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Daily Current Capsules 02nd February 2021

The first ever digital Union Budget
The key highlights of the Union Budget 2021-22 are as follows:
6 pillars of the Union Budget 2021-22:

  1. Health and Wellbeing
  2. Physical & Financial Capital, and Infrastructure
  3. Inclusive Development for Aspirational India
  4. Reinvigorating Human Capital
  5. Innovation and R&D
  6. Minimum Government and Maximum Governance

1.Health and Wellbeing

  • Rs. 2,23,846 crore outlay for Health and Wellbeing in BE 2021-22 as against Rs. 94,452 crore in BE 2020-21 - an increase of 137%
  • Focus on strengthening three areas: Preventive, Curative, and Wellbeing

Vaccines

  • Rs. 35,000 crore for COVID-19 vaccine in BE 2021-22
  • The Made-in-India Pneumococcal Vaccine to be rolled out across the country, from present 5 states - to avert 50,000 child deaths annually

Health Systems

  • . 64,180 crore outlay over 6 years for PM AatmaNirbhar Swasth Bharat Yojana - a new centrally sponsored scheme to be launched, in addition to NHM

PM AatmaNirbhar Swasth Bharat Yojana:

  • National Institution for One Health
  • 17,788 rural and 11,024 urban Health and Wellness Centers
  • 4 regional National Institutes for Virology
  • 15 Health Emergency Operation Centers and 2 mobile hospitals
  • Integrated public health labs in all districts and 3382 block public health units in 11 states

Nutrition
Mission Poshan 2.0 to be launched:

  • To strengthen nutritional content, delivery, outreach, and outcome
  • Merging the Supplementary Nutrition Programme and the Poshan Abhiyan
  • Intensified strategy to be adopted to improve nutritional outcomes across 112 Aspirational Districts

Universal Coverage of Water Supply

  • Rs. 2,87,000 crore over 5 years for Jal Jeevan Mission (Urban) - to be launched with an aim to provide: 2.86 crore household tap connections
  • Universal water supply in all 4,378 Urban Local Bodies
  • Liquid waste management in 500 AMRUT cities

Swachch Bharat, Swasth Bharat

  • Rs. 1,41,678 crore over 5 years for Urban Swachh Bharat Mission 2.0

Main interventions under Swachh Bharat Mission (Urban) 2.0:

  • Complete faecal sludge management and waste water treatment
  • Source segregation of garbage
  • Reduction in single-use plastic
  • Reduction in air pollution by effectively managing waste from construction-and-demolition activities
  • Bio-remediation of all legacy dump sites

Clean Air

  • Rs. 2,217 crore to tackle air pollution, for 42 urban centers with a million- plus population

Scrapping Policy
Voluntary vehicle scrapping policy to phase out old and unfit vehicles  Fitness tests in automated fitness centres:

  • After 20 years in case of personal vehicles
  • After 15 years in case of commercial vehicles

2. Physical and Financial Capital and Infrastructure

Production Linked Incentive scheme (PLI)

  • Rs. 1.97 lakh crore in next 5 years for PLI schemes in 13 Sectors
  • To create and nurture manufacturing global champions for an

AatmaNirbhar Bharat

  • To help manufacturing companies become an integral part of global supply chains, possess core competence and cutting-edge technology
  • To bring scale and size in key sectors
  • To provide jobs to the youth

Textiles

  • Mega Investment Textiles Parks (MITRA) scheme, in addition to PLI: o 7 Textile Parks to be established over 3 years
  • Textile industry to become globally competitive, attract large investments and boost employment generation & exports

Infrastructure


National Infrastructure Pipeline (NIP) expanded to 7,400 projects:

  • Around 217 projects worth Rs. 1.10 lakh crore completed

Measures in three thrust areas to increase funding for NIP:

  • Creation of institutional structures
  • Big thrust on monetizing assets
  • Enhancing the share of capital expenditure

