UTBT 34th Session
Topic- Budget 2021: Hits and Misses
Date- 27th February 2021
Time- 7:30 p.m.
Venue- Google Meet
The year 2020 has caused devastating human and economic catastrophe worldwide and India is no exception. The Covid-19 Pandemic and the ensuing stringent lockdowns have unleashed no less than a carnage on the economy- businesses were shut, consumption slumped, investments took a hit and unemployment skyrocketed. In such a scenario, the nation was eagerly waiting for the Budget, which is expected to propel India in the path of recovery and progress.
By discussing and building on the following topics, we intend to understand the Budget, the hits, the misses and whether or not it met the expectations of different sectors and people.
Infrastructure
Infrastructure development has been one of the major focus points of this year’s budget. Hence the budget allocated 34.5% more than last year as it is expected to generate a multiplier effect. We also witness the set-up of a Development Financial Institution.
Industry
We attempt to cover the topic pertaining to Industry using 3 main headings:
Capital Expenditure: The Budget estimate of the government’s capital expenditure for the year 2020-21 was Rs 1,084,748 crore.
Textile: Setting up of 7 mega textile parks, duty reduction in nylon but 10% levied import duty on cotton.
Power: with a budget allocation of Rs 3.05 lakh crore, concerns regarding absence of mention of power storage, funding of expansion of national grid and import duty on cotton were subsequently raised.
Agriculture and Fisheries
Agriculture: The increase in farm loan disbursal to 16.5 lakh crores, the enhanced allocation of 40,000 crores to Rural Infrastructure Development Fund, the doubling of the corpus to the Micro Irrigation Fund are some major key points.
Has the Budget deterred from announcing new proposals with regard to expanding the purview of MSP, even amid the farmers’ protest? In the absence of specific
Fisheries: An amount of 1220.84 crores has been allocated to the Department of Fisheries, which is the highest-ever budgetary support for the Department.
Keeping this in mind, we ask what is next for agri-startups, and why the budget deterred from addressing the purview of MSP.
Healthcare
As Covid19 made healthcare the central focal point, we saw the highest ever budgetary allocation of 2.24 lakh crores for FY22 (137% higher than the FY21 outlay), rising to 3 % of GDP. Moreover, 35,000 crores is a one-time investment for the vaccine rollout. But we can conclude that covid19 has certainly brought healthcare to the forefront, the question is its sustainability
Financial Sector
The NPA figures had been on the increase but with the onset of pandemic, people feared that this figure is going to worsen. This year’s budget finally warmed up to the idea of a bad bank. But is it going to meet the same end as the IBC or is it finally the start of a structural fix of the Indian banking system?
External Sector
One of the cornerstone of the Union budget 2020-21 was the decision to keep the fiscal deficit for 2021-22 at 6.8% of the GDP and to bring it back below the 4.5% mark by 2025-26. However, in reality, the deficit shot up to a high of 9.5% of the GDP. Further, the government has indicated to borrow significantly more than the FRBM targets currently allow. Considering this, the center proposes to amend the FRBM Act.
References:
1. Union Budget 2021: Textile industry welcomes Union
2. Budget; urges withdrawal of 10% cotton import duty – The Financial Express
4. https://www.
