Budget 2021-22

Indian Economy
Topic: Budget 2021-22
Study Material
ANALOG IAS ACADEMY

Contents
1. Glossary
2. Budget Process
3. Fiscal Transparency and Deficit
4. 15th Finance Commission Recommendations
5. Major Subsidies
6. Health and Well-being
7. Women and Child Development Ministry
8. Agriculture
9. Social Security Measures
10. Tax Proposals
11. Infrastructure
12. Human Capital
13. Financial Reforms
14. Different Indicators analysis through Graphs
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Chapter 1: KEY TO BUDGET DOCUMENTS
The list of Budget documents presented to the Parliament is given below:
Category Documents in this category

Budget Speech: Highlights the main expenditure and tax
proposals.
Budget at a Glance: Provides a brief overview on total funds
raised by the government (through taxes or borrowing), how
Summary Documents
that money is to be spent and budget deficit/surplus.
Annual Financial Statement: Similar to ‘Budget at a Glance’
but organised in a different way to reflect requirements under
Article 112 of the Constitution.
Expenditure Profile: Presents a summary of the total
expenditure of all ministries. Also presents expenditure
according to different categories of interest i.e., summary of
funds allocated to schemes for women or minorities.
Expenditure Budget: Presents a detailed breakdown of the
Expenditure Documents
expenditure of each ministry.
Demands for Grants / Appropriation Bill: Two documents
required under the Constitution, asking Parliament to allocate
the stated amount of funds to different ministries and
schemes. Parliament votes to pass these two documents.
Receipts Budget: Presents detailed information on how the
government intends to raise money through different sources.
Finance Bill: A Bill presented to Parliament (and to be voted
on) containing the various legal amendments to bring into
Receipts Documents
effect the tax changes proposed by the government.
Memorandum on the Finance Bill: Explains the various
legal provisions contained in the Finance Bill and their
implications in simple language.
Macro-Economic Framework: Explains the government’s
assessment of the growth prospects of the economy.
FRBM Documents Medium-Term Fiscal Policy: A statement setting limits on
the size of the budget deficits for the next three years, as well
as targets for tax and non-tax receipts.
Output Outcome Monitoring Framework: Outlays, Outputs
and Outcomes are being presented to the Parliament in
Outcome Budget measurable terms, bringing-in greater accountability for the
agencies involved in the execution of government schemes
and projects.
Implementation of Budget Announcements,2020-2021: It
summarises the status of implementation of the
Status Report
announcements made by Hon’ble Finance Minister in the
Budget Speech 2020-21.
Receipts indicate the money received by the government. This includes: (i) the money
earned by the government, and (ii) the money it receives in the form of borrowings or
repayment of loans by states.
Capital receipts indicate the receipts which lead to a decrease in assets or increase in
liabilities of the government. It consists of: (i) the money earned by selling assets such as
shares of public enterprises, and (ii) the money received in the form of borrowings or
repayment of loans by states.
Revenue receipts are receipts which do not have a direct impact on the assets and
liabilities of the government. This consists of the money earned by the government
through tax and non-tax sources (such as dividend income).
Capital expenditure is used to create assets or to reduce liabilities. It consists of: (i) the
money spent by the government on creating assets such as roads and hospitals, and (ii)
the money given by the government in the form of loans to states or repayment of its
borrowings.
Revenue expenditure is the expenditure by the government which does not impact its
assets or liabilities. For example, this includes salaries, interest payments, pension, and
administrative expenses.
Net borrowings means the net amount of money borrowed by the government during a
year. This equals the total borrowings made in the year minus the repayments made by
the government against its existing borrowings.
Outstanding debt is the stock of money borrowed by subsequent governments over the
years which the government currently owes. The figure for a financial year indicates the
government’s outstanding debt at the end of the year.
Gross domestic product (GDP): The added value of output of all productive sectors in
the economy, in a financial year April 1st to March 31st, as measured by the Central
Statistics Office(CSO).
Example growth numbers from Economic Survey 2020-21:
• The real GDP in 2019-20 is ₹146 trillion.

• The real GDP in 2020-21 would contract in the current fiscal to ₹134 trillion (-
7.7%).
• The real GDP in 2021-22 will be ₹149 trillion(+11%).
• In nominal terms, India’s GDP would in 2021-22 will expand by 15.4%, suggesting
a retail inflation of 4.4%.
What is nominal GDP and how is it different from real GDP?
GDP is the total market value of all goods and services produced in the economy during a
particular year, inclusive of all taxes and subsidies on products. The market value taken
at current prices is the nominal GDP. The value taken at constant prices — that is prices
for all products taken at an unchanged base year i.e. 2010-11 — is the real GDP.
In simple terms, real GDP is nominal GDP stripped of inflation. Real GDP growth thus
measures how much the production of goods and services in the economy has increased
in actual physical terms during a year. Nominal GDP growth, on the other hand, is a
measure of the increase in incomes resulting from rise in both production and prices.
Fiscal deficit: Total additional borrowings made by the government every year to bridge
the gap between its income and expenditure.
Fiscal deficit for 2020-21, earlier estimated to be 3.5% of GDP, has now been sharply
revised upwards to 9.5% of the GDP.
The government has projected a fiscal deficit of 6.8% of Gross Domestic Product (GDP) for
financial year 2021-22, along with setting a glide path to reduce it to 4.5% by financial
year 2025-26. This marks a sharp departure from the earlier fiscal deficit projection of
3.3% of GDP for 2021-22.
Revenue deficit is the gap between the revenue components of receipts and expenditure,
i.e. revenue disbursements and revenue receipts. This indicates the money the
government needs to borrow to spend on non-capital components (which do not lead to
creation of assets).
Fiscal targets in the FRBM Act, 2003
The Fiscal Responsibility and Budget Management (FRBM) Act, 2003 requires the
central government to reduce its fiscal deficit to 3% of GDP. The initial deadline to
achieve this target was 2007-08 which has been extended multiple times over the
years.
Recently, the Finance Act, 2018 extended the deadline for achieving this target from
2017-18 to 2020-21. It also removed the provision which required the central
government to limit its revenue deficit to 2% of GDP.
Effective revenue deficit is the difference between revenue deficit and the grants given
by the government to states, local bodies or implementing agencies for creation of assets.
Primary deficit equals fiscal deficit minus interest payments. This indicates the gap
between the government’s expenditure requirements and its receipts, not taking into the
account the expenditure incurred on interest payments on loans taken during the
previous years.
Charged expenditure includes expenditure which is not required to be voted on by

Parliament and is charged directly from the Consolidated Fund. Such expenditure can
still be discussed in Parliament. Examples include interest payments, and salaries and
allowances of the President and judges of the Supreme Court.
Appropriation Bill authorises the government to withdraw money from the Consolidated
Fund. It is introduced and voted on after the Demands for Grants are passed.
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.
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.
Tax revenue: The primary source of income for the government. The government funds
its expenditure by either directly taxing income of individuals/companies or by taxing
goods and services consumed by people (indirect taxes).
Non-tax revenue: Additional sources of revenue for the government other than taxes.
This includes revenues from interest receipts, spectrum auction and disinvestment,
among other things.
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.
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.
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.
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.
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.
Budget Estimates: Amount of money allocated in the Budget to any ministry or scheme
for the coming financial year.
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.
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.
Annual Financial Statement (AFS)
The Annual Financial Statement (AFS), the document as provided under Article 112,
shows the estimated receipts and expenditure of the Government of India for 2021-22
in relation to estimates for 2020-21 as also actual expenditure for the year 2019-20.
The receipts and disbursements are shown under three parts in which Government
Accounts are kept viz.,
(i) The Consolidated Fund of India,

