One thing you can be sure of about the budget that Finance Minister Nirmala Sitharaman announced a big push for social infrastructure for this fiscal. The budget proposed it’s highest ever Rs 2,23,846 crore budget outlay for healthcare sector and for the well-being of people for the year 2022. This marks an immense increase of 137 per cent from the outlay kept at Rs 94,452 crore in the current fiscal.
Given how the health infrastructure was found in troubled waters as the pandemic struck, the government took a solemn pledge of investing in it. The government in its most anticipated budget of 2021-22 announced a welcomed new centrally-funded scheme PM Swasthya Yojana having an outlay of Rs 64,180 crore which is aimed at developing and strengthening the primary, secondary and tertiary healthcare facilities. Apart from this, the New Education Policy has also found its mention in the budget announced on Monday. Industry experts definitely see these moves as a massive boost in development of social infrastructure by the Modi government.
For an economy waiting for a consumption-driven boost to relieve the battering economy, the Budget 2021 proved to be quite disappointing. Though the Budget had provisions to improve the conditions of living through provision and investment in health and well-being through PM swasthya yojana, there was no major immediate measure to boost disposable incomes as there were no changes in tax slabs. Moreover, it was highly expected by different sectors for the government to boost demand through tax breaks. On the contrary, increasing consumer excise duty led to the costlier fmcg items which has the potential to plummet the growth.
As the government immensely invests in the healthcare sector, much funds have been apportioned to water and the sanitation programme. This adds to the noble cause of the health care sector. The central government will aim to reserve Rs 35,000 crores for vaccination drive. In addition to this the finance commission will grant another Rs. 13,000 crores to states in the bid to incentivize them to invest in the health sector.
Another sector that is all set to get an investment boost is the agriculture infrastructure sector. In a bid to improve agricultural infrastructure and enhance farmers’ remuneration, the Agriculture Infrastructure and Development Cess (AIDC) has been proposed in the budget. The cess will be applicable on the small number of items such as petrol & diesel and liquor. Cess on fuel prices is certainly a negative for consumers – reducing their share of purchase. This also comes as a negative for market leader HUL.
The 2021 budget can also be called the ‘diplomacy budget’ as the external Affairs ministry got an immense boost in budgetary allocation. This is due to the immense priority role that the external ministry is to play in vaccine diplomacy to finishing key infrastructure projects abroad. Rs. 18,154 crores have been allocated to the ministry of external affairs. This is the highest ever boost that the ministry got and also an increase of 4.65% from 2021 year’s budget estimates.
The budget has considerably increased capital expenditure this year amounting to Rs. 34.83 lakh crore. It is also projected that the government will borrow about Rs. 12 lakh crores in FY22 which amounts to 40% of the GDP. Thus, the fiscal deficit of the government is all set to shoot up. The fiscal deficit has been estimated to stand at 6.8% in FY22.
The relief has been provided to the senior citizens with no tax filling for seniors above 75 years of age. The government Is also all set to introduce DFIs (Development Financial Infrastructure). Rs 20,000 crore will be allotted to capitalize the new DFIs, with aim to have a lending portfolio of Rs 5 lakh crore in 3 years. This has been done by considering the long-term investment needs of the economy.