Creation of institutional structures: Infrastructure Financing

  • Rs. 20,000 crore to set up and capitalise a Development Financial Institution(DFI) - to act as a provider, enabler and catalyst for infrastructure financing
  • Rs. 5 lakh crore lending portfolio to be created under the proposed DFI in 3 years
  • Debt Financing by Foreign Portfolio Investors to be enabled by amending InvITs‟ and REITs‟ legislations

Big thrust on monetizing assets

National Monetization Pipeline to be launched Important asset monetization measures:

  1. 5 operational toll roads worth Rs. 5,000 crore being transferred to the NHAIInvIT
  2. Transmission assets worth Rs. 7,000 crore to be transferred to the PGCILInvIT
  3. Dedicated Freight Corridor assets to be monetized by Railways, for operations and maintenance, after commissioning
  4. Next lot of Airports to be monetized for operations and management concession

Other core infrastructure assets to be rolled out under the Asset Monetization Programme:

  • Oil and Gas Pipelines of GAIL, IOCL and HPCL
  • AAI Airports in Tier II and III cities
  • Other Railway Infrastructure Assets
  • Warehousing Assets of CPSEs such as Central Warehousing Corporation and NAFED
  • Sports Stadiums

Sharp Increase in Capital Budget

  • Rs. 5.54 lakh crore capital expenditure in BE 2021-22 - sharp increase of 34.5% over Rs. 4.12 lakh crore allocated in BE 2020-21

Roads and Highways Infrastructure

  • Rs. 1,18,101 lakh crore, highest ever outlay, for Ministry of Road Transport and Highways - of which Rs. 1,08,230 crore is for capital
  • Under the Rs. 5.35 lakh crore Bharatmala Pariyojana, more than 13,000 km length of roads worth Rs. 3.3 lakh crore awarded for construction

Railway Infrastructure

  • Rs. 1,10,055 crore for Railways of which Rs. 1,07,100 crore is for capital expenditure
  • National Rail Plan for India (2030): to create a „future ready‟ Railway system by 2030
  • 100% electrification of Broad-Gauge routes to be completed by December, 2023
  • Broad Gauge Route Kilometers (RKM) electrification to reach 46,000 RKM, i.e. 72% by end of 2021
  • Western Dedicated Freight Corridor (DFC) and Eastern DFC to be commissioned by June 2022, to bring down the logistic costs - enabling Make in India strategy

Future dedicated freight corridor projects -

  • East Coast corridor from Kharagpur to Vijayawada
  • East-West Corridor from Bhusaval to Kharagpur to Dankuni
  • North-South corridor from Itarsi to Vijayawada

Measures for passenger convenience and safety:

  • Aesthetically designed Vista Dome LHB coach on tourist routes for better travel
  • High density network and highly utilized network routes to have an indigenously developed automatic train protection system, eliminating train collision due to human error

Urban Infrastructure

  • Raising the share of public transport in urban areas by expansion of metro rail network and augmentation of city bus service
  • Rs. 18,000 crore for a new scheme, to augment public bus transport:
  • ‘MetroLite' and ‘MetroNeo' technologies to provide metro rail systems at much lesser cost with similar experience in Tier-2 cities and peripheral areas of Tier-1 cities.

Power Infrastructure

  • 139 Giga Watts of installed capacity and 1.41 lakh circuit km of transmission lines added, and additional 2.8 crore households connected in past 6 years
  • Consumers to have alternatives to choose the Distribution Company for enhancing competitiveness
  • A comprehensive National Hydrogen Energy Mission 2021-22 to be launched


Ports, Shipping, Waterways

  • Rs. 2,000 crore worth 7 projects to be offered in PPP-mode in FY21-22 for operation of major ports
  • Indian shipping companies to get Rs. 1624 crore worth subsidy support over 5 years in global tenders of Ministries and CPSEs
  • To double the recycling capacity of around 4.5 Million Light Displacement Tonne (LDT) by 2024; to generate an additional 1.5 lakh jobs