(ii) The Contingency Fund of India and
(iii) The Public Account of India.
The Annual Financial Statement distinguishes the expenditure on Revenue
account from the expenditure on Capital account, as is mandated in the
Constitution of India. The Revenue and the Capital sections together, make the
Union Budget. The estimates of receipts and expenditure included in the Annual
Financial Statement are for expenditure net of refunds and recoveries.
The significance of the Consolidated Fund, the Contingency Fund and the Public Account
as well as the distinguishing features of the Revenue and the Capital portions are given
below briefly:
(i) The Consolidated Fund of India (CFI) draws its existence from Article 266 of the
Constitution. All revenues received by the Government, loans raised by it, and also
receipts from recoveries of loans granted by it, together form the Consolidated
Fund of India. All expenditure of the Government is incurred from the
Consolidated Fund of India and no amount can be drawn from the Consolidated
Fund without due authorization from the Parliament.
(ii) Article 267 of the Constitution authorises the existence of a Contingency Fund of
India which is an imprest placed at the disposal of the President of India to
facilitate meeting of urgent unforeseen expenditure by the Government pending
authorization from the Parliament. Parliamentary approval for such unforeseen
expenditure is obtained, ex-post-facto(means, after it is done), and an equivalent
amount is drawn from the Consolidated Fund to recoup the Contingency Fund
after such ex-post-facto approval. The corpus of the Contingency Fund as
authorized by Parliament presently stands at ₹500 crore.
(iii) Moneys held by Government in trust are kept in the Public Account. The Public
Account draws its existence from Article 266 of the Constitution of India. Provident
Funds, Small Savings collections, income of Government set apart for expenditure
on specific objects such as road development, primary education, other
Reserve/Special Funds etc., are examples of moneys kept in the Public Account.
Public Account funds that do not belong to the Government and have to be finally
paid back to the persons and authorities, who deposited them, do not require
Parliamentary authorisation for withdrawals. The approval of the Parliament is
obtained when amounts are withdrawn from the Consolidated Fund and kept in
the Public Account for expenditure on specific objects. The actual expenditure on
the specific object is again submitted for vote of the Parliament for withdrawal
from the Public Account for incurring expenditure on the specific objects.
The Revenue Budget consists of the revenue receipts of the Government (Tax revenues
and other Non-Tax revenues) and the expenditure met from these revenues. The
estimates of revenue receipts shown in the Annual Financial Statement take into account
the effect of various taxation proposals made in the Finance Bill.
• Tax revenues comprise proceeds of taxes and other duties levied by the Union.
• Non-tax receipts of the Government mainly consist of interest and dividend on
investments made by the Government, fees and other receipts for services
rendered by the Government.
• Revenue expenditure is for the normal running of Government departments and
for rendering of various services, making interest payments on debt, meeting
subsidies, grants in aid, etc. Broadly, the expenditure which does not result in
creation of assets for the Government of India, is treated as revenue expenditure.
All grants given to the State Governments/Union Territories and other parties are
also treated as revenue expenditure even though some of the grants may be used
for creation of capital assets.
Capital Budget: Capital receipts and capital payments together constitute the Capital
Budget.
• The capital receipts are loans raised by the Government from the public (these
are termed as market loans), borrowings by the Government from the Reserve
Bank of India and other parties through the sale of Treasury Bills, the loans
received from foreign Governments and bodies, disinvestment receipts and
recoveries of loans from State and Union Territory Governments and other parties.
• Capital payments consist of capital expenditure on acquisition of assets like land,
buildings, machinery, equipment, as also investments in shares, etc., and loans
and advances granted by the Central Government to the State and the Union
Territory Governments, Government companies, Corporations and other parties.
Accounting Classification
• According to Article 150, the Annual Financial Statement shows, certain

disbursements distinctly, which are charged on the Consolidated Fund of India.
The Constitution of India mandates that such items of expenditure such as
emoluments of the President, salaries and allowances of the Chairman and the
Deputy Chairman of the Rajya Sabha and the Speaker and the Deputy Speaker of
the Lok Sabha, salaries, allowances and pensions of the Judges of the Supreme
Court, the Comptroller and Auditor-General of India and the Central Vigilance
Commission, interest on and repayment of loans raised by the Government and
payments made to satisfy decrees of courts etc., may be charged on the
Consolidated Fund of India and are not required to be voted by the Lok Sabha.
Demands for Grants
Article 113 of the Constitution mandates that the estimates of expenditure from the
Consolidated Fund of India included in the Annual Financial Statement and required to
be voted by the Lok Sabha, be submitted in the form of Demands for Grants. The
Demands for Grants are presented to the Lok Sabha along with the Annual Financial
Statement.
Generally, one Demand for Grant is presented in respect of each Ministry or Department.
However, more than one Demand may be presented for a Ministry or Department
depending on the nature of expenditure. With regard to Union Territories without
Legislature, a separate Demand is presented for each of such Union Territories. In
Budget 2021-22 there are 101 Demands for Grants. Each Demand initially gives
separately the totals of
(i) ‘voted’ and ‘charged’ expenditure;
(ii) the ‘revenue’ and the ‘capital’ expenditure and
(iii) the grand total on gross basis of the amount of expenditure
for which the Demand is presented. This is followed by the estimates of expenditure
under different major heads of account. The amounts of recoveries are also shown. The
net amount of expenditure after reducing the recoveries from the gross amount is also
shown.
A summary of Demands for Grants is given at the beginning of this document, while
details of ‘New Service’ or ‘New Instrument of Service’ such as, formation of a new
company, undertaking or a new scheme, etc., if any, are indicated at the end of the
document.
Finance Bill
At the time of presentation of the Annual Financial Statement before the Parliament, a
Finance Bill is also presented in fulfilment of the requirement of Article 110 (1)(a) of the
Constitution, detailing the imposition, abolition, remission, alteration or regulation of
taxes proposed in the Budget. It also contains other provisions relating to Budget that
could be classified as Money Bill. A Finance Bill is a Money Bill as defined in Article 110
of the Constitution.
Statements mandated under FRBM Act.
i. Macro-Economic Framework Statement
The Macro-Economic Framework Statement is presented to Parliament under Section 3 of

the Fiscal Responsibility and Budget Management Act, 2003 and the rules made
thereunder. It contains an assessment of the growth prospects of the economy along with
the statement of specific underlying assumptions. It also contains an assessment
regarding the GDP growth rate, the domestic economy and the stability of the external
sector of the economy, fiscal balance of the Central Government and the external sector
balance of the economy.
ii. Medium-Term Fiscal Policy cum Fiscal Policy Strategy Statement
The Medium-Term Fiscal Policy Statement cum Fiscal Policy Strategy Statement is
presented to Parliament under Section 3 of the Fiscal Responsibility and Budget
Management Act, 2003. It sets out the three-year rolling targets for six specific fiscal
indicators in relation to GDP at market prices, namely (i) Fiscal Deficit, (ii) Revenue
Deficit, (iii) Primary Deficit (iv) Tax Revenue (v) Non-tax Revenue and (vi) Central
Government Debt.
The Statement includes the underlying assumptions, an assessment of the balance

between revenue receipts and revenue expenditure and the use of capital receipts
including market borrowings for the creation of productive assets. It also outlines for the
existing financial year, the strategic priorities of the Government relating to taxation,
expenditure, lending and investments, administered pricing, borrowings and guarantees.
The Statement explains how the current fiscal policies are in conformity with sound fiscal
management principles and gives the rationale for any major deviation in key fiscal
measures.
Explanatory Documents:
To facilitate a more comprehensive understanding of the major features of the Budget,

certain other explanatory documents are presented. These are briefly summarized below:
a) Expenditure Budget
The provisions made for a scheme or a programme may be spread over a number of Major
Heads in the Revenue and Capital sections in a Demand for Grants. In the Expenditure
Budget, the estimates made for a scheme/programme are brought together and shown on
a net basis on Revenue and Capital basis at one place. Expenditure of individual
Ministries/ Departments are classified under 2 broad Umbrellas (i) Centres’ Expenditures
and (ii) Transfers to States/ Union Territories( UTs).
Under the Umbrella of Centres’ Expenditure there are 3 sub-classification
(b) Establishment expenditure of the Centre

(c) Central Sector Schemes and
(d) Other Central Expenditure including those on Central Public Sector Enterprises
(CPSEs) and Autonomous Bodies.
The Umbrella of Transfers to States/UTs includes the following 3 sub- classification:
(a) Centrally Sponsored Scheme

