New Union Budget Highlights 2020-2021

 

What are the Union Budget Highlights 2020 that you need to know?

The Finance Minister (FM), Nirmala Sitharaman, unveiled the Union Budget for the financial year 2020-2021 on February 1^st, 2020. The budget vows to boost the income of Indians, improve their purchasing power and energize the Indian economy.

This year's Budget revolves around three themes –

1.) Aspirational India : This aims to improve the standard of living across the board and provide easier access to education, health and better jobs for all.

2.) Economic development –  "Sabka Saath, Sabka Vikas, Sabka Vishwas."

3.) Caring society –  Three broad themes are covered in this:

• Corruption free, policy-driven good governance
• Clean and sound financial sector
• Ease of living

To help you better understand the budget, here's a look at the key highlights:

Allocation

To enhance infrastructure, Rs. 12,000 crore is now allocated for the construction of new lines. Additionally, Rs. 2,250 crore has been assigned for gauge conversion while rolling stocks have a budget allocation of Rs. 5,786.97 crore. Finally, Rs. 1,650 crore will be rolled out for signalling and telecoms.

For Railways

• The budgetary allocation for the railways was fixed at Rs. 70,000 crore with an outlay for capital expenditure summing up to Rs. 1.61 lakh crore.
• The budget is also hoping to set up solar power panels and plants on railway-owned land alongside the tracks.
• With the help of the Public-Private-Partnership (PPP) model, the government hopes to redevelop four stations and operate 150 new passenger trains.
• The budget also mentioned the introduction of more trains, similar to the Tejas, which will connect most of India's iconic destinations.

Income Tax Slabs

Along with revising the taxable income slabs and reducing tax rates, the Finance Minister raised the bank depositor's insurance cover from Rs. 1 lakh to Rs. 5 lakh. The new break down of tax slabs is as follows:

To make things simpler, around 70 of the more than 100 income tax deductions and exemptions have been removed. Now, this new regime is optional and those who want to continue to claim deductions will be allowed to do so, under the already existing income tax rates.

The Finance Minister abolished dividend tax for companies, introduced new slabs for individuals and announced record spending in agriculture and infrastructure sectors.

Manufacturing

The new budget has outlined the following manufacturing goals:

• Aim to work on schemes that encourage the manufacture of mobile phones, semiconductor packaging and electronic equipment.
• Aim to encourage the private sector to build Data Centre Parks across the country.
• Over the next five years, Rs. 80 billion will be provided for quantum technologies and applications.
• Milk processing capitals will be doubled by 2025.

Subsidies

• Food subsidy to be raised to Rs. 1.15 trillion in 2020-2021.
• Fertilizer subsidy to be seen at Rs. 713.09 billion in 2020-2021.
• Petroleum subsidy to be seen at Rs. 409.15 billion in 2020-2021.

For the Power Sector

• For the promotion of industry and commerce, India will provide Rs. 273 billion.

• If emission norms are not met, firms operating old thermal powers plants will be advised to stop activities.
• In cities with over 1 million people, India will provide Rs. 44 billion for clean air incentives.

More Airports and Highways

• India will privatize at least one major airport.
• India to develop 100 more airports by 2024.
• The country will monetize over 6,000 km of highway in 12 lots by 2024.

Things that will see a hike:

• Custom duty on walnuts will be raised from 30% to 100%.
• Custom duty on autos and auto parts will be raised up to 10%.
• Nominal health cess of 5% on import of medical devices.

LIC Listing Proposed via an IPO

The Finance Minister, in her budget speech, announced that the government has decided to sell a part of its stake in LIC (Life Insurance Corporation of India) through an initial public offering. This state-run insurer was established in the year 1956 and was fully owned by the Government of India.

Dividend Distribution Tax Abolished

The government has also eliminated the dividends distribution tax that was levied on dividends issued by companies. These companies were required to pay DDT at 15%. The surcharge and cess, however, brought the rate up to 20.56%.

Real Estate

To promote the idea of affordable housing in India, Budget 2020 has proposed to extend the date of loan sanctions, to avail an additional deduction of Rs. 1.5 lakh, by one year to March 31, 2021.

Education

• The Finance Minister announced that Rs. 99,300 crore will be assigned to the education sector and Rs. 3,000 crore rupees will be used solely for skill development.
• FDI and external commercial borrowings to be leveraged to improve the education system.
• Government proposes to attach a medical college to a district hospital in PPP mode.
• US-like SAT exam to be held in Asian and African countries for foreign students who wish to study in India.
• Online education programmes to be offered by top 100 National Institutional Ranking Framework institutes.
• New education policy to be announced soon.
• Two new national science schemes are proposed to be launched.
• 150 higher educational institutes to start apprenticeship related to their degree and/or diploma courses by March 2021.

Agriculture

• NABARD refinance system to be strengthened.
• Co-operatives and NBFC active in credit.
• Finance ministry will provide Rs. 2.83 crore for agriculture and irrigation.
• Rural development and Panchayati Raj will receive Rs. 1.23 lakh crore.
• Agriculture credit target is set at Rs. 15 lakh crore.

Sanitation

• Water sanitation and pipeline project will be allocated Rs. 3.6 lakh crore and Rs. 12,300 crore for Swachh Bharat.
• The finance minister also touched upon the topic of open defecation in the country and committed to making India Open Defecation Free in the coming years.

GST

• Simplified GST filing system will be introduced in April 2020.
• GST benefit of Rs. 1 lakh crore has been extended to the consumers.

By introducing these key reforms and changes, this budget provides hope to the consumers and also aims to arm them with a strong purchasing power which will, in turn, boost the country's economy.

ARN: ED/02/20/18007

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