Petroleum & Natural Gas

  • Extention of Ujjwala Scheme to cover 1 crore more beneficiaries
  • To add 100 more districts to the City Gas Distribution network in next 3 years
  • A new gas pipeline project in J&K
  • An independent Gas Transport System Operator to be set up for facilitation and coordination of booking of common carrier capacity in all- natural gas pipelines on a non-discriminatory open access basis

Financial Capital

  • A single Securities Markets Code to be evolved
  • Support for development of a world class Fin-Tech hub at the GIFT-IFSC
  • A new permanent institutional framework to help in development of Bond market by purchasing investment grade debt securities both in stressed and normal times
  • Setting up a system of Regulated Gold Exchanges: SEBI to be notified as a regulator and Warehousing Development and Regulatory Authority to be strengthened
  • To develop an investor charter as a right of all financial investors
  • Capital infusion of Rs. 1,000 crore to Solar Energy Corporation of India and Rs. 1,500 crore to Indian Renewable Energy Development Agency

Increasing FDI in Insurance Sector

  • To increase the permissible FDI limit from 49% to 74% and allow foreign ownership and control with safeguards

Stressed Asset Resolution

 

  • Asset Reconstruction Company Limited and Asset Management Company to be set up

Recapitalization of PSBs

 

  • Rs. 20,000 crore in 2021-22 to further consolidate the financial capacity of PSBs

Deposit Insurance

  • Amendments to the DICGC Act, 1961, to help depositors get an easy and time-bound access to their deposits to the extent of the deposit insurance cover
  • Minimum loan size eligible for debt recovery under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 proposed to be reduced from Rs. 50 lakh to Rs. 20 lakh for NBFCs with minimum asset size of Rs. 100 crore

Company Matters

  • To decriminalize the Limited Liability Partnership (LLP) Act, 2008
  • Easing Compliance requirement of Small companies by revising their definition under Companies Act, 2013 by increasing their thresholds for Paid up capital from "not exceeding Rs. 50 Lakh" to "not exceeding Rs. 2 Crore" and turnover from "not exceeding Rs. 2 Crore" to "not exceeding Rs. 20 Cr".
  • Promoting start-ups and innovators by incentivizing the incorporation of One Person Companies (OPCs):
  • Allowing their growth without any restrictions on paid up capital and turnover
  • Allowing their conversion into any other type of company at any time,
  • Reducing the residency limit for an Indian citizen to set up an OPC from 182 days to 120 days andAllowing Non Resident Indians (NRIs) to incorporate OPCs in India.

To ensure faster resolution of cases by:

  • Strengthening NCLT framework
  • Implementation of e-Courts system
  • Introduction of alternate methods of debt resolution and special framework for MSMEs
  • Launch of data analytics, artificial intelligence, machine learning driven MCA21 Version 3.0 in 2021-22

Disinvestment and Strategic Sale

  • Rs. 1,75,000 crore estimated receipts from disinvestment in BE 2020-21
  • Strategic disinvestment of BPCL, Air India, Shipping Corporation of India, Container Corporation of India, IDBI Bank, BEML, Pawan Hans, Neelachal Ispat Nigam limited etc. to be completed in 2021-22.
  • Other than IDBI Bank, two Public Sector Banks and one General Insurance company to be privatized
  • IPO of LIC in 2021-22
  • New policy for Strategic Disinvestment approved; CPSEs except in four strategic areas to be privatized
  • NITI Aayog to work out on the next list of CPSEs to be taken up for strategic disinvestment
  • Incentivizing States for disinvestment of their Public Sector Companies, using central funds
  • Special Purpose Vehicle in the form of a company to monetize idle land
  • Introducing a revised mechanism for ensuring timely closure of sick or loss making CPSEs

Government Financial Reforms

  • Treasury Single Account (TSA) System for Autonomous Bodies to be extended for universal application
  • Separate Administrative Structure to streamline the „Ease of Doing Business‟ for Cooperatives