(b) Finance Commission Transfers
(c) Other Transfer to States
To understand the objectives underlying the expenditure proposed for various schemes
and programmes in the Expenditure Budget, suitable explanatory notes are included in
this volume.
a) Receipt Budget
Estimates of receipts included in the Annual Financial Statement are further analysed in
the document “Receipt Budget”. The document provides details of tax and non-tax
revenue receipts and capital receipts and explains the estimates. The document also
provides a statement on the arrears of tax revenues and non-tax revenues, as mandated
under the Fiscal Responsibility and Budget Management Rules, 2004. Trend of receipts
and expenditure along with deficit indicators, statement pertaining to National Small
Savings Fund (NSSF), Statement of Liabilities, Statement of Guarantees given by the
government, statements of Assets and details of External Assistance are also included in
Receipts Budget. This also includes the Statement of Revenue Impact of Tax Incentives
under the Central Tax System which seeks to list the revenue impact of tax incentives
that are proposed by the Central Government. This document also shows liabilities of the
Government on account of securities (bonds) issued in lieu of oil and fertilizer subsidies
in the past. This was earlier called ‘Statement of Revenue Foregone’ and brought out as a
separate statement in 2015-16. This has been merged in the Receipts Budget from 2016-
17 onwards.
References:
1) https://www.prsindia.org/budget/primers/overseeing-public-funds-how-
scrutinise-budgets
2) https://indianexpress.com/article/explained/simply-put-the-nominal-gdp-worry-
6205194/
3) https://www.livemint.com/budget/news/budget-terms-you-should-know-faq-
glossary-1561800919094.html
4) Key to Budget Document, 2021
Chapter 2: Budget Process
Members of Parliament (MPs) have a core role in examining how this money is
being raised, how it is planned to be spent, and whether such spending would lead to
desired outcomes. MPs hold the government accountable for use of public funds in two
stages. Firstly, before the beginning of each year, they scrutinise and approve the Union
Budget which contains the expenditure priorities, taxation proposals, and borrowing
requirements for the upcoming financial year. Second, they examine the audit reports on
the approved spending to see whether the allocation was used effectively and
appropriately.
Pre-Budget Consultation Process
The budget is a complex consultative process that involves the Ministry of Finance and
other ministries, apart from Niti Aayog. The Budget Division of the Department of
Economic Affairs in the Ministry of Finance responsible for producing the Union Budget
issues a circular to all the Union ministries, states, Union Territories , defence forces,
autonomous bodies and departments to prepare the estimates for the coming year as well
as to send in the revised estimates of the past year. The circular is issued in September,
which is when the entire process starts.
Once the estimates are sent in by the ministries and the various departments, extensive
consultations are held between them and the finance ministry's Department of
Expenditure.
Meanwhile, the Department of Economic Affairs and Department of Revenue also meet
various stakeholders including businessmen, economists, and farmers.
After the conclusion of the consultations, the Finance Minister decides on the tax
proposals, which are then discussed with the Prime Minister. Once the Prime Minister
approves, the Budget is prepared for printing.
Printing of Budget Documents:
The printing process starts off with the 'halwa ceremony'. After the halwa is served, the
officials and support staff directly associated with the Budget making and printing
process are required to stay in the ministry. They remain cut off from their families till
the presentation of the Budget in the Lok Sabha. This is done to ensure that there are no
leaks of information about the Union Budget before its presentation. The ceremony also
recognises and lauds the efforts of every staff who have been a part of the budget-making
process.
However, this year's budget is going to be different. For the first time in India, the Union
Budget 2021 will be paperless in the view of coronavirus outbreak. Nirmala Sitharaman
on Saturday has launched the “Union Budget Mobile App" for hassle-free access of
Budget documents.
President’s Prior Approval:
The Secretary General of the Lok Sabha Secretariat seeks the President's approval for the
presentation of the Budget. Once the Budget is presented at the Lok Sabha, the Finance
Minister briefs the cabinet about the Budget proposal. The Budget is then tabled at the
Parliament.
Presentation of Budget
Till 2016, the Budget was presented to Lok Sabha in two parts, namely, the Railway
Budget pertaining to Railway Finance and the General Budget which gave an overall
picture of the financial position of the Government of India, excluding the Railways. Since
the year 2017-18, with the merger of the Railway Budget with the General Budget, a
single document titled ‘Union Budget’ is presented by the Minister of Finance.
The Budget is presented to Lok Sabha on such day as the President may direct. General
it is presented on February 1st, from 2017-18.
Discussion on the Budget
No discussion on Budget takes place on the day it is presented to the House. Budgets are
discussed in two stages—the General Discussion followed by detailed discussion and
voting on the demands for grants.
a) General Discussion on the Budget :
During the General Discussion, the House is at liberty to discuss the Budget as a
whole or any question of principles involved therein but no motion can be moved. The
scope of discussion is confined to an examination of the general scheme and structure
of the Budget, whether the items of expenditure ought to be increased or decreased,
the policy of taxation as expressed in the Budget and in the speech of the Finance
Minister. The Finance Minister has the general right of reply at the end of the
discussion.
b) Consideration of the Demands for Grants by Departmentally Related Standing

Committees of Parliament
With the creation of Departmentally Related Standing Committees of Parliament in

1993, the Demands for Grants of all the Ministries/Departments are required to be
considered by these Committees. After the General Discussion on the Budget is over,
the House is adjourned for a fixed period. During this period, the Demands for Grants
of the Ministries/ Departments are considered by the Committees. These Committees
are required to make their reports to the House within specified period without asking
for more time and make separate report on the Demands for Grants of each Ministry.
c) Discussion on Demands for Grants
The demands for grants are presented to Lok Sabha along with the Annual Financial
Statement. After the reports of the Standing Committees are presented to the House,
the House proceeds to the discussion and voting on Demands for Grants, Ministry-
wise. The scope of discussion at this stage is confined to a matter which is under the
administrative control of the Ministry and to each head of the demand as is put to the
vote of the House.
It is open to members to disapprove a policy pursued by a particular Ministry or to

suggest measures for economy in the administration of that Ministry or to focus
attention of the Ministry to specific local grievances. At this stage, cut motions can be
moved to reduce any demand for grant but no amendments to a motion seeking to
reduce any demand is permissible.
Cut Motions
The motions to reduce the amounts of demands for grants are called ‘Cut Motions’. The
object of a cut motion is to draw the attention of the House to the matter specified
therein.
Cut Motions can be classified into three categories:—
(i) Disapproval of Policy Cut;

(ii) Economy Cut; and
(iii) Token Cut.
Disapproval of Policy Cut: A cut motion which says “That the amount of the demand be
reduced to Re. 1” implies that the mover disapproves of the policy underlying the
demand. The member giving notice of such a Cut Motion has to indicate in precise terms
the particulars of the policy which he proposes to discuss. Discussion is confined to the
specific point or points mentioned in the notice and it is open to the member to advocate
an alternative policy.
Economy Cut: Where the object of the motion is to effect economy in the expenditure, the
form of the motion is “That the amount of the demand be reduced by Rs...(a specified
amount)”. The amount suggested for reduction may be either a lump-sum reduction in
the demand or omission or reduction of an item in the demand.
Token Cut: Where the object of the motion is to ventilate a specific grievance within the
sphere of responsibility of the Government of India, its form is: “That the amount of the
demand be reduced by Rs. 100”.
Discussion on such a cut motion is confined to the particular grievance specified in the
motion which is within the sphere of responsibility of the Government of India.
Vote on Account
Prior to 2017, the Budget used to be presented on last working day of February.
Accordingly, the Parliament was not able to vote the entire budget before the
commencement of the new Financial year. Due to necessity to keep enough finance at the
disposal of
Government in order to allow it to run the administration of the country Government

