Prime Minister Narendra Modi along with union ministers and parliamentarians at Lok Sabha during the Budget Session of the Parliament, in New Delhi. Photograph:( Twitter )
India proposed doubling healthcare spending in an annual budget unveiled on Monday and lifted caps on foreigners investing in its vast insurance market to help revive an economy that suffered its deepest recorded slump as a result of the pandemic.
Finance Minister Nirmala Sitharaman on Monday presented her third Union Budget in Parliament, which rests on six pillars – from healthcare to infrastructure.
Sitharaman announced a whopping 137% increase in the allocation for health and well being during today’s budget speech. The budget outlay for 2021-22 on health is ₹2,34,846 crore as against ₹94,452 crores last year.
Union Budget 2021: As it happened
“Progressively as institutions absorb more, we will invest more taking a holistic approach to health. We focus on strengthening three areas — preventive, curative, and well being,” said Sitharaman in Parliament.
She announced mega national highway projects in election-bound states of Tamil Nadu, West Bengal, Assam and Kerala.
Union Budget 2021: Key highlights and takeaways from Nirmala Sitharaman's budget
While no changes were made to the personal income tax, senior citizens were offered benefit. Under the proposal, those above the age of 75 will no longer have to file I-T returns. The FM said that income tax return forms have been further simplified.
Sitharaman also extended tax holiday to startups and affordable housing projects by one year. The FM also ensured housing for migrant workers by exempting notified affordable rental projects from tax.
Delivering her budget statement to parliament, Finance Minister Nirmala Sitharam projected a fiscal deficit of 6.8% of gross domestic product for 2021/22. The current year was expected to end with a deficit of 9.5%, she said, well up from the 7% expected earlier.
India, which has the world`s second-highest coronavirus caseload after the United States, currently spends about 1% of GDP on health, among the lowest for any major economy.
Sitharaman said the foreign direct investment (FDI) cap for the insurance sector would be increased to 74% from the current 49%.
She also allocated 200 billion rupees ($2.74 billion) to recapitalise state-run banks that are saddled with bad loans and have been a drag on growth.
India`s benchmark 10-year bond yield rose sharply to 6.03% from the day`s low of 5.93% on the fiscal projections.
To bridge some of the deficit, the government plans to raise 1.75 trillion Indian rupees from selling its stake in the state-run companies and banks including IDBI bank, an insurance company and oil companies.
The pandemic ruined the divestment plans for the current fiscal with only 180 billion rupees raised so far from the sales.
(With inputs from agencies)