BIG INFRA PUSH IN BUDGET

Infrastructure was expected to get a massive fillip in Budget 2021, and Finance Minister Nirmala Sitharaman has given it exactly that, announcing a slew of measures, including setting up of a Development Finance Institution (DFI), allowing large-scale asset monetisation, and allocating the highest-ever capital expenditure of Rs 1.08 lakh crore for building highways. The total allocation for the highways sector is Rs 1.18 lakh crore, up 28 per cent from Rs 91,823 crore in 2020-21.

Road projects in four poll-bound states Assam, Kerala, Tamil Nadu and West Bengal have been allocated Rs 1.93 lakh crore separately under the Bharatmala project.

The infrastructure boost has been fuelled by the growing realisation that India’s post-pandemic economic recovery will be led by spending on this sector. “This is for the first time that infrastructure has got such primacy in the Budget. It does not only mean fillip for the infra sector but will have a cascading effect in all other sectors including steel and cement,” Union Road Transport Minister Nitin Gadkari told ThePrint.

Experts believe that an infra push now will not only be the right antidote to check the slowdown in the economy, but will also create jobs and boost growth.

A Bill to set up the DFI — which will be capitalised with Rs 20,000 crore — will be introduced in the ongoing session of Parliament. The DFI will have a lending portfolio of approximately Rs 5 lakh crore to finance big ticket projects in highways, ports and railways sectors in the next three years, Finance Minister Sitharaman said.

She also announced expanding the National Infrastructure Pipeline (NIP) to include 7,400 projects. The NIP was launched in 2019 with 6,835 projects. So far, around 217 projects worth Rs 1.10 lakh crore under some key infrastructure ministries have been completed.

Sitharaman also announced a ‘National Monetisation Pipeline’ of potential brownfield infrastructure assets to raise finances for upcoming projects. For instance, railways will monetise Dedicated Freight Corridor assets for operations and maintenance, after commissioning. The next lot of airports will be monetised for operations and management concession.

“The Jal Jeevan Mission (Urban) will be launched. It aims at universal water supply in all 4,378 urban local bodies with 2.86 crore household tap connections, as well as liquid waste management in 500 AMRUT (Atal Mission for Rejuvenation and Urban Transformation) cities. It will be implemented over 5 years, with an outlay of Rs 2,87,000 crore,” Sitharaman said.

She also announced the launch of a new scheme to support augmentation of public bus transport services, at a cost of Rs 18,000 crore. The scheme will facilitate deployment of innovative PPP models to enable private sector players to finance, acquire, operate and maintain over 20,000 buses.

Besides, two new technologies — ‘MetroLite’ and ‘MetroNeo’ — will be deployed to provide metro rail systems at much lower cost with the same experience, convenience and safety in Tier-2 cities and peripheral areas of Tier-1 cities.

INCOME TAX RATES REMAIN UNCHANGED

The Personal Income tax rates have not been changed at all in this budget.

Sitharaman announced a more simpler I-T return filing wherein, details of capital gains, dividend income and interest income will be pre-filled in the returns.

To further reduce litigation for small taxpayers, the government has decided to make the Income Tax Appellate Tribunal faceless and only electronic communication will be done.

Sitharaman proposed to constitute a dispute resolution committee which will be faceless to ensure efficiency and transparency. Anyone with a taxable income up to Rs 50 Lakhs and disputed income up to Rs 10 Lakhs is eligible to approach the committee, she added.

Further, the timeline for re-opening of tax returns has been reduced to three years from the present six years.

Stating that Income tax filing has gone up, the finance minister said income tax return filers have increased to 6.48 crore in 2020 from 3.31 crore in 2014.

WE HAVE SPENT, WE HAVE SPENT AND WE HAVE SPENT: SITHARAMAN

Shortly after the presenting the Union Budget 2021-22, Finance Minister Nirmala Sitharaman Monday said the government has decided to spend big on infrastructure and attend to the needs of the health sector.

Addressing the post-budget press conference, Sitharaman said the government decided to give greater impetus to the economy. “And that impetus, we thought, would be qualitatively spent and give necessary demand push if we choose to spend big on infrastructure,” she said.

Terming increased spending on infrastructure and healthcare sector as the two important features of the budget, “If there are two important features of this budget, it is that we chose to spend big on infrastructure which spans across roads, power generation, bridges, ports and so on,” she said.