obtained vote on account from Parliament. Normally, the vote on account was taken for
two months for a sum equivalent to one-sixth of the estimated expenditure for the entire
year under various demands for grants. Vote on Account was passed by Lok Sabha after
the general discussion on the Budget (General and Railway) was over and before the
discussion on the demands for grants was taken up.
However with the advancement of the date of presentation of Budget since 2017-18 to 1st
February, the necessity to obtain vote on Account is no more required. The Demands for
Grants and the Appropriation Bill are passed well before the close of the Financial Year.
However, during an election year, the vote on account may be necessary and taken for a
longer period say, 3 to 4 months if it is anticipated that the main demands and the
Appropriation Bill will take longer than two months to be passed by the House.
Supplementary Demand for Grants
If the amount authorised to be expended for a particular service for the current financial
year is found to be insufficient for the purpose of that year or when a need has arisen
during the current financial year for supplementary or additional expenditure upon some
‘new service’ not contemplated in the Budget for that year, the President causes to be laid
before both the Houses of Parliament another statement showing the estimated amount
of that expenditure.
Excess Demands for Grants
If any money has been spent on any service during a financial year in excess of the
amount granted for the service for that year, the President causes to be presented to Lok
Sabha a demand for such excess. All cases involving such excesses are brought to the
notice of Parliament by the Comptroller and Auditor General through a report on the
Appropriation Accounts. The excesses are then examined by the Public Accounts
Committee which makes recommendations regarding their regularisation in its report to
the House.
The Supplementary Demands for Grants are presented to and passed by the House
before the end of the financial year while the demands for excess grants are made after
the expenditure has actually been incurred and after the financial year to which it relates
has expired.
Appropriation Bill
After the demands for grants have been passed by the House, a Bill to provide for the
appropriation out of the Consolidated Fund of India of all moneys required to meet the
grants and the expenditure charged on the Consolidated Fund of India is introduced,
considered and passed. The introduction of such Bill cannot be opposed.
Finance Bill
“Finance Bill” means a Bill ordinarily introduced every year to give effect to the financial
proposals of the Government of India for the next following financial year and includes a
Bill to give effect to supplementary financial proposals for any period.
The Finance Bill is introduced immediately after the presentation of the Budget. The
introduction of the Bill cannot be opposed. The Appropriation Bills and Finance Bills may
be introduced without prior circulation of copies to members.
As the Finance Bill contains taxation proposals, it is considered and passed by the Lok
Sabha only after the Demands for Grants have been voted and the total expenditure is
known. The scope of discussion on the Finance Bill is vast and members can discuss any
action of the Government of India. The whole administration comes under review.
References:
1. https://www.businesstoday.in/union-budget-2020/expectations/budget-2020-
how-and-who-prepares-the-union-budget/story/395167.html
2. https://www.livemint.com/budget/news/how-is-the-union-budget-prepared-
1561794798485.html
3. http://loksabhaph.nic.in/writereaddata/Abstract/process.pdf
Chapter 3: Fiscal Transparency and Deficit
Revised Estimates Budget Estimates
S. No Type
(RE) 2020-21 (BE) 2021-22
1 Fiscal Deficit 9.5 6.8
2 Revenue Deficit 7.5 5.1
3 Primary Deficit 5.9 3.1
4 Gross Tax Revenue 9.8 9.9
5 Non-tax Revenue 1.1 1.1
Central Government Debt
6 3.1 2.9
Of which Liabilities on account of EBR
Deficits Trend:
Note: In 2020-21, FD is 9.5, RD is 7.5 and PD is 5.9. Also in 2021-22, FD is 6.8, RD is

5.1 and PD is 3.1.
Covid -19 inflicted an unprecedented adverse shock to the economy in 2020-21. Along
with the economy, the finances of the Government was in stress for the greater part of
four months and was particularly severe in the first quarter of 2020-21.
• The original fiscal deficit target for 2020-21 was 3.5%.

• However, in reality, the deficit has shot up to a high of 9.5% of the GDP due to the
impact of the COVID-19 pandemic — low revenue flows due to the lockdown and
negative economic growth clubbed with high government spending to provide relief
to vulnerable sections of society, as well as a stimulus package to revive demand.
The Govt. has pegged the fiscal deficit for 2021-22 at 6.8% of the GDP and aims to bring
it back below the 4.5% mark by 2025-26.
How fiscal deficit is reduced from 9.5% to 6.8%? By a reduction in expenditure from
17.7 percent of GDP in RE 2020-21 to 15.6 percent in BE 2021-22 and a marginal
increase in gross tax revenues to the tune of 0.1 percent of GDP.
The Centre proposes to make amendments to the Fiscal Responsibility and Budget
Management (FRBM) Act, 2003, to reflect below changes to the fiscal consolidation road
map.
Towards Fiscal Transparency
In the Budget 2021-22, the Government has focused on its mandate in the preamble to
the FRBM Act, of improving fiscal transparency.
Fiscal Deficit is the most important metric to understand the financial health of any
government’s finances. As such, it is keenly watched by rating agencies — both inside
and outside the country. That is why most governments want to restrict their fiscal deficit
to a respectable number.
One of the ways to do this is by resorting to “off-budget borrowings”. Such borrowings are
a way for the Centre to finance its expenditures while keeping the debt off the books — so
that it is not counted in the calculation of fiscal deficit.
Off-Budget Borrowings: According to the last Budget documents, in the 2020-21

financial year the Centre was set to borrow Rs 5.36 lakh crore. However, this figure did
not include the loans that public sector undertakings were supposed to take on their
behalf or the deferred payments of bills and loans by the Centre. These items constitute
the “off-budget borrowings” because these loans and deferred payments are not part of
the fiscal deficit calculation.
Off-budget borrowings are loans that are taken not by the Centre directly, but by another
public institution which borrows on the directions of the central government. Such
borrowings are used to fulfil the government’s expenditure needs. So by logic these
borrowing amounts should be part of fiscal deficit calculations but govt. was keeping it
away from calculation.
In the Budget presentation for 2020-21, the government paid only half the amount
budgeted for the food subsidy bill to the Food Corporation of India. The shortfall was met
through a loan from the National Small Savings Fund. This loan amount did not figure in
in the fiscal deficit calculation.
Other public sector undertakings have also borrowed for the government. For instance,
public sector oil marketing companies were asked to pay for subsidised gas cylinders for
Pradhan Mantri Ujjwala Yojana beneficiaries in the past. These amounts also didn’t
figure-in in FD calculation.
In RE 2020-21, the Government has estimated to pre-pay around 1.5 Lakh crore rupees
of outstanding food subsidy related loans of the Food Corporation of India. In BE 2021-
22, the food subsidy requirements of FCI has been provided in the Budget.
This year’s, 2020-21, fiscal deficit has been funded through government borrowings,
multilateral borrowings, small saving funds and short-term borrowings.
What is government borrowing?
Government borrows through issue of government securities called G-secs and Treasury
Bills. Borrowing is a loan taken by the government and falls under capital receipts in the
Budget document. It is essentially the total amount of money that the central government
borrows to fund its spending on public services and benefits.
Multilateral Loans: Loans granted by the multilateral agencies like World bank, IMF,
Asian Development Bank(ADB), Asian Infrastructure Investment Bank etc.
The central government is increasingly turning to external sources of financing to meet

the high demand for resources amid a serious shortfall in revenue. In the April-July
period of 2020-21, India borrowed a record Rs39,165 crore from multilateral agencies to
meet pandemic-related expenses.
Small Saving Funds: Loans from National Small Savings Fund (NSSF). The NSSF is the
repository of small savings collected from the public, including public provident fund
deposits and savings certificates. The fund, administered by the Ministry of Finance, was
set up to pool all small savings together. The total NSS funds were estimated at Rs 16.85
lakh crore in 2019-20. Of this, around one-fourth of the funds were given as loans to
state-owned firms in 2018-19 and 2019-20.
Short-term Borrowings: It is through a mechanism called Ways and Means Advances

(WMAs). WMA is a temporary liquidity arrangement with RBI that enables the Centre and
states to borrow up to 90 days from the central bank to tide over mismatches between
revenues and expenditure.
Improving the quality of Expenditure:
Government has focused on improving the quality of expenditure in both RE 2020-21 and
BE 2021-22.
• The scope of the Treasury Single Account (TSA) which was implemented as a
pilot beginning FY 2018-19, was widened to include more autonomous bodies in
this financial year and make it universal in 2021-22. Aimed at reducing the
parking of funds by implementing agencies, TSA will improve the efficiency of
expenditure.
• In BE 2021-22, Government has focused on increasing capital expenditure. As a
proportion of Total Expenditure, Capital Expenditure at BE 2021-22 will increase
to 15.9 percent from the RE 12.7 percent an increase of more than 3.2 percentage
points. The higher capital expenditure with a focus on infrastructure spending, BE
2021-22 will have a multiplier effect on the recovery process that is underway.
What is a TSA?
A TSA can be defined as a unified structure of government bank accounts enabling

consolidation and optimum utilization of government cash resources. In other
words, a TSA is a bank account or a set of linked bank accounts through which the
government transacts all its receipts and payments and gets a consolidated view of its
cash position at the end of each day. This banking arrangement for government
transactions is based on the principle of fungibility of all cash irrespective of its end use.
An effective TSA system is founded on three key principles:
• The government banking arrangement should be unified, to enable ministry of