3. Inclusive Development for Aspirational India

Agriculture

  • Ensured MSP at minimum 1.5 times the cost of production across all commodities.
  • SWAMITVA Scheme to be extended to all States/UTs, 1.80 lakh property- owners in 1,241 villages have already been provided cards
  • Agricultural credit target enhanced to Rs. 16.5 lakh crore in FY22 - animal husbandry, dairy, and fisheries to be the focus areas
  • Rural Infrastructure Development Fund to be enhanced to Rs. 40,000 crore from Rs. 30,000 crore
  • To double the Micro Irrigation Fund to Rs. 10,000 crore
  • ‘Operation Green Scheme' to be extended to 22 perishable products, to boost value addition in agriculture and allied products
  • Around 1.68 crore farmers registered and Rs. 1.14 lakh crore of trade value carried out through e-NAMs; 1,000 more mandis to be integrated with e-NAM to bring transparency and competitiveness.
  • APMCs to get access to the Agriculture Infrastructure Funds for augmenting infrastructure facilities

Fisheries

  • Investments to develop modern fishing harbours and fish landing centres - both marine and inland
  • 5 major fishing harbours - Kochi, Chennai, Visakhapatnam, Paradip, and Petuaghat to be developed as hubs of economic activity
  • Multipurpose Seaweed Park in Tamil Nadu to promote seaweed cultivation

Migrant Workers and Labourers

  • One Nation One Ration Card scheme for beneficiaries to claim rations anywhere in the country - migrant workers to benefit the most
  • Scheme implementation so far covered 86% of beneficiaries across 32 States and UTs and the remaining 4 states to be integrated in next few months
  • Portal to collect information on unorganized labour force, migrant workers especially, to help formulate schemes for them

Implementation of 4 labour codes underway

  • Social security benefits for gig and platform workers too minimum wages and coverage under the Employees State Insurance
  • Corporation applicable for all categories of workers
  • Women workers allowed in all categories, including night-shifts with adequate protection
  • Compliance burden on employers reduced with single registration and licensing, and online returns

Financial Inclusion

  • Under Stand Up India Scheme for SCs, STs and women,
  • Margin money requirement reduced to 15%
  • To also include loans for allied agricultural activities
  • Rs. 15,700 crore budget allocation to MSME Sector, more than double of this year‟s BE

4. Reinvigorating Human Capital
School Education

  • 15,000 schools to be strengthened by implementing all NEP components. Shall act as exemplar schools in their regions for mentoring others
  • 100 new Sainik Schools to be set up in partnership with NGOs/private schools/states

Higher Education

  • Legislation to be introduced to setup Higher Education Commission of India as an umbrella body with 4 separate vehicles for standard-setting, accreditation, regulation, and funding
  • Creation of formal umbrella structure to cover all Govt. colleges, universities, research institutions in a city for greater synergy.
  • Central University to come up in Leh for accessibility of higher education in Ladakh

Scheduled Castes and Scheduled Tribes Welfare

  • 750 Eklavya model residential schools in tribal areas:
  • Unit cost of each school to be increased to Rs. 38 crore
  • For hilly and difficult areas, to Rs. 48 crore
  • Focus on creation of robust infrastructure facilities for tribal students

Revamped Post Matric Scholarship Scheme for welfare of SCs

  • Rs. 35,219 crore enhanced Central Assistance for 6 years till 2025- 2026
  • 4 crore SC students to benefit

Skilling

  • Proposed amendment to Apprenticeship Act to enhance opportunities for youth
  • Rs. 3000 crore for realignment of existing National Apprenticeship Training Scheme (NATS) towards post-education apprenticeship, training of graduates and diploma holders in Engineering

Initiatives for partnership with other countries in skilling to be taken forward, similar to partnership:

  • With UAE to benchmark skill qualifications, assessment, certification, and deployment of certified workforce
  • With Japan for a collaborative Training Inter Training Programme (TITP) to transfer of skills, technique and knowledge


