Basics of budget and highlights of Budget 2021

1. Lecture on
Union Budget of India

2. OUTLINE OF THE LECTURE
 Introduction
 Role of The Government
 Keynesian Economics
 Budget and Types
 Objectives of the Budget
 History of Indian Budget
 Highlights of Union Budget – 2021

3. Introduction
Government has several policies to meet the objectives of social &
economic growth. (Fiscal Policy, Monetary Policy Etc.)
It has to spend huge amount of funds on Different sector of the
economy.
It is necessary to find out all possible sources of revenue to meet the
escalating expenditure. (Tax Income and Non Tax Income).
According to Constitution of India, there is three-tier system of
government, namely. Central (or Union) government. State government
and Local government.
Accordingly, these governments prepare their own respective budgets
(called Union Budget, State Budget and Municipal Budget) containing
estimates of expected revenue and proposed expenditure.

4. Role of The Government in the Economy
1.Protection from External Aggression
Adam Smith: Confined to 2.Maintenance of Law and Order
3.Public Works
Prof. Musgrave: Public Economist
Any Govt must do main 3 Economic Functions
1. Allocation Function: resources in use are divided between private goods and social goods
2. Distribution Function: distribution of wealth and income to ensure “fair or just” in economy
3. Stability Function: maintaining high employment, price stability and an appropriate rate of
economic growth, with allowances for effects on trade and balance of payments.

5. Keynesian Economics
 Keynesian economics was developed by the British Economist John
Maynard Keynes during the 1930s in an attempt to understand the
Great Depression.
 Keynesian economics is considered a "demand-side" theory that
focuses on changes in the economy over the short run.
 In his theory, Keynes advocated for increased government
expenditures and lower taxes to stimulate demand and pull the
global economy out of the depression.
 Active fiscal and monetary policy are the primary tools recommended
by Keynesian economists to manage the economy and fight
unemployment.

6. Budget and Types
 The word budget is derived from “bowgette”, which means 'a leather
bag' in French.
 Which means a small bag, a bag containing the financial Proposals.
 Financial Proposals contains Expenditure and Receipts of next fiscal
year.
 Budget is a master financial plan of a government. it brings together
estimates of revenues and proposed expenditure for budget period.
 According to Richard Goode, a government budget is a financial plan
covering outlays and receipts of the government.

7. Types of Budget:

9. History of Indian Budget
 India has had 38 (29) finance ministers since Independence in 1947.
 The budget was first introduced in India on 7 April, 1860 by the East-
India Company to the British Crown.
 Pre-independence finance minister, James Wilson presented the budget
in 1860.
 Earlier budget papers were printed in Rashtrapati Bhavan.
 The printing venue was shifted to Minto Road in New Delhi.
 Since 1980, budget papers are printed in the North Block.
 Shanmukham Chetty was the first Finance Minister of India presented
the budget in November 1947 without any tax proposals.

10.  He presented the analysis of the economic scenario of Independent
India just 95 days before the budget presentation in 1948.
 After Chetty, K.C Neogy took charge of the finance department for 35
days.
 John Mathai was the third finance minister to present the budget in
1950-51.
 C.D Deshmukh, who presented the budget in the newly formed Indian
Parliament.
 Deshmukh was the first Indian RBI governor and Finance Minister from
1950 to 1956.

11. Annual Financial Statement:
There is no word “budget” in IC
Under Article 112 of the Constitution of India, a statement of estimated
receipts and expenditure of the Government of India has to be laid before
Parliament.
Every financial year which runs from 1st April to 31st March.
This statement titled “Annual Financial Statement” is the main Budget
document.
Annual Financial Statement shows the receipts and payment of Govt.
under three parts.
 accounts are kept –
1. Consolidated Fund 2.Contingency Fund & 3.Public Account

12. Consolidated Fund
All revenues received by Govt.
Loans raised by Govt.
Receipts from recoveries of loans granted by the Govt.
 All expenditure of Govt. is incurred from the Consolidated Fund and
 No amount can be withdrawn from the Fund without authorization from
Parliament.
Contingency Fund:
Used to meet urgent unforeseen expenditure
Constituted under Article 267(1) of the Indian Constitution
The contingency fund is at the disposal of the President of India, who releases
the funds on request of the Union Cabinet.
later gets an approval from Parliament. A Parliament approval is mandatory.