finance/ treasury oversight of government cash flows in and out of these bank
accounts and allow complete fungibility of all cash resources, including on a
real-time basis if electronic banking is in place.
• No other government agency should operate bank accounts outside the oversight
of the treasury. Institutional structures and transaction processing arrangements
determine how a TSA is accessed and operated. The treasury, as the chief financial
agent of the government, should manage the government’s cash (and debt)
positions to ensure that sufficient funds are available to meet financial obligations,
idle cash is efficiently invested, and debt is optimally issued according to the
appropriate statutes. In some cases, debt management including issuance of debt
is done by a Debt Management Office (DMO).
• The TSA should have comprehensive coverage, i.e., it should ideally include cash
balances of all government entities, both budgetary and extrabudgetary, to ensure
full consolidation of government’s cash resources.
Chapter 4: 15th Finance Commission Recommendations
Devolution to States - Finance Commission
The Fifteenth Finance Commission (XV-FC) was constituted on 27th November 2017
under Article 280 of the Constitution. In 2019, the Commission was mandated to submit
two reports by an amendment to its Terms of Reference(ToR) in 2019. The First Report,
which was submitted to the President on 5th December 2019, contained
recommendations for financial year 2020-21. The Commission has submitted its final
report in November 2020 pertaining to 2021-22 to 2025-26.
Recommendations accepted by the Govt.:
• The Fourteenth Finance Commission had raised States’ share to 42% of divisible
revenues, but the Fifteenth Finance panel had reduced the share to 41% in its
interim report for 2020-21, citing the conversion of Jammu, Kashmir and Ladakh
into Union Territories.
• Additional revenue deficit grants of ₹2.94 lakh crore for 17 States over the next five
years.
• Enhance State’s borrowing ceilings in 2021-22.
• Given an ‘in-principle’ nod to the panel’s suggestion to set up a separate non-
lapsable fund for defence and internal security modernisation.
No Clear decision on,
The Commission has suggested the additional ceiling for power sector reforms be offered
up to 2024-25, the government has said it will examine recommendations related to
States’ fiscal road map separately.
Similarly, the Commission’s recommendation to overhaul the Fiscal Responsibility and

Budget Management law to ensure legislations are in sync with fiscal sustainability
frameworks, will be examined separately.
To bridge the gap between defence budget allocations and the projected budgetary
requirements, the panel has mooted a fund of ₹2.38 lakh crore for the coming five-year
period. It has recommended that ₹1.54 lakh crore of this fund be transferred from the
Consolidated Fund of India, partially using receipts from the disinvestment of defence
public sector enterprises and land monetisation. The government has said the modalities
and sources of funding will be examined in due course.
Southern State’s Fear:
The southern States fears about losing some share in tax transfers due to the reliance on
the 2011 Census data instead of the 1971 census, which could penalise States that did
better on managing demographics.
15th FC has given a 12.5% weightage for demographic performance in its tax-transfer
calculations.
And also the revenue deficit grants proposed for 17 states, as part of it Andhra Pradesh
and Kerala will get higher than the 14th Finance Commission’s period, while Tamil Nadu
has also been earmarked for marginally higher grant on this front.
Tax Devolution Formula:
The 15th Finance Commission used the following criteria while determining the share of
states: (i) 45% for the income distance, (ii) 15% for the population in 2011, (iii) 15% for
the area, (iv) 10% for forest and ecology, (v) 12.5% for demographic performance, and (vi)
2.5% for tax effort.
The Demographic Performance criterion is to reward efforts made by states in controlling

their population.
Non-Lapsable Defence Fund:
A non-lapsable fund would mean the unspent amount from capital budget of the ministry
will not lapse, and will continue in the next fiscal.
• The utility of creation of a non-lapsable is that roll over fund of the unspent
Capital to next fiscal year would help in eliminating the prevailing uncertainty in
providing adequate funds for various defence capability development and
infrastructure projects.
• As per the Finance Ministry, the balance available in the corpus fund at the
commencement of the new financial year would not be available automatically for
spending and approval of the Parliament through valid appropriation would be
necessary.
15th FC View:
• FC was of the opinion that a non-lapsable Defence Capital Fund Account is an

imperative need for enhancement and heightened operational preparedness of the
Defence Forces.
• Even if certain financial rules and regulations have to be amended for creation of a
'Non-lapsable Defence Capital Fund Account' it can and should be done in the
interest of the nation.
• Moreover, creation of such a fund would also ensure that procurement of
equipments, arms and ammunition for our Defence Forces which are in the
pipeline and in the stage of fructification is not delayed because of lack of money
due to technicalities of rules and regulations.
Finance Commission Grants
Finance Commission grants are given to the States under the statutory provisions under
Article 275(1) of the Constitution. The current transfer to the States under the FC grants
is based on the recommendations of the 15th Finance Commission in relation to (i)
revenue deficit grants, (ii) Grants in Aid for the States disaster response funds and (iii)
Grants in Aid for the rural and urban local bodies.
Finance Commission Grants to the States continued increasing trend in the FY 2021-22
with a budget of 2,20,843 crore rupees which is 21 percent more than the Revised
allocation in RE 2020-21 which is 1,82,352 crore rupees.
15th Finance Commission Recommendations:
Revenue deficit grants:
• Based on uniform norms of assessing revenues and expenditure of the States and
the Union, XVFC has recommended total revenue deficit grants (RDG) of Rs
2,94,514 crore over the 2021-26 period for 17 States.
Local Governments:
• The total size of the grant to local governments should be Rs. 4,36,361 crore for
the period 2021-26.
• Of these total grants, Rs. 8,000 crore is performance-based grants for incubation
of new cities and Rs. 450 crore is for shared municipal services. A sum of Rs.
2,36,805 crore is earmarked for rural local bodies, Rs.1,21,055 crore for urban
local bodies and Rs. 70,051 crore for health grants through local governments.
Disaster Risk Management:
• Mitigation Funds should be set up at both the national and State levels, in line
with the provisions of the Disaster Management Act. The Mitigation Fund should
be used for those local level and community-based interventions which reduce
risks and promote environment-friendly settlements and livelihood practices.
• For SDRMF, XVFC has recommended the total corpus of Rs.1,60,153 crore for
States for disaster management for the duration of 2021-26, of which the Union’s
share is Rs. 1,22,601 crore and States’ share is Rs. 37,552 crore.
Chapter 5: Major Subsidies
The revenue expenditure on major subsidies such as food, fertilizers and petroleum
continued to be the second highest contributor to the total expenditure.
These three subsidies were estimated at 2,27,794 crore rupees in BE 2020-21 which has
been revised to 5,95,620 crore rupees with an increase of 161 percent. Reasons are,
• The biggest contributor to this significant jump is Food Subsidy which has
increased 289 percent over BE 2020-21.
• This is on account of Government providing free ration to citizens during Covid-19
pandemic related lockdown and provisioning for the pre-payment of NSSF loans
with FCI of about 1.5 lakh crore rupees.
BE 2021-22 proposed 3,36,439 crore rupees for Major subsides, which shows reduction
of 43.5 percent year-on-year against RE 2020-21, this indicates the undercurrent of
subsidy rationalisation in the Government spending.
Food Subsidy:
• It is provided in the budget of the Department of Food and Public Distribution