5. Innovation and R&D

Modalities of National Research Foundation announced in July 2019 -

  1. Rs. 50,000 crore outlay over 5 years
  2. To strengthen overall research ecosystem with focus on national-priority thrust areas Rs. 1,500 crore for proposed scheme to promote digital modes of payment
  • National Language Translation Mission (NTLM) to make governance-and-policy related knowledge available in major Indian languages
  • PSLV-CS51 to be launched by New Space India Limited (NSIL) carrying Brazil‟s Amazonia Satellite and some Indian satellites

As part of the Gaganyaan mission activities:

  • 4 Indian astronauts being trained on Generic Space Flight aspects, in Russia
  • First unmanned launch is slated for December 2021
  • Rs. 4,000 crore over five years for Deep Ocean Mission survey exploration and conservation of deep sea biodiversity

6. Minimum Government, Maximum Governance

  • Measures being undertaken to bring reforms in Tribunals to ensure speedy justice
  • National Commission for Allied Healthcare Professionals already introduced to ensure transparent and efficient regulation of the 56 allied healthcare professions
  • The National Nursing and Midwifery Commission Bill introduced for the same in nursing profession
  • Proposed Conciliation Mechanism with mandate for quick resolution of contractual disputes with CPSEs
  • Rs. 3,768 crore allocated for first digital census in the history of India
  • Rs. 300 crore grant to the Government of Goa for the diamond jubilee celebrations of the states liberation from Portuguese
  • Rs. 1,000 crore for the welfare of Tea workers especially women and their children in Assam and West Bengal through a special scheme

15th FC

  • Net borrowing for the states allowed at 4% of GSDP for the year 2021-2022 as per recommendation of 15th FC
  • Part of this earmarked for incremental capital expenditure
  • Additional borrowing ceiling of 0.5% of GSDP will be provided subject to conditions

States expected to reach a fiscal deficit of 3% of GSDP by 2023-24, as recommended by the 15th Finance Commission
Fifteenth Finance Commission:

  • The final report covering 2021-26 was submitted to the President, retaining vertical shares of states at 41%
  • Funds to UTs of Jammu and Kashmir and Ladakh would be provided by Centre
  • On the Commission‟s recommendation, Rs. 1,18,452 crore have been provided as Revenue Deficit Grant to 17 states in 2021-22, as against Rs. 74,340 crore to 14 states in 2020-21

Tax Proposals

  • Vision of a transparent, efficient tax system to promote investments and employment in the country with minimum burden on tax payers

 

  1. Direct Taxes Achievements:
  • Corporate tax rate slashed to make it among the lowest in the world
  • Burden of taxation on small taxpayers eased by increasing rebates
  • Return filers almost doubled to 6.48 crore in 2020 from 3.31 crore in 2014
  • Faceless Assessment and Faceless Appeal introduced Relief to Senior Citizens:
  • Exemption from filing tax returns for senior citizens over 75 years of age and having only pension and interest income; tax to be deducted by paying bank

Reducing Disputes, Simplifying Settlement:

  • Time limit for re-opening cases reduced to 3 years from 6 years
  • Serious tax evasion cases, with evidence of concealment of income of Rs. 50 lakh or more in a year, to be re-opened only up to 10 years, with approval of the Principal Chief Commissioner
  • Dispute Resolution Committee to be set up for taxpayers with taxable income up to Rs. 50 lakh and disputed income up to Rs. 10 lakh
  • National Faceless Income Tax Appellate Tribunal Centre to be established
  • Over 1 lakh taxpayers opted to settle tax disputes of over Rs. 85,000 crore through
  • Vivad Se Vishwas Scheme until 30th January 2021

Incentivising Digital Economy:

  • Limit of turnover for tax audit increased to Rs. 10 crore from Rs. 5 crore for entities carrying out 95% transactions digitally

Relief for Dividend:

  • Dividend payment to REIT/ InvIT exempt from TDS
  • Advance tax liability on dividend income only after declaration/ payment of dividend
  • Deduction of tax on dividend income at lower treaty rate for Foreign Portfolio Investors

Attracting Foreign Investment for Infrastructure:

