban transport project at a cost of Rs 18600 crore, to have fares on metro model. Central Government to provide 20% of equity and facilitate external assistance up to 60% of the project cost.

 Indian Railways‟ achievements:

o 550 Wi-fi facilities commissioned in as many stations.

o Zero unmanned crossings.

o 27000 Km of tracks to be electrified.

 

Ports & Water-ways:

 Corporatizing at least one major port and its listing on stock exchanges to be considered.

 Governance framework keeping with global benchmarks needed for more efficient sea-ports.

 Economic activity along river banks to be energised as per Prime Minister‟s Arth Ganga concept.

 

Airports:

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

 Air fleet number expected to go up from present 600 to 1200 during this time.

 

Electricity:

 “Smart” metering to be promoted.

 More measures to reform DISCOMs to be taken.

 

Power:

 Rs.22, 000 crore proposed for power and renewable energy sector in 2020-21.

 Expansion of national gas grid from the present 16200 km to 27000 km proposed.

 Further reforms to facilitate transparent price discovery and ease of transactions.

 

New Economy

 To take advantage of new technologies:

o Policy to enable private sector to build Data Centre parks throughout the country to be brought out soon.

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o Fibre to the Home (FTTH) connections through Bharatnet to link 100,000 gram panchayats this year.

o Rs.6000 crore proposed for Bharatnet programme in 2020-21.

 Measures proposed to benefit Start-ups:

o A digital platform to be promoted to facilitate seamless application and capture of IPRs.

o Knowledge Translation Clusters to be set up across different technology sectors including new and emerging areas.

o For designing, fabrication and validation of proof of concept, and further scaling up Technology Clusters, harbouring test beds and small scale manufacturing facilities to be established.

o Mapping of India‟s genetic landscape- Two new national level Science Schemes to be initiated to create a comprehensive database.

o Early life funding proposed, including a seed fund to support ideation and development of early stage Start-ups.

 Rs.8000 crore proposed over five years for National Mission on Quantum Technologies and Applications.

 

Caring Society

 Focus on:

o Women & child,

o Social Welfare;

o Culture and Tourism

 Allocation of Rs. 35,600 crore for nutrition-related programmes proposed for the FY2020-21.

 Rs.28, 600 crore proposed for women specific programs.

 Issue about age of a girl entering motherhood - proposed to appoint a task force to present its recommendations in six months‟ time.

 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.

 Rs. 85, 000 crore proposed for 2020-21 for welfare of Scheduled Castes and Other Backward Classes.

 Rs. 53, 700 crore provided to further development and welfare of Scheduled Tribes.

 Enhanced allocation of Rs. 9,500 crore provided for 2020-21 for senior citizens and Divyang.

 

Culture & Tourism

 Allocation of Rs. 2500 crore for 2020-21 for tourism promotion.

 Rs.3150 crore proposed for Ministry of Culture for 2020-21.

 An Indian Institute of Heritage and Conservation under Ministry of Culture proposed; with the status of a deemed University.

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 5 archaeological sites to be developed as iconic sites with on-site Museums:

o Rakhigarhi (Haryana)

o Hastinapur (Uttar Pradesh)

o Shivsagar (Assam)

o Dholavira (Gujarat)

o Adichanallur (Tamil Nadu)

 Re-curation of the Indian Museum in Kolkata, announced by Prime Minister in January 2020.

 Museum on Numismatics and Trade to be located in the historic Old Mint building in Kolkata.

 4 more museums from across the country to be taken up for renovation and re-curation.

 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, by Ministry of Shipping.

 State governments expected to develop a roadmap for certain identified destinations and formulate financial plans during 2021 against which specified grants to be made available to the States in 2020-21.

 

Environment & Climate Change

 Allocation for this purpose to be Rs.4400 crore for 2020-21.

 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 above one million to be encouraged.

 PM launched Coalition for Disaster Resilient Infrastructure (CDRI) with Secretariat in Delhi. Second such international initiative after International Solar Alliance.

 

Governance

 Clean, corruption-free, policy driven, good in intent and most importantly trusting in faith.

 Taxpayer Charter to be enshrined in the Statute will bring fairness and efficiency in tax administration.

 Companies Act to be amended to build into statues, criminal liability for certain acts that are civil in nature.

o Other laws with such provisions are to be corrected after examination.

 Major reforms in recruitment to Non-Gazetted posts in Government and Public sector banks:

o An independent, professional and specialist National Recruitment Agency (NRA) for conducting a computer-based online Common Eligibility Test for recruitment.

o A test-centre in every district, particularly in the Aspirational Districts.

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 A robust mechanism to be evolved for appointment including direct recruitment to various Tribunals and specialised bodies to attract best talents and professional experts.

 Contract Act to be strengthened.

 New National Policy on Official Statistics to:

o Promote use of latest technologies including AI.

o Lay down a road-map towards modernised data collection, integrated information portal and timely dissemination of information.

 A sum of Rs. 100 crore allocated to begin the preparations for G20 presidency to be hosted in India in the year 2022.

 Development of North East region:

o Improved flow of funds using online portal by the Government.

o Greater access to financial assistance of Multilateral and Bilateral funding agencies.

 Development of Union Territories of J&K and Ladakh:

o An amount of Rs. 30,757 crore provided for the financial year 2020-21.

o The Union Territory of Ladakh has been provided with Rs. 5,958.

 

Financial Sector

 Reforms accomplished in PSBs :

o 10 banks consolidated into 4.

o Rs. 3,50,000 crore capital infused.

 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.

 Scheduled Commercial Bank‟s health under monitoring through a robust mechanism, keeping depositors‟ money safe.

