The Crux of Union Budget 2021-22

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 The Crux of Union Budget 2021-22

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1. Focus on Expenditure: Finance Minister Nirmala Sitharaman has found space for imparting a fiscal impulse in 2021-22. Compared with a capex of Rs 4.12 lakh crore in Revised Estimate (RE) of 2020-21, she has hiked it 34.46 per cent to Rs 5.54 lakh crore in 2021-22.
2. Reformist approach: Two public-sector banks (PSBs) and one state-owned general insurance company to be disinvested. FDI in insurance to be hiked to 74% from 49% now. LIC IPO will be brought in.
3. Focus on growth: Year 2020-21 was bad for the common man, but the FM has avoided giving any income tax relief. No increase in standard deduction, no raise in the tax slabs. Sad and bad!
4. Health focus: Due to the Covid-19 pandemic, FM gave health the due attention. Health allocation jumped 137% to Rs 2,23,846 crore in 2021-22 compared with Rs 94,452 crore in 2020-21. Provided Rs 35,000 crore for the Covid-19 vaccine, and promised to provide further funds, if required.
5. Bad Bank arriving: After thinking for six years, the government has decided to set up an asset reconstruction company (ARC) that will take over the bad loans of banks, giving them flexibility to finance the economic recovery. But it's a risky idead, and carries the seed of 'moral hazard' in it.
6. Development Finance Institutions (DFI) reborn: The idea was dead in 1990s, with earlier DFIs including IDBI and ICICI turning into universal banks. To provide debt to long gestation projects, a new DFI arriving with a capital of Rs 20,000 crore. It will have statutory backing, but will be professionally managed. Lending portfolio of Rs 5 lakh crore within three years.
7. Asset Monetisation: This is an ongoing exercise, where the government needs to do more. National Monetisation Pipeline of potential assets of NHAI, PGCIL, Railways, airports, warehouses, sports stadiums is being created. Basically govt. is getting out of business, as part of neoliberal approach.
8. Elections: Four poll-bound states get big highway projects: Tamil Nadu (3,500 km – Rs 1.03 lakh crore), Kerala (1,100 km – Rs 65,000 crore), West Bengal (675 km – Rs 25,000 crore) and Assam (1,300 km – Rs 34,000 crore).
9. Strategic disinvestment: NITI Aayog asked to short list non-core PSUs for strategic sale. After a poor show in 2020-21, the government has estimated disinvestment receipts at Rs 1,75,000 crore. This is an unlikely-to-achieve target.
10. Growth is the key: The fiscal deficit estimated at 6.8 per cent of GDP in 2021-22, from 9.5% in 2020-21. It will be brought down to 4.5 per cent of GDP by 2025-26. All these calculations depend on GDP growth rate, which is a big question mark.

Read more on - Polity | Economy | Schemes | S&T | Environment

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