  • Infrastructure Debt Funds made eligible to raise funds by issuing Zero Coupon Bonds
  • Relaxation of some conditions relating to prohibition on private funding, restriction on commercial activities, and direct investment

Supporting ‘Housing for All':

  • Additional deduction of interest, up to Rs. 1.5 lakh, for loan taken to buy an affordable house extended for loans taken till March 2022
  • Tax holiday for Affordable Housing projects extended till March 2022
  • Tax exemption allowed for notified Affordable Rental Housing Projects

Tax incentives to IFSC in GIFT City:

  • Tax holiday for capital gains from incomes of aircraft leasing companies
  • Tax exemptions for aircraft lease rentals paid to foreign lessors
  • Tax incentive for relocating foreign funds in the IFSC
  • Tax exemption to investment division of foreign banks located in IFSC

Relief to Small Trusts:

  • Exemption limit of annual receipt revised from Rs.1 crore to Rs.5 crore for small charitable trusts running schools and hospitals

Labour Welfare:

  • Late deposit of employee‟s contribution by the employer not to be allowed as deduction to the employer
  • Eligibility for tax holiday claim for start-ups extended by one more year
  • Capital gains exemption for investment in start-ups extended till 31st March, 2022

Indirect Taxes GST:
Measures taken till date:
a. Nil return through SMS
b. Quarterly return and monthly payment for small taxpayers o Electronic invoice system
c. Validated input tax statement
d. Pre-filled editable GST return
e. Staggering of returns filing
f. Enhancement of capacity of GSTN system
g. Use of deep analytics and AI to identify tax evaders


Custom Duty Rationalization:

  • Twin objectives: Promoting domestic manufacturing and helping India get onto global value chain and export better
  • 80 outdated exemptions already eliminated
  • Revised, distortion-free customs duty structure to be put in place from 1st October 2021 by reviewing more than 400 old exemptions
  • New customs duty exemptions to have validity up to the 31st March following two years from its issue date

Electronic and Mobile Phone Industry:

  • Some exemptions on parts of chargers and sub-parts of mobiles withdrawn
  • Duty on some parts of mobiles revised to 2.5% from ‘nil' rate Iron and Steel:
  • Customs duty reduced uniformly to 7.5% on semis, flat, and long products of non-alloy, alloy, and stainless steels
  • Duty on steel scrap exempted up to 31st March, 2022
  • Anti-Dumping Duty (ADD) and Counter-Veiling Duty (CVD) revoked on certain steel products
  • Duty on copper scrap reduced from 5% to 2.5%

Textiles:

  • Basic Customs Duty (BCD) on caprolactam, nylon chips and nylon fiber & yarn reduced to 5%

Chemicals:

  • Calibrated customs duty rates on chemicals to encourage domestic value addition and to remove inversions

Duty on Naptha reduced to 2.5% Gold and Silver:

  • Custom duty on gold and silver to be rationalized Renewable Energy:
  • Phased manufacturing plan for solar cells and solar panels to be notified
  • Duty on solar invertors raised from 5% to 20%, and on solar lanterns from 5% to

15% to encourage domestic production Capital Equipment:

  • Tunnel boring machine to now attract a customs duty of 7.5%; and its parts a duty of 2.5%
  • Duty on certain auto parts increased to general rate of 15% MSME Products:
  • Duty on steel screws and plastic builder wares increased to 15%
  • Prawn feed to attract customs duty of 15% from earlier rate of 5%
  • Exemption on import of duty-free items rationalized to incentivize exporters of garments, leather, and handicraft items
  • Exemption on imports of certain kind of leathers withdrawn
  • Customs duty on finished synthetic gem stones raised to encourage domestic processing

Agriculture Products:

  • Customs duty on cotton increased from nil to 10% and on raw silk and silk yarn from 10% to 15%.
  • Withdrawal of end-use based concession on denatured ethyl alcohol
  • Agriculture Infrastructure and Development Cess (AIDC) on a small number of items

Rationalization of Procedures and Easing of Compliance:

  • Turant Customs initiative, a Faceless, Paperless, and Contactless Customs measures
  • New procedure for administration of Rules of Origin Achievements and Milestones during the COVID-19 pandemic

Pradhan Mantri Garib Kalyan Yojana (PMGKY):

  • Free food grain to 80 crore people
  • Free cooking gas for 8 crore families
  • Direct cash to over 40 crore farmers, women, elderly, the poor and the needy

AatmaNirbhar Bharat package (ANB 1.0):

  • Estimated at Rs. 23 lakh crore - more than 10% of GDP
  • PMGKY, three ANB packages (ANB 1.0, 2.0, and 3.0), and announcements made later were like 5 mini-budgets in themselves
  • Rs. 27.1 lakh crore worth of financial impact of all three ANB packages including RBI‟s measures - amounting to more than 13% of GDP

Structural reforms:

  • One Nation One Ration Card
  • Agriculture and Labour Reforms
  • Redefinition of MSMEs
  • Commercialisation of the Mineral Sector
  • Privatisation of Public Sector Undertakings
  • Production Linked Incentive Schemes

2021 - Year of milestones for Indian history

  • 75th year of India's independence
  • 60 years of Goa‟s accession to India
  • 50 years of the 1971 India-Pakistan War
  • Year of the 8th Census of Independent India
  • India‟s turn at the BRICS Presidency
  • Year for Chandrayaan-3 Mission
  • Haridwar MahaKumbh

Vision for AatmaNirbhar Bharat (Strengthening the Sankalp of: )

  • Nation First
  • Doubling Farmer‟ Income
  • Strong Infrastructure
  • Healthy India
  • Good Governance
  • Opportunities for Youth
  • Education for All
  • Women Empowerment
  • Inclusive Development

Budget Terminologies
1. Union Budget

  • Union Budget is the most comprehensive report of the Government's Finances in which revenues from all sources and outlays for all activities are consolidated. The Budget also contains estimates of the Government's accounts for the next fiscal year called Budgeted Estimates.

2. Direct and Indirect Taxes

  • Direct taxes are the one that fall directly on individuals and corporations. For example, income tax, corporate tax etc.
  • Indirect taxes are imposed on goods and services. They are paid by consumers when they buy goods and services. These include excise duty, customs duty etc.

3. GST

  • The constitution defines "Goods and Services Tax" means any tax on supply of goods, or services or both except taxes on the supply of the alcoholic liquor for human consumption.
  • "goods" means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply
  • "services" means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged

4. Customs Duty

  • These are levies charged when goods are imported into, or exported from, the country, and they are paid by the importer or exporter. Usually, these are also passed on to the consumer.

5. Fiscal Deficit

 

  • When the government's non-borrowed receipts fall short of its entire expenditure, it has to borrow money form the public to meet the shortfall. The excess of total expenditure over total non-borrowed receipts is called the fiscal deficit.

6. Revenue Deficit

 

  • The difference between revenue expenditure and revenue receipt is known as revenue deficit. It shows the shortfall of government's current receipts over current expenditure.

7.Primary Deficit

  • The primary deficit is the fiscal deficit minus interest payments. It tells how much of the Government's borrowings are going towards meeting expenses other than interest payments.

8. Fiscal policy

  • It is the government actions with respect to aggregate levels of revenue and spending. Fiscal policy is implemented though the budget and is the primary means by which the government can influence the economy.

9. Monetary Policy

 

  • This comprises actions taken by the central bank (i.e. RBI) to regulate the level of money or liquidity in the economy, or change the interest rates.

10. Inflation

  • A sustained increase in the general price level. The inflation rate is the percentage rate of change in the price level.

11. Capital Budget

  • The Capital Budget consists of capital receipts and payments. It includes investments in shares, loans and advances granted by the central Government to State Governments, Government companies, corporations and other parties.