(Dept of F&PD).
• Subsidy is to meet the difference between economic cost of food grains procured by
the government and their sales realization at the PDS rate called central issue
price (CIP) under the National Food Security Act (NFSA) and other welfare
schemes.
Fertilizer Subsidy:
• The government fixes the MRP of urea being sold in the market. The difference
between the selling price and production cost is provided as subsidy.
• Further, in case of imported urea the import is done from the Government account
and urea is sold to farmers at statutorily fixed price.
• The urea subsidy is paid to the urea manufacturing units as per New Pricing
Schemes (NPS)-III and Modified NPS-III, New Urea Policy (NUP)- 2015 and as per
Notification in June 2015 for the units using naphtha as feedstock.
• With introduction of Neem Coating of Urea, Introduction of 45 Kg bag of Urea and
Uniform freight policy the spree of reforms in Fertilizer subsidy continued.
Fertilizer Subsidy Rationalisation:
The government has made several efforts to tackle diversion, hoarding, black marketing
and excessive use of urea—a widely-used fertiliser that accounts for nearly half of India’s
total fertiliser consumption.
These include
(i) Mandatorily requiring all manufacturers/ importers to do neem-coating of urea
supplies (2015);
(ii) Making disbursal of subsidy to manufacturers conditional upon actual sales to
farmers and sales getting registered on point-of- sale (POS) machines (March
2018);
(iii) Restricting purchase to 100 bags per transaction by each purchaser (down from
999 bags earlier) and capping number of transactions per month (August 2020)
and
(iv) Tracking top 20 urea purchasers in each district and initiating action against
those violating the purchase norms.
Currently, there is excessive use of urea—a dominant source of ‘N’—vis-à-vis complex

fertilisers such as diammonium phosphate (DAP), the main source of ‘P’, and muriate of
potash (MOP), the main source of ‘K’. This has led to increasing imbalance in the NPK-
use ratio. On an all-India basis, currently, this ratio is 6.7:2.4:1 against the ideal of
4:2:1, with consequent adverse effects on crop yield, soil and human health.
The Union government controls the MRP of urea—set at a low level, without any relation
to the cost of production and distribution. Manufacturers get reimbursed for the shortfall
in realisation from sales via the subsidy on a ‘unit-specific’ basis under the new pricing
scheme (NPS). The MRP is kept unchanged (today’s price is the same as in 2002) even as
all cost escalations are absorbed by raising the subsidy. In the case of P and K fertilisers,
there is ‘uniform’ subsidy on per nutrient basis for all manufacturers under the Nutrient
Based Subsidy (NBS) Scheme. In 2010, the government had launched the NBS under
which a fixed amount of subsidy is provided on each grade of subsidised phosphatic and
potassic (P&K) fertilisers.
Fuel Subsidy
• The Ministry of Petroleum and Natural Gas operates budgetary allocation as

budgeted for Fuel subsidy.
• The prices of petrol and diesel have been made market determined by the
Government effective from June, 2020 and October 2014 respectively, and hence
since then their prices are being decided by the Public Sector Oil Marketing
Companies(OMC).
• In reference to Domestic LPG, in order to insulate the common man from the
impact of rise in international oil prices, the Government continued to modulate
the effective price to consumer of Domestic LPG.
• The prices of non-subsidised Domestic LPG are however determined by the OMCs
in line with changes in the international markets.
• To help the poor to fight the battle against Corna-19 virus, the Government has
decided to provide gas cylinders free of cost to the beneficiaries under Pradhan
Mantri Ujjwala Yojana for a period of three months under Pradhan Mantri Garib
Kalyan Yojana.
References:
1) https://www.livemint.com/industry/banking/rbi-raises-wma-limit-for-central-
government-11587388128386.html
2) https://www.livemint.com/news/india/government-borrows-record-amount-from-
external-sources-to-fund-mounting-expenses-11599634118007.html
3) https://indianexpress.com/article/explained/why-govt-borrows-off-budget-and-
how-7162925/
4) https://www.imf.org/external/pubs/ft/tnm/2011/tnm1104.pdf
5) https://www.business-standard.com/article/news-ians/parliamentary-panel-
bats-for-non-lapsable-capital-fund-for-defence-117081001716_1.html
6) https://www.livemint.com/budget/news/budget-2021-subsidy-bill-nears-6-
trillion-mainly-on-extra-free-foodgrain-distribution-11612178337366.html
7) https://www.financialexpress.com/opinion/fertile-for-reform-rational-use-of-urea-
chasing-a-mirage/2108591/
Chapter 6: Health and Well-being
Finance Minister Nirmala Sitharaman said in her Budget speech that the government
expected to spend ₹2,23,846 crore in the coming year on “health and well-being... a 137%
increase (from last year).” This mission would be implemented over five years. This
includes,
• ₹60,030-crore outlay on drinking water and sanitation

• ₹2,700-crore outlay on nutrition
• ₹49,000 crore as Finance Commission grants and
• ₹35,000 crore toward vaccination
• Launching of PM AtmaNirbhar Swasth Bharat Yojana
Drinking Water and Sanitation:
• The World Health Organization has repeatedly stressed the importance of clean
water, sanitation, and clean environment as a prerequisite to achieving universal
health.
• The Jal Jeevan Mission (Urban) will be launched. It aims at universal water supply
in all 4,378 Urban Local Bodies with 2.86 crore household tap connections.
• The Swachh Bharat Mission (Urban) 2.0 would be implemented over five years —
from 2021 to 2026 — on an outlay of ₹1.41 lakh crore
• The Swachh Bharat Mission (Urban), which is being implemented by the Housing
and Urban Affairs Ministry, would get a second round.
• For further swachhta [cleanliness] of urban India, govt. to focus on 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 and bioremediation of all legacy
dump sites.
Jal Jeevan Mission (JJM):
Jal Jeevan Mission, launched in 2019, is envisioned to provide safe and adequate
drinking water through individual household tap connections by 2024 to all households
in rural India. Implemented by Ministry of Jal Shakti.
• To provide Functional Tap Water Connection (FHTC) to every rural household.

• To prioritize provision of FHTCs in quality affected areas, villages in drought prone
and desert areas, Sansad Adarsh Gram Yojana (SAGY) villages, etc.
• To provide functional tap connection to Schools, Anganwadi centres, GP buildings,
Health centres, wellness centres and community buildings
• To assist in ensuring sustainability of water supply system, i.e. water source,
water supply infrastructure, and funds for regular O&M
• The programme will also implement source sustainability measures as mandatory
elements, such as recharge and reuse through grey water management, water
conservation, rain water harvesting.
• JJM looks to create a jan andolan for water, thereby making it everyone’s priority.
• The Jal Jeevan Mission will be based on a community approach to water and will
include extensive Information, Education and communication as a key component
of the mission.
PM AtmaNirbhar Swasth Bharat Yojana
Launching with an outlay of about Rs 64,180 crores over 6 years.
In February 2018, the Indian Government had announced Ayushman Bharat Program
(ABP) with two components,
• Health and Wellness Centres (HWCs), to deliver comprehensive primary health

care (PHC) services to the entire population
• Pradhan Mantri Jan Arogya Yojana (PMJAY) for improving access to
hospitalisation services at secondary and tertiary level health facilities for bottom
40% of total population.
New Scheme Objectives:
The scheme is to develop capacities of primary, secondary, and tertiary care health
systems, strengthen existing national institutions, and create new institutions, to cater to
detection and cure of new and emerging diseases.
The main interventions under the new scheme are,
• Support for over 17,000 rural and 11,000 urban health and wellness centres
• Setting up integrated public health labs in all districts and 3,382 block public
health units in 11 states
• Establishing critical care, hospital blocks in 602 districts and 12 central
institutions
• Strengthening the National Centre for Disease Control, its five regional branches
and 20 metropolitan health surveillance units
• There will be expansion of the integrated health information portal to all states and
UTs to connect all public health labs
• Operationalisation of 17 new public health units and strengthening of existing
public health units at points of entry i.e. at 32 airports, 11 seaports and 7 land
crossings.
• Fifteen health emergency operation centres and two mobile hospitals will also be
set up
• Establishing a national institution for One Health — a regional research platform
for the WHO south-east Asia region office
• Nine bio-safety ‘level 3’ labs and four regional National Institutes of Virology
References:
1) https://jaljeevanmission.gov.in/content/about-jjm#mission
2) https://www.thehindu.com/business/budget/union-budget-2021-budget-
proposes-137-hike-in-health-well-being-spend/article33714433.ece
3) https://theprint.in/economy/137-hike-in-health-wellness-budget-new-pm-
atmanirbhar-swasth-bharat-scheme-announced/596281/
4) https://www.businesstoday.in/union-budget-2021/news/budget-2021-pm-
atmanirbhar-swasth-bharat-yojana-to-boost-health-
infrastructure/story/429890.html
Chapter 7: Women and Child Development Ministry
Anganwadi services have now been clubbed under ‘Saksham Anganwadi’ and Mission
Poshan 2.0 scheme.
Mission POSHAN 2.0:
To strengthen nutritional content, delivery, outreach, and outcome, govt will merge the
Supplementary Nutrition Programme and the Poshan Abhiyaan and launch the Mission
Poshan 2.0.
• It is an umbrella scheme covering Integrated Child Development Services (ICDS),