“The second feature is that I have tried to address the needs of the healthcare sector, and even there, capacities for better health management had to be brought in the light of what we had gone through last year,” Sitharaman added, highlighting the situation that had arisen due to the Covid-19 pandemic.

Asserting that the government has spent immensely, the minister said the fiscal deficit, which was at 3.5 per cent in February 2020, has increased to 9.5 per cent of the GDP.

“So we have spent, we have spent and we have spent,” she said, adding that the government, at the same time, has also given a clear glide path for deficit management.

Prime Minister Narendra Modi hailed the budget as one having the “vision of self-reliance” and featuring “every section of the society”.

BUDGET ‘LET DOWN LIKE NEVER BEFORE’, WILL UNRAVEL SOON, SAYS CONGRESS

Asserting that the Union Budget was a “let down like never before”, the Congress on Monday claimed that it will unravel soon, and described the imposition of cess on petrol and diesel in the budget as a “vengeful act” against the thousands of farmers who took out the tractor rally. The opposition party said it was a case of “wrong diagnosis and prescription”, and that Finance Minister Nirmala Sitharaman could have been “brave” by extending help to the poor, but chose to be “timid”.

TMC supremo Mamata Banerjee called the budget “anti-farmer, anti-people and anti-country”.

The Rs 230-crore reduction in the budgetary allocation to the environment ministry has drawn flak from environmentalists who say it may slow down or completely halt green initiatives. Besides the shrunk budget, they also feel that the Centre has not clarified how a separate amount of Rs 2,217 crore, set aside for tackling air pollution in 42 cities with minimum population of one million, will be utilised.

INTERNATIONAL AFFAIRS

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WEST CONDEMNS COUP, CHINA'S RESPONSE IS MUTED

The United Nations led condemnation of Myanmar's military on Monday after it seized power, calling for the release of elected leaders, including Nobel laureate Aung San Suu Kyi.

UN Secretary-General Antonio Guterres said the developments were a "serious blow to democratic reforms" and urged all leaders to refrain from violence and respect human rights, a U.N. spokesman said.

The U.S., Britain, Australia and the EU condemned the military's coup and detentions and its declaration of a state of emergency. The Army said it had taken action in response to "election fraud".

China's response, however, was more muted.

"China is a friendly neighbour of Myanmar's. We hope that all sides in Myanmar can appropriately handle their differences under the Constitution and legal framework and safeguard political and social stability," Foreign Ministry spokesman Wang Wenbin said.

OXFORD KEPT COVID-19 VACCINE TRIAL VOLUNTEERS IN DARK ABOUT DOSING ERROR

About 1,500 of the initial volunteers in a late-stage clinical trial of the Oxford/AstraZeneca COVID-19 vaccine were given the wrong dose, but weren't informed that a mistake had been made after the blunder was discovered, documents obtained by Reuters show.

Instead, the dosing mishap was presented to the trial participants in a letter dated June 8 as an opportunity for University of Oxford researchers to learn how well the vaccine works at different doses. The letter was signed by the trial's chief investigator, Oxford professor Andrew J.Pollard, and sent to the trial subjects.

As Reuters reported on Dec. 24, participants were given about a half dose due to a measuring mistake by Oxford researchers.

THE REST

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REPEAL FARM LAWS, DEMANDS OPPN; TMC MOST VOCIFEROUS

Going digital, Finance Minister Nirmala Sitharaman read out the Budget from a tablet even as the Shiromani Akali Dal and Rashtriya Loktantrik Party, former constituents of the ruling NDA, walked out of the Lok Sabha in solidarity with the agitating farmers.

Congress MPs from Punjab Gurjeet Aujla and Ravneet Bittu carried placards around their neck that read: “Repeal farm laws that are killing farmers.”

The Opposition benches wore a thin look with Congress president Sonia Gandhi absent. Rahul Gandhi was seated in the second row. National Conference chief Farooq Abdullah was present. Samajwadi Party’s Mulayam Singh Yadav marked a brief presence.

Trinamool Congress was the most aggressive with MPs Saugata Roy and Kalyan Banerjee frequently taunting the FM each time she made an announcement on record MSP procurement, proposed disinvestment and private management of ports. “Adani, Adani” chants resonated on the Opposition side when Sitharaman said the government would permit private players to manage ports.

Throughout the speech, the Opposition MPs kept demanding restoration of MPLADs, currently suspended due to Covid.

