The Union government said on February 1 that it would inject Rs 2.83 lakh crore into the sprawling farm sector and more funds into a central water scheme to get broader economic growth back up from its lowest in a decade.

Presenting the 2020-21 Union Budget, Finance Minister Nirmala Sitharaman said the fiscal deficit for the current year would widen to 3.8 per cent of gross domestic product, up from 3.3 per cent targeted for the current year.

For fiscal 2020-21 Sitharaman set the fiscal deficit at 3.5 per cent as it boosts state funding to shore up a sagging economy that has put pressure on Prime Minister Narendra Modi.

To help generate revenue, she announced that the government will reduce stakes in India’s largest insurer - Life Insurance Corporation - as part of its divestment programme.

India is grappling with its worst economic slowdown in a decade. The government estimates economic growth this year, which ends on March 31, will slip to 5 per cent, the weakest pace since the global financial crisis of 2008-09.

Sitharaman said Rs 2.83 lakh crore will be allocated for agriculture and allied activities, including helping farmers set up solar power generation units as well as establish a national cold storage to transport perishables.

“Farm markets need to be liberalised, farming need to be made more competitive,” she said.

She also said the government will spend Rs 3.6 lakh crore on a central water scheme to address the challenges facing one of the world’s most water-stressed nations.

Agriculture accounts for 15 per cent of India’s gross domestic product and a source of livelihood for more than half of the country’s 1.3 billion population.

Sitharaman said “water stress-related issues are now a serious concern across the country”, and that the government is proposing comprehensive measures for 100 such water-stressed districts.

In its annual Economic Survey, released on January 31, the government predicted that growth would rebound to 6-6.5 per cent in the fiscal year beginning April 1, but warned that it may have to exceed its deficit target to revive growth.

“People have reposed faith in our economic policy,” said Sitharaman to the thumping of desks in Parliament. “This is a Budget to boost their income and enhance their purchasing power.”

Sitharaman also set aside Rs 69,000 crore for the health sector, up marginally from last year’s allocation as the government seeks to implement an ambitious scheme to provide health insurance for millions of people.

Some economists said global trade tensions and the outbreak of coronavirus in China, which has killed more than 250 people so far, pose a risk to economic recovery by hitting cross-border commerce and supply chains.

Highlights

Deficit

* Fiscal deficit for 2019-20 seen at 3.8 per cent of GDP

* Fiscal deficit for 2020-21 seen at 3.5 per cent of GDP

Borrowing

* 2020-21 net market borrowing seen at Rs 5.36 lakh crore

Expenditure / Receipts

* Revised expenditure for 2019-20 is Rs 26.99 lakh crore

* Receipts for 2020-21 estimated at Rs 22.46 lakh crore

* Expenditure for 2020-21 estimated at Rs 30.42 lakh crore

* India to allocate Rs 2.83 lakh crore for agriculture and allied activities

* Approves Rs 3.6 lakh crore for a central water scheme

* To allocate Rs 99,300 crore for the education sector in 2020-21

* To allocate Rs 28,600 crore on central schemes for women

* Government to sell part of its holding in Life Insurance Corporation

Health care

* India to allocate Rs 69,000 crore towards health care spending

* Taxes from medical devices to be used to fund health care infrastructure

Transport

* India to develop 100 more airports by 2024

* India to monetise more than 6,000 km of highways in 12 lots by 2024

* India to privatise at least one major port

Power / Industry

* India to provide Rs 27,300 crore for the promotion of industry and commerce

* Firms operating old thermal power plants advised to shut units if emission norms not met

* India to allocate Rs 4,400 crore for clean air incentives in cities with more than 1 million people

* India to allocate Rs 22,000 crore for power and renewables

* Conventional energy meters to be replaced by prepaid smart meters in the next three years

* India to expand national gas grid to 27,000 km

* Large solar power capacity to be set up alongside rail tracks on land owned by Indian Railways

Manufacturing

* Scheme focused on encouraging manufacture of mobile phones, electronic equipment and semiconductor packaging to be introduced

* To encourage private sector to build data centre parks throughout the country

* Rs 8,000 crore over five years to be

provided for quantum technologies and applications

* Milk processing capacity to be doubled by 2025

Income Tax

* New and simplified personal income tax regime proposed. New tax slabs of 15 per cent and 25 per cent in addition to the existing 10 per cent, 20 per cent and 30 per cent

* Under the proposed slab, annual income upto Rs 5 lakh is exempt from tax. Income between Rs 5 and 7.5 lakh will be taxed at 10 per cent, while those between Rs 7.5 and 10 lakh at 15 per cent

* New regime to entail estimated revenue forgone of Rs 40,000 crore per year

* Around 70 of the existing exemptions and deductions (more than 100) to be removed in the new simplified regime

* Remaining exemptions and deductions to be reviewed and rationalised in coming years

* New tax regime to be optional - an individual may continue to pay tax as per the old regime and avail deductions and exemptions.

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