anganwadi services, Poshan Abhiyaan, Scheme for Adolescent Girls and National
Creche Scheme
• It will help tackle the complex issue of malnutrition which is dependent upon
various factors.
• Malnutrition is a complex condition that can involve multiple factors. Nutrition
specific and sensitive interventions should be targeted more to reduce multiple
forms of malnutrition.
• Will also adopt an intensified strategy to improve nutritional outcomes across 112
aspirational districts.
'POSHAN Abhiyan' (National Nutrition Mission) that aims to reduce the level of stunting,
under-nutrition, anaemia and low birth weight babies. The Mission strives to achieve
reduction in stunting from 38.4 per cent to 25 per cent by 2022.
Supplementary Nutrition Programme is provided to children below 6 yrs of age,

pregnant and nursing mothers and adolescent girls of low income group to improve
health and nutritional status.
The latest National Family Health Survey-5 found a decline in nutritional status in
several of the 22 states surveyed. In 16 states, the rate of underweight and severely
wasted children aged under five has increased while in 13 states stunting in children
increased since NFHS-4 conducted five years ago.
Samarthya Programme:
Pradhan Mantri Matru Vandana Yojana (PMMVY), a scheme launched in 2017 with a
budget estimate of Rs 2,500 crore in 2020-21, is no longer a standalone scheme now.
It has been clubbed with various other maternity benefits such as Beti Bachao, Mahila
Shakti Kendra, gender budgeting to come under the umbrella programme ‘Samarthya’.
The total budget for these many programmes stand at Rs 2,522 crore, slightly more than
the busiest estimated PMMVY alone in 2020-21.
Pradhan Mantri Matru Vandana Yojana (PMMVY)
Purpose: To tackle Under-nutrition in women of India
• Under-nutrition continues to adversely affect majority of women in India.

• In India, every third woman is undernourished and every second woman is
anemic. An undernourished mother almost inevitably gives birth to a low birth
weight baby.
• When poor nutrition starts in-utero, it extends throughout the life cycle since the
changes are largely irreversible.
• Owing to economic and social distress many women continue to work to earn a
living for their family right up to the last days of their pregnancy.
• Furthermore, they resume working soon after childbirth, even though their bodies
might not permit it, thus preventing their bodies from fully recovering on one
hand, and also impeding their ability to exclusively breastfeed their young infant
in the first six months.
From 01.01.2017, the Maternity Benefit Programme is implemented in all the districts of
the country. The programme is named as ‘Pradhan Mantri Matru Vandana Yojana’
(PMMVY).
Under PMMVY, a cash incentive of ` 5000/- is provided directly to the Bank / Post Office
Account of Pregnant Women and Lactating Mothers (PW&LM) for first living child of the
family subject to fulfilling specific conditions relating to Maternal and Child Health.
Saksham Anganwadis:
• The government is planning to upgrade services with facilities like creche and
smart teaching/learning aid.
• The objective is to make anganwadi centres interactive and "more child-friendly" by
providing additional facilities like creche as well as smart teaching and learning
aid.
• Currently, a total of 13.77 lakh anganwadi centres are operational in the country
with a strength of 12.8 lakh workers and 11.6 lakh helpers, as per the official
data.
• A total of 2.5 lakh anganwadis will be upgraded in the next five years.
References:
1) https://indianexpress.com/article/cities/mumbai/mumbai-anganwadi-groups-to-
protest-funding-cuts-announced-in-budget-7172079/
2) https://economictimes.indiatimes.com/news/politics-and-nation/government-
plans-to-upgrade-2-5-lakh-anganwadi-centres-in-next-5-years-women-and-child-
development-ministry-official/articleshow/72828637.cms?from=mdr
3) https://www.firstpost.com/india/union-budget-2021-mission-poshan-2-0-
focuses-on-health-wellbeing-nutrition-to-fight-malnutrition-9262991.html
4) https://wcd.nic.in/sites/default/files/FINAL%20PMMVY%20%28FAQ%29%20BO
OKELT.pdf
5) http://megsocialwelfare.gov.in/supplementary.html
Chapter 8: Agriculture
• The flagship PM-KISAN scheme, meant to provide income support to farmers, saw
a 13% drop in its budget, which is ₹10,000 crore lower than last year’s initial
allocation.
• PM KISAN, has reduced its budget to match last year’s revised estimates which
reached 9 crore households, rather than trying to reach out to its original target of
14.5 crore households.
• Budget emphasised the government’s track record in paying minimum support
prices (MSP) to farmers.
• Allow State-run Agricultural Produce Marketing Committees (APMCs) to access the
₹1 lakh crore Agriculture Infrastructure Fund (AIF).
• Also announced an Agriculture Infrastructure Development Cess to be levied on
petrol, diesel, gold and other imports, to improve facilities for production,
conservation and processing of farm produce and thus “ensure enhanced
remuneration for our farmers”.
• The schemes to provide a remunerative price for farm produce, such as PM AASHA
and the Price Support Scheme have seen budget cuts of 20-25%.
PM-KISAN Scheme
• Pradhan Mantri Kisan Samman Nidhi (PM-KISAN)

• PM Kisan is a Central Sector scheme with 100% funding from Government of
India.
• It has become operational from 1.12.2018.
• Under the scheme an income support of 6,000/- per year in three equal
installments will be provided to small and marginal farmer families having
combined land holding/ownership of upto 2 hectares.
• Definition of family for the scheme is husband, wife and minor children.
• State Government and UT administration will identify the farmer families which
are eligible for support as per scheme guidelines.
• The fund will be directly transferred to the bank accounts of the beneficiaries.
• There are various Exclusion Categories for the scheme.
What is APMC?
Agricultural Produce Market Committees (APMC) is the marketing boards established by

the state governments in order to eliminate the exploitation incidences of the farmers by
the intermediaries, where they are forced to sell their produce at extremely low prices.
All the food produce must be brought to the market and sales are made through auction.
The market place i.e, Mandi is set up in various places within the states. These markets
geographically divide the state. Licenses are issued to the traders to operate within a
market. The mall owners, wholesale traders, retail traders are not given permission to
purchase the produce from the farmers directly.
What was the need of introducing MSP?
On the path of the Green Revolution, Indian policymakers realised that the farmers
needed incentives to grow food crops. Otherwise, they won’t opt for crops such as wheat
and paddy as they were labour-intensive and didn’t fetch lucrative prices. Hence, to
incentivise the farmers and boost production, the MSP was introduced in the 1960s.
Minimum Support Price (MSP)
Minimum support price (MSP) is a “minimum price” for any crop that the government
considers as remunerative for farmers and hence deserving of “support”. It is also the
price that government agencies pay whenever they procure the particular crop.
The Centre currently fixes MSPs for 23 farm commodities — 7 cereals (paddy, wheat,
maize, bajra, jowar, ragi and barley), 5 pulses (chana, arhar/tur, urad, moong and
masur), 7 oilseeds (rapeseed-mustard, groundnut, soyabean, sunflower, sesamum,
safflower and nigerseed) and 4 commercial crops (cotton, sugarcane, copra and raw jute).
Agriculture Infrastructure Fund (AIF):
• Agriculture and allied activities are the primary income source for ~58% of total
population of India. ~85% of the farmers are Small Holding Farmers (SHFs) with
less than 2 hectares of land under cultivation and manage ~45% of agricultural
land.
• Annual income of majority of the farmers is very low. Further, India has limited
infrastructure connecting farmers to markets and hence, 15-20% of yield is wasted
which is relatively higher vs. other countries where it ranges between 5-15%.
• The role of infrastructure is crucial for agriculture development and for taking the
production dynamics to the next level.
• It is only through the development of infrastructure, especially at the post-harvest
stage that the produce can be optimally utilized with opportunity for value addition
and fair deal for the farmers.
• Development of such infrastructure shall also address the vagaries of nature, the
regional disparities, development of human resource and realization of full
potential of our limited land resource.
In view of above, the Hon’ble Finance Minister announced on 15.05.2020 Rs 1 lakh crore
Agri Infrastructure Fund for farm-gate infrastructure for farmers.
Objectives:
• Improved marketing infrastructure to allow farmers to sell directly to a larger base

of consumers and hence, increase value realization for the farmers. This will
improve the overall income of farmers.
• With investments in logistics infrastructure, farmers will be able to sell in the
market with reduced post-harvest losses and a smaller number of intermediaries.
This further will make farmers independent and improve access to market.
• With modern packaging and cold storage system access, farmers will be able to
further decide when to sell in the market and improve realization.
• Community farming assets for improved productivity and optimization of inputs
will result in substantial savings to farmers.
• Government will be able to direct priority sector lending in the currently unviable
projects by supporting through interest subvention, incentive and credit
guarantee. This will initiate the cycle of innovation and private sector investment
in agriculture.
Pradhan Mantri Annadata Aay Sanraks Han Abhiyan” (PM-AASHA)
The Scheme is aimed at ensuring remunerative prices to the farmers for their produce as
announced in the Union Budget for 2018.
Components of PM-AASHA:
The new Umbrella Scheme includes the mechanism of ensuring remunerative prices to
the farmers and is comprised of
• Price Support Scheme (PSS),