Modi frequently applauded the FM, giving a cue to his colleagues, who reciprocated heartily even as Opposition MPs were heard asking, “What’s there to clap?”

NEW CESS FOR AGRICULTURE INFRASTRUCTURE AND DEVELOPMENT

Nirmala Sitharaman announced a cess on certain items, including petrol, diesel, gold and some imported agricultural products in a attempt to boost agriculture infrastructure. While proposing the Agriculture Infrastructure and Development Cess (AIDC), Sitharaman also said that care has been taken not to put additional burden on consumers on most items.

As per the Budget documents, AIDC of Rs 2.5 per litre has been imposed on petrol and Rs 4 per litre on diesel.

"Overall, there would be no additional burden on the consumer," the minister said. Consequent to imposition of AIDC on petrol and diesel, the Basic Excise Duty (BED) and Special Additional Excise Duty (SAED) rates have been reduced on them so that overall consumer does not bear any additional burden.

The cess on import of 'gold and silver' will be 2.5 per cent, alcoholic beverages (100 per cent), crude palm oil (17.5 per cent), apples (35 per cent), 'coal, lignite and peat' (1.5 per cent), fertilizers, including urea (5 per cent), and cotton (5 per cent).

ONE PERSON COMPANIES TO BE INCENTIVISED, TO BOOST STARTUPS

In her burdget speech, Sitharaman said incorporation of OPCs (One Person Company) will be incentivised by allowing such companies "to grow without restriction on paid up capital and turnover, allowing conversion into any other type of company at any time, reducing the residency limit for an Indian citizen to set up an OPC from 182 days to 120 days, and allow also non-resident Indians to incorporate OPCs in India".

Previously, only the resident Indian citizens were allowed to set up one-person companies in the country.

The OPC concept was introduced in the Companies Act, 2013, to primarily benefit entrepreneurs and facilitate easier access to funding sources through an institutional establishment. Apart from India, many nations, including the US, China and Singapore, allow businesses to be structured as OPCs.

NO ITR FILING FOR SENIOR CITIZENS AGED 75 YEARS AND ABOVE, BUT…..

Budget 2021 proposes to exempt senior citizens who are 75 years or above and have only pension and interest income in a financial year, from filing income tax returns. The bank paying income to them will deduct the necessary tax from their bank account, provided that

in addition to such pension income, the senior citizen may have also have interest income from the same bank in which he is receiving his pension income. He shall be required to furnish a declaration to the specified bank. The declaration shall contain such particulars, in such form and verified in such manner, as may be prescribed.

Once the declaration is furnished, the specified bank would be required to compute the income of such senior citizen after giving effect to the deduction allowable under Chapter VI-A and rebate allowable under section 87A of the Act, for the relevant assessment year and deduct income tax on the basis of rates in force. Once this is done, there will not be any requirement of furnishing return of income by such senior citizen for this assessment year. This amendment will take effect from 1st April, 2021.

AN AMBITIOUS PRIVATISATION PLAN IN BUDGET 2021

The Modi government announced its most ambitious plan to privatise central public sector enterprises during the Union Budget Monday.

The government will maintain a bare minimum presence in only four strategic sectors, Finance Minister Nirmala Sitharaman said in her budget speech. The four sectors are atomic energy, space and defence; transport and telecommunications; power, petroleum, coal and other minerals; and banking, insurance and financial services.

All CPSEs in other sectors will be privatised, she said. “In four areas, a bare minimum number of firms will be retained and the rest will be privatised. In other sectors, all firms will be privatised,” she said, adding that the policy approved by the government provides a clear roadmap for disinvestment in strategic and non-strategic sectors.

The firms that will be privatised in 2021-22 include BPCL, Air India, SCI, Container Corporation of India, IDBI Bank, Bharat Earth Movers Ltd, and Pawan Hans, she said.

Two public sector banks and one general insurance company will also be taken up for privatisation, Sitharaman said, adding that the amendments to relevant laws for this purpose will be tabled in the current Parliament session.

The IPO of Life Insurance Corporation of India will also be completed in 2021-22.

Sitharaman said the long-awaited resolution of bad loans with banks will be made by transferring them to an asset reconstruction company (ARC).

The Budget also proposed hiking FDI in insurance sector to 74% but majority of board directors and key management personal must be Indians, with at least 50% of directors being independent directors, and specified percentage of profits to be retained as general reserve.