12. Revenue Budget

  • The revenue budget consists of revenue receipts of the Government and it expenditure. Revenue receipts are divided into tax and non-tax revenue. Tax revenues constitute taxes like income tax, corporate tax, excise, customs, service and other duties that the Government levies. The non-tax revenue sources include interest on loans, dividend on investments.

13. Finance Bill

  • The Bill produced immediately after the presentation of the Union Budget detailing the Imposition, abolition, alteration or regulation of taxes proposed in the Budget.

14. Vote on Account

  • The Vote on Account is a grant made in advance by the parliament, in respect of the estimated expenditure for a part of new financial year, pending the completion of procedure relating to the voting on the Demand for Grants and the passing of the Appropriation Act.

15. Excess Grants

  • If the total expenditure under a Grant exceeds the provision allowed through its original Grant and Supplementary Grant, then, the excess requires regularization by obtaining the Excess Grant from the Parliament under Article 115 of the Constitution of India.

 

  • It will have to go though the whole process as in the case of the Annual Budget, i.e. through presentation of Demands for Grants and passing of Appropriation Bills.

16. Budget Estimates

  • Amount of money allocated in the Budget to any ministry or scheme for the coming financial year.

17. Revised Estimates

  • Revised Estimates are mid-year review of possible expenditure, taking into account the rest of expenditure, New Services and New instrument of Services etc. Revised Estimates are not voted by the Parliament, and hence by itself do not provide any authority for expenditure. Any additional projections made in the Revised Estimates need to be authorized for expenditure through the Parliament's approval or by Re-appropriation order.

18. Re-appropriations

  • Re-appropriations allow the Government to re-appropriate provisions from one sub-head to another within the same Grant. Re-appropriation provisions may be sanctioned by a competent authority at any time before the close of the financial year to which such grant or appropriation relates. The Comptroller & Auditor General and the Public Accounts Committee reviews these re- appropriations and comments on them for taking corrective actions.

19. Outcome Budget

  • From the fiscal year 2006-07, every Ministry presents a preliminary Outcome Budget to the Ministry of Finance, which is responsible for compiling them. The Outcome Budget is a progress card on what various Ministries and Departments have done with the outlays in the previous annual budget. It measures the development outcomes of all Government programs and whether the money has been spent for the purpose it was sanctioned including the outcome of the fund usage.

20. Guillotine

  • Parliament, unfortunately, has very limited time for scrutinising the expenditure demands of all the Ministries. So, once the prescribed period for the discussion on Demands for Grants is over, the Speaker of Lok Sabha puts all the outstanding Demands for Grants, Whether discussed or not, to the vote of the House. This process is popularly known as 'Guillotine'.

21. Cut Motions

  • Motions for reduction to various Demands for Grants are made in the Form of Cut Motions seeking to reduce the sums sought by Government on grounds of economy or difference of opinion on matters of policy or just in order to voice a grievance.

22. Consolidated Fund of India

  • All revenues raised by the Government, money borrowed and receipts from loans given by the Government ow into it. All Government expenditure other than certain exceptional items met from Contingency Fund and Public Account are made from this account. No money can be appropriated from the Fund except in accordance with the law.

23. Contingency Fund of India

  • A fund placed at the disposal of the President to enable him/her to make advances to the executive/Government to meet urgent unforeseen expenditure.

24. Public Account

  • Under provisions of Article 266(1) of the Constitution of India, Public Account is used in relation to all the fund flows where Government is acting as a banker. Examples include Provident Funds and Small Savings. This money does not belong to government but is to be returned to the depositors. The expenditure from this fund need not be approved by the Parliament.

25. Corporate Tax

  • This is the tax paid by corporations or rms on the incomes they earn.

26. Minimum Alternative Tax (MAT)

  • The Minimum Alternative Tax is a minimum tax that a company must pay, even if it is under zero tax limits.

27. Disinvestment

  • By disinvestment we mean the sale of shares of public sector undertakings by the Government. The shares of government companies held by the Government are earning assets at the disposal of the Government. If these shares are sold to get cash, then earning assets are converted into cash, So it is referred to as disinvestment.

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