13. Public Account:
Certain transactions related to Provident Fund, Small savings of Post
offices etc. enter Govt. accounts in respect of which government act more
as a Banker.
The money thus received are kept in Public Account and
Parliamentary approval is not required to operate this fund.

14. Highlights of Union Budget – 2021

15. 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%.
 Rs. 35,000 crore for COVID-19 vaccine in BE 2021-22
 Mission Poshan 2.0 to be launched: To strengthen nutritional content,
delivery, outreach, and outcome.
 Jal Jeevan Mission (Urban) – to be launched to universal cover of water
supply.
 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 1′ Fitness tests in automated fitness centres:
 After 20 years in case of personal vehicles
 After 15 years in case of commercial vehicles

16. 2. Physical and Financial Capital and Infrastructure
Production Linked Incentive scheme (PLI) will be introduced
Rs. 1.97 lakh crore in next 5 years for PLI schemes in 13 Sectors
Mega Investment Textiles Parks (MITRA) scheme for textile
development.
National Infrastructure Pipeline (NIP) expanded to 7,400 projects:
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. 5.54 lakh crore capital expenditure in BE 2021-22 – sharp increase
of 34.5% over Rs. 4.12 lakh crore allocated in BE 2020-21 :

17. 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:
Rs. 1,10,055 crore for Railways of which Rs. 1,07,100 crore is for capital
expenditure
100% electrification of Broad-Gauge routes to be completed by
December, 2023
To increase the permissible FDI limit from 49% to 74% and allow foreign
ownership and control with safeguards
 Rs. 1,75,000 crore estimated receipts from disinvestment in BE 2020-21

18. 3. Inclusive Development for Aspirational India
 Ensured MSP at minimum 1.5 times the cost of production across all
commodities.
 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
 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
 One Nation One Ration Card scheme for– migrant workers claim rations
anywhere in the country
 Portal to collect information on unorganized labour force, migrant workers
 Rs. 15,700 crore budget allocation to MSME Sector.

19. 4. Reinvigorating Human Capital
 15,000 schools to be strengthened by implementing all NEP components.
 100 new Sainik Schools to be set up in partnership with NGOs/private
schools/states
 Establishment of 750 Eklavya model residential schools in tribal areas
 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
 Central University in Leh for accessibility of higher education in Ladakh.
Skilling
 Proposed amendment to Apprenticeship Act to enhance opportunities for
youth
 Rs. 3000 crore for realignment of existing National Apprenticeship
Training Scheme (NATS)
 Initiatives for partnership with UAE and Japan in upgrade the skills of youth.

20. 5. Innovation and R&D
 Modalities of National Research Foundation announced in July 2019
 Rs. 50,000 crore outlay over 5 years
 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
 As part of the Gaganyaan mission activities:
 First unmanned launch is slated for December 2021
 4,000 crore over five years for Deep Ocean Mission survey
exploration and conservation of deep sea biodiversity

21. 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
 3,768 crore allocated for first digital census in the history of India
 1,000 crore for the welfare of Tea workers especially women and their
children in Assam and West Bengal through a special scheme

22. Rs in Crores
 Revenue deficit: When total revenue expenditure exceeds total revenue receipts.
 Effective Revenue Deficit is the difference between revenue deficit and grants for creation of
capital assets.
 Fiscal deficit refers the government's total expenditure exceeds its total revenue.
 Primary deficit refers to the difference between the current year's fiscal deficit and interest
payment on previous borrowings.

24. Thank you
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