For ordinary depositors, the Deposit Insurance and Credit Guarantee Corporation has finally been permitted to increase deposit insurance coverage to Rs 5 lakh per depositor from Rs 1 lakh.

The Budget also proposes to increase foreign portfolio investments in corporate bonds to 15% from 9%, open up certain government securities for NRIs and domestic investors.

BUDGET 2021: OTHER PROPOSALS

The government expects to spend ₹2,23,846 crore in the coming year on “health and well being... a 137% increase (from last year).” This includes a ₹60,030 crore outlay on drinking water and sanitation, a ₹2,700 crore outlay on nutrition and ₹35,000 crore toward vaccination.

Real estate developers are set to benefit from plans for a new development finance institution to meet funding requirements for infrastructure projects.

The announcement of an additional 11,000-km of highways and metros, along with rapid rail transport projects for 27 cities ,and a long-awaited vehicle scrappage policy boosted stocks of metal companies that will cater to added demand for steel and aluminum.

Sitharaman’s announcement of the establishment of seven mega textile parks to be launched in three years could boost the sector.

A higher-than-expected $164-billion borrowing plan for the new fiscal year hit India’s sovereign bonds, which slid after the announcement. The government also plans to raise an another 800 billion rupees by this fiscal year, on top of its projection of record 13.1 trillion rupees of debt sales.

She also raised import tariffs on solar and mobile-phone equipment and auto parts, among others. Announced with a view to boosting local manufacturing in line with the government’s focus on self-reliance, the move may raise further concerns about India’s trade policies that are increasingly seen as protectionist.

The government’s proposed spending on education was slashed by 6 per cent from Rs 99,311 crore in 2020-21 to Rs 93,224 crore.

STOCK MARKET GIVES A 2300 POINT SALUTE TO BUDGET

As Finance Minister Nirmala Sitharaman announced a Budget that is being seen as growth-oriented and balanced, Dalal Street gave a thumbs up. The Sensex rallied 2,300 points, or 5 percent.

This has been the best performance by the stock market on a Budget Day since 1999.

“Equity market was most thrilled with the absence of some nightmares like the introduction of wealth tax or raising LTCG tax, especially given that this was a challenging year on the revenue front for the government.

What the market also cheered is the massive front-loading of expenditure for the rest of 2020-21, which will have a positive ripple effect on the economy.

The last time the market rose as much as today on any Budget Day was in 1999 when the BSE Sensex jumped 5.13 percent. On the Budget Day in 1997, the index had jumped 6.5 percent.

Yesterday, gains were mainly led by banking, infra, metal and auto stocks. Bank Nifty touched a record high with a gain of 8 percent closing at 33,305.30 on FM measures to clean up the NPAs in the sector.

INDICATORS

Sensex 48,601 (+2315), Nifty 14,281 (+646), Trading Value NSE (Rs.crores) 87599.7

Nasdaq 13,403 (+333) Dow 30,212 (+229), S&P 3,774 (+60)

US$-Rs. 73.07 GBP-Rs. 100.11, Euro-Rs. 88.37, UAE Dhm-Rs.19.89, Can$-Rs. 57.05, Aus$- Rs. 55.79

GBP 0.72 /US$, Euro 0.82 /US$, Jap.Yen 104.84 /US$, Aus$ 1.30 /US$, Sing 1.33 /US$, Bang Taka 83.24 /US$, Can$ 1.28 /US$, Mal Ring 4.03 /US$,

Pak Re 159.83 /US$, Phil Peso 48.00 /US$, Russian Rouble 75.85 /US$, NZ$ 1.39 /US$, Thai Baht 29.92 /US$, Ukraine Hryvnia 27.85 /US$

Bitcoin - USD 33,721

Dollar Index 90.87 Brent Crude 56.96 BDI 1452

Gold world Spot Price USD/aoz 1,860 India (Rs. per gm 24k/22k) 4,945 / 4,845, Silver (Rs. Per KG) 73,300

THOUGHT FOR THE DAY

A quarrel between friends, when made up, adds a new tie to friendship. - Francis de Sales

OFF TRACK

Joe told his doctor that he wasn't able to do all the things around the house that he used to do.

The doctor decided to do a thorough examination and afterwards Joe said, "Now, Doc, I can take it. Tell me in plain English what is wrong with me."

"Well, in plain English," the doctor replied, "you're just lazy."

"Okay," said Joe. "Now give me the medical term so I can tell my wife."