Budget Highlights
- Expenditure: The government proposes to spend Rs 30,42,230 crore in 2020-21, which is 12.7% higher than the revised estimate of 2019-20.
- Receipts: The receipts (other than net borrowings) are expected to increase by 16.3% to Rs 22,45,893 crore, owing to higher estimated revenue from disinvestments.
- GDP growth: The government has assumed a nominal GDP growth rate of 10% (i.e., real growth plus inflation) in 2020-21. The nominal growth estimate for 2019-20 was 12%.
- Deficits: Revenue deficit is targeted at 2.7% of GDP, which is higher than the revised estimate of 2.4% in 2019-20. Fiscal deficit is targeted at 3.5% of GDP, lower than the revised estimate of 3.8% in 2019-20. Note that the government is estimated to breach its budgeted target for fiscal deficit (3.3%) in 2019-20 and the medium term fiscal target of 3% in 2020-21. This does not include off-budget borrowings (0.9% of GDP in 2020-21).
- Ministry allocations: Among the top 13 ministries with the highest allocations, the highest percentage increase is observed in the Ministry of Communications (129%), followed by the Ministry of Agriculture and Farmers’ Welfare (30%) and the Ministry of Home Affairs (20%).
- Policy Highlights
- Legislative Changes: The Banking Regulation Act, 1949 will be amended for better governance of cooperative banks. The limit for NBFCs to be eligible for debt recovery under the SARFAESI Act, 2002 will be reduced. The asset size will be reduced from Rs 500 crore to Rs 100 crore, and loan size will be reduced from one crore rupees to Rs 50 lakh. The Deposit Insurance and Credit Guarantee Corporation has been permitted to increase deposit insurance coverage for a depositor, which will now be one lakh to five lakh rupees, per depositor. The Factor Regulation Act, 2011 will be amended to enable NBFCs to extend invoice financing to MSMEs. The PFRDA Act will be amended to separate NPS trust for government employees for PFRDAI. Laws where there is criminal liability for acts that are civil in nature will be examined and amended. Contracts Act, 1872 will be strengthened to ensure that contracts are honoured.
- GST Compensation: GST compensation balances for 2016-17 and 2017-18 will be paid in two instalments. From now, transfer to GST Compensation Fund will be only through the compensation cess.
- Disinvestment: The government will sell a part of its holding in LIC through an Initial Public Offer. The government also plans to sell the balance of its holding in IDBI Bank.
- Investment: Certain specified categories of government securities will be opened fully for non-resident investors. The limit for Foreign Portfolio Investment in corporate bonds will be increased from 9% to 15% of the outstanding stock of corporate bonds. It has been proposed to set up an Investment Clearance Cell which will provide “end to end” facilitation and support, such as pre-investment advisory at the central and state level.
- Commerce and Industry: A scheme focused on encouraging manufacturing of mobile phones, electronic equipment, and semi-conductor packaging has been proposed. The National Technical Textiles Mission will be implemented from 2020-21 to 2023-24 with an outlay of Rs 1,480 crore. A scheme will be launched for the refund of duties and taxes on exported products, which are not getting exempted under any other existing mechanism.
- Infrastructure and Urban Development: The government will build 6,500 projects under the National Infrastructure Pipeline. These projects will include housing, safe drinking water, and healthcare, among others. A National Logistics Policy will be released which will clarify the roles of the central government, state governments, and key regulators. Further, it will create a single window e-logistics market. Five new smart cities will be developed in collaboration with states in public-private partnership mode.
- Transport and Energy: Four railway station re-development projects and operation of 150 passenger trains will be done through public-private partnership mode. The government will encourage states to replace conventional energy meters with prepaid smart meters by 2023. It has been proposed to expand the national gas grid from 16,200 km to 27,000 km.
- Agriculture and allied activities: The government will expand the Pradhan Mantri Kisan Urja Suraksha evam Utthan Mahabhiyan scheme to help 20 lakh farmers in setting up stand-alone solar pumps. Viability gap funding will be provided for setting up warehouses at the block level. All eligible beneficiaries of Pradhan Mantri Kisan Samman Nidhi will be covered under the Kisan Credit Card scheme. The government will propose comprehensive measures for 100 water stressed districts.
- Technology: A policy will be introduced to enable private sector to build data centre parks. Fibre to the Home connections through Bharatnet will link one lakh gram panchayats in 2020. A new National Policy on Official Statistics has been proposed which will use latest technology including Artificial Intelligence. An outlay of Rs 8,000 crore has been proposed for the National Mission on Quantum Technologies and Applications, over a period of five years.
- Education: The new National Education Policy will be announced. Steps will be taken to enable sourcing of External Commercial Borrowings and Foreign Direct Investment for education. Degree level online education programme will be started by institutions who rank within top 100 in the National Institutional Ranking framework.
- Health: Jan Aushadhi Kendra scheme will be expanded to all districts and 2,000 medicines and 300 surgicals will be offered by 2024. Viability gap funding window has been proposed for setting up hospitals in the public-private partnership mode.
- Social Justice: Legislative and institutional changes will be made to ensure that there is no manual cleaning of sewer systems or septic tanks. Rs 28,600 crore has been allocated for programs specific to women.
- National Recruitment Agency: National Recruitment Agency will be set up for recruitment of non-gazetted posts in government and public sector banks.
- Receipts Highlights for 2020-21
- Total receipts (including borrowings) in 2020-21 are estimated to be Rs 30,42,230 crore and net receipts (excluding borrowings) to be Rs 22,45,893 crore. Receipts (without borrowings) are estimated to increase by 16.3% over the revised estimates of 2019-20.
- Gross tax revenue is budgeted to increase by 12% over the revised estimates of 2019-20, which is higher than the estimated nominal GDP growth of 10% in 2020-21. The net tax revenue of the central government (excluding states’ share in taxes) is estimated to be Rs 16,35,909 crore in 2020-21.
- Devolution to states from centre’s tax revenue is estimated to be Rs 7,84,181 crore in 2020-21. In 2019-20, the devolution to states reduced by 19% from an estimate of Rs 8,09,133 crore at the budgeted stage to Rs 6,56,046 crore at the revised stage.
- Non-tax revenue is expected to be Rs 3,85,017 crore in 2020-21. This is 11.4% higher than the revised estimate of 2019-20.
- Capital receipts (without borrowings) are budgeted to increase by 175.7% over the revised estimates of 2019-20. This is on account of disinvestments, which are expected to be Rs 2,10,000 crore in 2020-21, as compared to Rs 65,000 crore as per the revised estimates of 2019-20.