Focus on Privatization, Health and Infrastructure in the Budget 2021

Image courtesy: indiatvnews.com

The Finance Minister Nirmala Sitharaman proposed in front of the Parliament the Budget 2021, today at 11 AM.

While the Budget will be analyzed in the coming days and weeks to come, there certainly can be laid out the key takeaways and important points in the speech of the Finance Minister on February 1, 2021. There has been an emphasis on Health and Infrastructure, and also on the vision of further privatization of public assets termed as ‘structural reforms’ by the Minister in the speech.

Sitharaman has announced significant proposals. The minister introduced a new flagship scheme ‘PM Atmanirbhar Swasth Bharat Yojana’, for which around 64,000 crores have been outlaid. The government has also provided 35,000 crores for vaccines, adding that more could be provided too.

Also read: Zero Budget for Farmers, Proves Our Apprehensions Right: Farmers’ Unions

The Modi Government’s total expenditure in 2020-2021 was 34.50 Lakh Crores, significantly higher than the planned 30.42 Lakh Crores in the Budget Estimates last year. The Fiscal Deficit in FY’21 stood at 9.5%, which is significantly high than the ones that have been allowed by the policy of ‘fiscal prudence’ in previous years. FM targets the fiscal deficit of FY’22 to 6.8%.

While there has been no change in income tax slabs on the grounds of income, the senior citizens over the age of 75 who only have pension incomes have been exempted from income tax returns.

The government has also proposed to increase capital expenditure to 5.54 Lakh Crores in 2021-22, which is 34% more than the Budget Estimates of 2020-21.

Also read: All India Kisan Sabha: Budget Betrays the Farmers Demands

Privatization and Increase in Prices

The Government has also decided to officially embark on the disinvestment of public assets. It is the expectation that around Rs 1.75 lakh crore will be earned by the government from stake sale in public sector companies and financial institutions, including 2 Public Sector banks and one insurance company, in the next fiscal year. The Initial Public Offering of Life Insurance Corporation has also been decided to get completed in 2021-22. Another decision associated with insurance companies is the hiking of the Foreign Direct Investment Cap from 49% to 74%. This means that a foreign investing company could now own a comfortable majority stake in the insurance companies of India.

The increase in budget for the Food Corporation of India has led to many speculating that govt might be thinking to privatise the FCI.

Nearly 28% of the Government’s increase in its expenditure in this tumultuous year of pandemic and the technical recession has been provided to the FCI, which was in bad debt and could not be seen as a clean, safe asset. Is this the preparation before privatization? That would have disastrous consequences for the food security of hundreds of millions of Indians.

Also read: 16 Oppn Parties to Boycott Presidential Address Tomorrow in Budget Session: Ghulam Azad

The Government has also introduced a New Agricultural Development Cess which will be Rs. 2.5 per liter on petrol and Rs. 4 per litre on diesel, and further 30% on Kabuli chana, 50% on Bengal gram, 20% on lentil (masoor). 2.5% cess is also imposed on gold and silver, with 35% on apples.

There has been a reduction in several subsidies to farmers and for education. The PM Kisan Scheme has been reduced by 13% and the National Education Mission’s funds have been cut by 12% too. There are also cuts in Petroleum subsidies by 68%.

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