 Cooperative Banks to be strengthen by amending Banking Regulation Act for:

o Increasing professionalism.

o Enabling access to capital.

o Improving governance and oversight for sound banking through the RBI.

 NBFCs eligibility limit for debt recovery reduced from:

o Rs. 500 crore to Rs 100 crore asset size.

o Rs 1 crore to Rs 50 lakh loan size.

 Private capital in Banking system:

o Government to sell its balance holding in IDBI Bank to private, retail and institutional investors through the stock exchange.

 Easier mobility in jobs:

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o Auto-enrolment in Universal Pension coverage.

o Inter-operability mechanism to safeguard the accumulated corpus.

 Pension Fund Regulatory Development Authority of India Act to be amended to:

o Strengthen regulating role of PFRDAI.

o Facilitate separation of NPS trust for government employees from PFRDAI.

o Enable establishment of a Pension Trust by the employees other than Government.

 Factor Regulation Act 2011 to be amended to:

o Enable NBFCs to extend invoice financing to the MSMEs through TReDS

 New scheme to provide subordinate debt for entrepreneurs of MSMEs by the banks

o Would be counted as quasi-equity.

o Would be fully guaranteed through the Credit Guarantee Trust for Medium and Small Entrepreneurs (CGTMSE).

o The corpus of the CGTMSE would accordingly be augmented by the government.

 Window for MSME‟s debt restructuring by RBI to be extended by one year till March 31, 2021.

o More than five lakh MSMEs have already been benefitted.

 An app-based invoice financing loans product for MSMEs to be launched.

o To prevent the problem of delayed payments and consequential cash flows mismatches.

 Export promotion of MSMEs:

o For selected sector such as pharmaceuticals, auto components and others.

o An Rs 1000 crore scheme anchored by EXIM Bank together with SIDBI.

o Hand holding support for technology upgradations, R&D, business strategy etc.

 

Financial Market

 Deepening Bond Market.

o Certain specified categories of Government securities to be opened fully for non -resident investors also.

o FPI limit in corporate bonds increased to 15% from 9% of its outstanding stock.

 New legislation to be formulated for laying down a mechanism for netting of financial contracts.

o Scope of credit default swaps to expand.

 Debt Based Exchange Traded Fund expanded by a new Debt-ETF consisting primarily of Government Securities.

o To give attractive access to retail investors, pension funds and long-term investors.

 A Partial Credit Guarantee scheme for the NBFCs formulated post the Union budget 2019-20 to address their liquidity constraints.

o New mechanism to be devised to further this.

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o Government support to securities so floated.

 

Infrastructure Financing

 Rs.103 lakh crore National Infrastructure Pipeline projects earlier announced.

 Rs 22,000 crore to cater to the equity support to Infrastructure Finance Companies such as IIFCL and a subsidiary of NIIF.

 IFSC, GIFT city: full of potential to become a centre of international finance as well as a centre for high end data processing:

o 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

 XV Finance Commission (FC):

o XV Finance Commission has given its first report for FY2020-21

o Recommendations accepted in substantial measure

o Its final report for five years beginning 2021-22 to be submitted during the latter part of the year.

 GST Compensation Fund:

o Balances due out of collection of the years 2016-17 and 2017-18 to be transferred to the Fund, in two instalments.

o Hereinafter, transfers to the fund to be limited only to collection by way of GST compensation cess.

 Overhaul of Centrally Sponsored Schemes and Central Sector Schemes necessary:

o To align them with emerging social and economic needs of tomorrow

o To ensure that scarce public resources are spent optimally

 On the recent debate over transparency and credibility of projected fiscal numbers, it is assured that procedure adopted is compliant with the FRBM Act.

 For the FY 2019-20:

o Revised Estimates of Expenditure: at Rs.26.99 lakh crore

o Revised Estimates of Receipts: estimated at Rs.19.32 lakh crore.

 For year 2020-21:

o Nominal growth of GDP estimated at 10%.

o Receipts: estimated at Rs.22.46 lakh cr

o Expenditure: at Rs.30.42 lakh cr.

 Significant tax reforms for boosting investments recently undertaken. However, expected tax buoyancy expected to take time.

 Fiscal deficit of 3.8% estimated in RE 2019-20 and 3.5% for BE 2020-21. It comprises two ingredients;

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o 3.3% for year 2019-20 and 3% for the 2020-21 budget estimate.

o Deviation of 0.5%, consistent with Section 4(3) of FRBM Act, both for RE 2019-20 and BE 2020-21. (Section 4 (2) of the FRBM Act provides for a trigger mechanism for a deviation from the estimated fiscal deficit on account of structural reforms in the economy with unanticipated fiscal implications.)

o Return path, committing to fiscal consolidation without compromising needs of investment out of public funds, is laid in Medium Term Fiscal Policy cum Strategy Statement.

o Market borrowings: Net market borrowings: Rs.4.99 lakh crore for 2019-20 and Rs.5.36 lakh crore for 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%.

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Direct Tax

Direct Tax Proposals - To stimulate growth, simplify tax structure, bring ease of compliance, and reduce litigations.

 Personal Income Tax:

o Significant relief to middle class taxpayers.

o New and simplified personal income tax regime proposed:

Taxable Income Slab (Rs.)	Existing tax rates	New tax rates
0-2.5 Lakh	Exempt	Exempt
2.5-5 Lakh	5%	5%
5-7.5 Lakh	20%	10%
7.5-10 Lakh	20%	15%
10-12.5 Lakh	30%	20%
12.5-15 Lakh	30%	25%
Above 15 Lakh	30%	30%