Finance Minister Nirmala Sitharaman presented her first full-time budget today. This was also the first budget of the decade. This was the longest Budget speech of Independent India. Presenting the Union Budget 2020-21, the Finance Minister 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.

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:
  • Corruption free,policy-driven Good Governance.
  • Clean and sound financial sector.
• Ease of Living underlined by the three themes of Union Budget 2020-21.

Union Budget 2020-21: Key Announcements

Agriculture, Irrigation and Rural Development

• Record farm credit target of ₹ 15 lakh crore set for 2020-21. All eligible beneficiaries of PM-KISAN will be covered under the KCC scheme.
• A target of ₹ 1 lakh crore for fisheries exports by 2024-25 & 200 lakh tonnes fish production by 2022-23.
• Kisan Rail to build a national cold supply chain for perishables.
• Krishi Udaan to add value to agri-products in both international and national routes.
• PM KUSUM launched to cover 20 lakh farmers for stand-alone solar pumps and further 15 lakh for grid-connected pumps.
• Scheme to enable farmers to set up solar power generation capacity on fallow or barren lands.
• One-Product One-District for better marketing and export in the Horticulture sector.
• Doubling of the milk processing capacity by 2025.
• Financing on Negotiable Warehousing Receipts (e-NWR) to be integrated with e-NAM.
• Viability gap funding for the creation of efficient warehouses on PPP mode. Village Storage scheme proposed to be run by the SHGs to provide farmers with a good holding capacity and reduce their logistics cost.
• Incentivising State governments who undertake the implementation of model laws already issued by the central government.

Wellness, Water and Sanitation

• ₹ 69,000 crore allocated for the health sector. Out of which, ₹ 6,400 crores allocated for PM-JAY (Pradhan Mantri Jan Arogya Yojana).
• Jan Aushadhi Kendra Scheme to offer 2000 medicines and 300 surgery in all districts by 2024.
• TB Harega Desh Jeetega campaign launched and a commitment to end Tuberculosis by 2025.
• More than 20,000 empanelled hospitals under PM-JAY to meet the need of poorer people in Tier-2 and Tier-3 cities.
• Viability Gap funding window for setting up hospitals in the PPP model.
• Aspirational Districts where presently there are no Ayushman empanelled hospitals to be covered in the first phase.
• Proceeds from taxes on medical devices to be used to support this vital health infrastructure.
• To meet the requirement of qualified medical doctors, a medical college is to be attached to an existing district hospital in PPP mode for Viability Gap funding.
• Large hospitals with sufficient capacity are to be encouraged to offer resident doctors DNB/FNB courses under the National Board of Examinations.
• Special bridge courses will be designed by the Ministries of Health, Skill Development.
• ₹ 3.60 lakh crore allocated for Jal Jeevan Mission.
• ₹ 12,300 crores allocated for Swachh Bharat Mission.

Education and Skills

• ₹ 99,300 crores for the education sector and ₹ 3000 crores for skill development in 2020-21.
• New Education Policy will be announced soon.
• National Police University and National Forensic Science University proposed.
• Degree level full-fledged online education program to be started by institutions who are ranked within Top-100 in the National Institutional Ranking Framework.
• 1-year internship for fresh engineers in Urban Local Bodies.
• Sourcing of External Commercial Borrowings and FDI to deliver higher quality education.
• Under Study In India programme, an Ind-SAT exam is proposed to be held in Asian and African countries.
• 150 higher educational institutions to start apprenticeship embedded degree/diploma courses by March 2021.
• National Recruitment Agency to be set up to recruit candidates for non-gazetted posts in Government and Public Sector Banks.

Business and Economy

Banking

• DICGC has been permitted to increase Deposit Insurance Cover for a depositor, from ₹1 lakh to ₹5 lakh per depositor.
• Amendments to the Banking Regulation Act to strengthen the Cooperative Banks, for increasing professionalism, enabling access to capital, and improving governance and oversight.

• Government of India will sell the balance holding of IDBI Bank to private investors to meet the need for greater private capital.

Foreign Direct Investment

• 100% tax exemption to interest, dividend, and capital gains income in respect of investment made in infrastructure and other notified priority sectors before 31st March 2024 and with a minimum lock-in period of 3 years by the Sovereign Wealth Fund of foreign governments.
• Extension of the period of concessional withholding rate of 5% under Section 194LC for interest payment to non-residents in borrowings and bonds issued up to the 30th June 2023.
• Extension of the period up to 30th June 2023 for a lower rate of withholding of 5% under Section 194LD for Interest payment to Foreign Portfolio Investors (FPIs) and Qualified Foreign Investors (QFIs) in respect of bonds issued by Indian companies, government securities and Municipal Bonds.
• Further extension of the withholding rate from 5% to 4% on interest payment on the bonds listed on IFSC exchange.

Business

• Early life funding, a seed fund to support ideation and development of start-ups.
• Start-ups with turnover up to ₹ 100 crores to get 100% deduction for 3 consecutive years.
• Deferment of tax payment on income related to ESOPs for 5 years.
• Turnover threshold raised by five times for audit from the existing ₹ 1 crore to ₹ 5 crores for businesses which carry out less than 5% of their business transactions in cash.
• An app-based invoice financing loans product to be launched to obviate the problem of delayed payments and consequential cash flows mismatches.
• Amendments to the Factor Regulations Act 2011 will enable NBFCs to extend invoice financing to the MSMEs through TReDS, thereby enhancing their economic and financial sustainability.
• New scheme to provide subordinated debt for MSME entrepreneurs by banks.
• The window for MSME debt restructuring extended by 1 year till March 31, 2021.
• Export promotion measures for MSMEs such as handholding for tech upgradation, R&D, etc.
• To achieve higher export credit disbursement, a new scheme, NIRVIK is being launched, which provides for higher insurance coverage, reduction in premium for small exporters, and simplified procedure for claim settlements
• Extend handholding support to select export intensive sectors like pharmaceuticals & auto components through a ₹ 1,000 crore scheme to be anchored by SIDBI and EXIM bank.
• Extension of the concessional corporate tax rate of 15% to new domestic companies engaged in the generation of electricity.

Markets

• Certain specified categories of Government securities would be opened fully for non-resident investors.
• The limit for FPI in corporate bonds, currently at 9% at outstanding, will be increased to 15%.
• To improve investors’ confidence and to expand the scope of credit default swaps, new legislation will be formulated for laying down a mechanism for netting of financial contracts.
• Floating a new Debt-ETF consisting primarily of government securities to give attractive investment options for pension funds and long-term investors.

Infrastructure

• ₹103 lakh crore National Infrastructure Pipeline projects earlier announced.
• ₹22,000 crores to cater to the equity support to Infrastructure Finance Companies such as IIFCL and a subsidiary of NIIF.
• GIFT city to set up an International Bullion exchange(s) as an additional option for trade by global market participants to create jobs in India and lead to better price discovery of gold.
• National Logistics Policy to be launched soon.
• Accelerated development of highways to be undertaken. Delhi-Mumbai Expressway and two other packages to be completed by 2023.

• Union Budget 2020-21 proposed to monetise at least 12 lots of highway bundles of over 6000 Km before 2024.
• 100 more airports to be developed by 2024 to support Udaan scheme.
• Corporatizing at least one major port and its listing on stock exchanges to be considered.
• Economic activity along river banks to be energised as per Prime Minister’s Arth Ganga concept.
• Conventional energy metres to be replaced with by prepaid smart metres in 3 years.
• Expansion of national gas grid from 16,200kms to 27,000kms.
• Setting up of large solar power capacity alongside rail tracks on land owned by railways.
• More Tejas type trains to connect iconic tourist destinations.
• 148km long Bengaluru Suburban Transport Project based on metro model fares.
• Four station redevelopment and operation of 150 trains through PPP mode.

Make In India & Digital India

• 5 new smart cities will be developed in collaboration with states in PPP mode.
• An Investment Clearance Cell will be set up that will provide “end to end” facilitation and support and to work through a portal.
• Scheme to encourage the manufacturing of mobile phones, electronic equipment, and semiconductor packaging.
• A National Technical Textiles Mission is proposed with a four-year implementation period from 2020-21 to 2023-24 to position India as a global leader in Technical Textiles.
• Technology clusters and roadmap for AI and 5G.
• A policy to enable the private sector to build Data Centre parks throughout the country to be brought out soon.
• FTTH connections through Bharatnet to link 1,00,000 gram panchayat this year. ₹ 6,000 crores allocated for Bharatnet programme for 2020-21.

Culture & Tourism

• Allocation of ₹ 2,500 crores for 2020-21 for tourism promotion. ₹ 3,150 crores 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.
• 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)
• 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.

Environment & Climate Change

• ₹4,400 crores have been allocated for this purpose in the Union Budget 2020-21.
• PM launched the Coalition for Disaster Resilient Infrastructure (CDRI) with Secretariat in Delhi. Second such international initiative after International Solar Alliance.

Taxes

• Dividend Distribution Tax to be removed to increase the attractiveness of the Indian equity market. The dividend will now be taxed in the hands of recipients.
• Simplified return from the 1st April 2020 to make return filing simple with features like SMS based filing for NIL return, return pre-filing, improved input tax credit flow, and overall simplification.
• Critical invoice information to be captured electronically in a centralised system for e-invoices.
• Aadhar based verification of taxpayers introduced to weed out the dummy and non-existent taxpayers.
• Dynamic QR-code proposed for consumer invoices. GST parameters to be captured when payment for purchases is made through the QR-code.
• A system of cash reward envisaged incentivising customers to seek invoice.
• New optional income tax regime proposed for Personal Income Tax in Union Budget 2020-21.

New Optional Income Tax Regime for Personal Income Tax

• Date of loan sanction for availing the additional deduction of up to ₹ 1.5 lakhs for interest paid on affordable house extended by one more year.
• The Income Tax Act has been amended to enable faceless appeal on the lines of faceless assessment, and Vivad se Vishwas scheme has been introduced to reduce litigations.
• Under the proposed scheme, taxpayers would be required to pay only the amount of the disputed taxes and will get a complete waiver of interest and penalty if they pay by 31st March 2020.
• Income Tax Act to be amended to mandate the CBDT to adopt a Taxpayers’ Charter in line with the best international practices.
• A new system will be developed under which PAN shall be alotted online on the basis of Aadhaar without any requirement for filing up the detailed application form.

Read the Economic Survey 2019-20.