• Price Deficiency Payment Scheme (PDPS)
• Pilot of Private Procurement & Stockist Scheme (PPPS).
The other existing schemes of Department of Food and Public Distribution (DFPD) for
procurement of paddy, wheat and nutri-cereals/coarse grains and of Ministry of Textile
for cotton and jute will be continued for providing MSP to farmers for these crops.
References:
1) https://pmkisan.gov.in/#About
2) https://indianexpress.com/article/explained/minimum-support-price-msp-
farmers-explained-6706253/
3) https://krishijagran.com/agriculture-world/what-is-apmc-and-msp-why-farmers-
are-protesting-for-it/
4) https://pmkisan.gov.in/Documents/Operational%20Guidelines%20of%20Financi
ng%20Facility%20under%20Agriculture%20Infrastructure%20Fund.pdf
5) https://www.pmindia.gov.in/en/news_updates/cabinet-approves-new-umbrella-
scheme-pradhan-mantri-annadata-aay-sanrakshan-abhiyan-pm-aasha/
Chapter 9: Social Security Measures
• The allocations for the Mahatma Gandhi National Rural Employment Guarantee
Act (MGNREGA) scheme stood at ₹73,000 crore in 2021-22.
• The budgetary allocations for pensions for senior citizens, widows and the disabled
in the coming year have been held at the exact same level as the original budget
estimates during 2020-21.
• Also announced the launch of a portal to collect information on gig, building and
construction workers to formulate welfare schemes for migrant workers.
MGNREGA
Ministry of Rural Development is the nodal ministry. It is a right to work scheme enacted
through Mahatma Gandhi National Rural Development Act, 2005 (MGNREGA).
Objectives:
• Primary objective of guaranteeing 100 days of wage employment per year to rural
households.
• Secondly, it aims at addressing causes of chronic poverty through the 'works'
(projects) that are undertaken, and thus ensuring sustainable development.
• Finally, there is an emphasis on strengthening the process of decentralisation
through giving a significant role to Panchayati Raj Institutions (PRIs) in planning
and implementing these works.
Key features:
• Legal right to work:
o Unlike earlier employment guarantee schemes, the Act provides a legal right
to employment for adult members of rural households.
o At least one third beneficiaries have to be women.
o Wages must be paid according to the wages specified for agricultural
labourers in the state under the Minimum Wages Act, 1948, unless the
central government notifies a wage rate (this should not be less than Rs 60
per day).
o At present, wage rates are determined by the central government but vary
across states, ranging from Rs 135 per day to Rs 214 per day.
• Time bound guarantee of work and unemployment allowance: Employment

must be provided with 15 days of being demanded failing which an ‘unemployment
allowance’ must be given.
• Decentralised planning: Gram sabhas must recommend the works that are to be
undertaken and at least 50% of the works must be executed by them. PRIs are
primarily responsible for planning, implementation and monitoring of the works
that are undertaken.
• Work site facilities: All work sites should have facilities such as crèches, drinking
water and first aid.
During COVID-19, MGNREGA Implementation:
Faced with a mass exodus of migrant workers from the cities back to their villages during
the lockdown, the govt. added a substantial extra allocation as part of COVID-19 relief to
ensure that some employment could be provided to this newly jobless population.
The importance of MGNREGA this year can be seen from the fact that the revised
expenditure estimates for the demand-driven scheme stand at ₹1.11 lakh crore in 2020-
21, sharply higher than the budget estimates of just ₹61,500 crore.
Portal to collect data on gig workers
• Govt. announced will launch of a portal to collect information on gig, building and
construction workers to formulate welfare schemes for migrant workers.
• The Portal will collect relevant information on gig, building, and construction
workers, among others. This will help formulate health, housing, skill, insurance,
credit and food schemes for migrant workers.
• For the first time globally, social security benefits will extend to gig and platform
workers.
• Minimum wages will apply to all categories of workers and they will all be covered
by the Employees State Insurance Corporation.
• At the same time, compliance burden on employers will be reduced with a single
registration and licensing and online returns.
Govt. already launched One Nation One Ration Card scheme. So far, the facility has
been enabled in 32 states/UTs covering nearly 69 crore beneficiaries, almost 86% of
NFSA population of the country.
Migrant workers, benefit from this scheme — those staying away from their families can
partially claim their rations where they are stationed, while their families in their native
places can claim the rest.
One nation One Ration Card Scheme
• Implemented by Food and Consumer Affairs. The plan for nation-wide portability
of ration cards under the National Food Security Act, 2O13 (NFSA).
• Which seeks to give over 80 crore beneficiaries under the National Food Security
Act (NFSA) food law access to their foodgrains entitlement from anywhere in the
country.
• Under the food law, the Centre provides 5 kg of foodgrains per person per month
to over 80 crore beneficiaries at a highly subsidised price of Rs 2-3 per kg.
• Presently, out of the total given coverage of 81.35 crore persons under the NFSA,
around 80 crore beneficiaries are receiving their entitled quota of foodgrains
through Public distribution system (PDS) on monthly basis.
• Under the ONORC plan, beneficiaries can lift their entitled foodgrains from any
ePoS (electronic Point of sale device) enabled Fair Price Shop (FPS) of their choice
by using their same/existing ration cards with biometric authentication on the
ePoS device at the time of lifting the foodgrains through portability.
• The Targeted Public Distribution System (TPDS) under NFSA is operated under the
joint responsibilities of the central and state/UT Governments. States are
responsible for identification of eligible beneficiaries under NFSA, issuance of
ration cards to them, lifting of foodgrains from the designated depots, distribution
to ration card holders as per their entitlements through ration shops.
References:
1) https://www.prsindia.org/theprsblog/mahatma-gandhi-national-rural-
employment-guarantee-act-review-implementation
2) https://economictimes.indiatimes.com/news/politics-and-nation/as-many-as-32-
states-uts-implementing-one-nation-one-ration-card/articleshow/80652491.cms
3) https://www.thehindu.com/news/national/portal-to-collect-data-on-gig-workers-
in-budget/article33717552.ece
4) https://www.thehindu.com/business/budget/rural-indias-lifeline-missing-from-
budget-2021-speech/article33721306.ece
Chapter 10: Tax Proposals
1. Changes in Basic Customs Duty:
The Customs duty rate structure has been guided by a conscious policy of the
government to incentivize domestic value addition under Make in India and Atma Nirbhar
Bharat initiative, which interalia envisages imposition of lower duty on raw materials and
providing reasonable tariff support to goods being manufactured in India.
The customs duty structure has been calibrated in such way that incentivizes investment
in key areas like petroleum exploration, electronic manufacturing etc. In accordance with
this policy, the Most-Favoured Nation (MFN) rates of Basic Customs Duty (BCD) have
been increased in recent years on such items which are being manufactured in India or
which domestic industry aspires to manufacture.
2. Abolition of Dividend Distribution Tax (DDT)- The Dividend Distribution Tax (DDT)
has been abolished through the Finance Act, 2020. Now, the companies shall not be
required to pay DDT with effect from FY 2020-21 as the dividend income shall be
taxed only in the hands of the recipients at their applicable rate.
What is Dividend Distribution Tax (DDT): The Dividend Distribution Tax is a tax
levied on dividends that a company pays to its shareholders out of its profits. The
Dividend Distribution Tax, or DDT, is taxable at source, and is deducted at the time of
the company distributing dividends. The dividend is the part of profits that the
company shares with its shareholders. The law provides for the Dividend Distribution
Tax to be levied at the hands of the company, and not at the hands of the receiving
shareholder. However, an additional tax is imposed on the shareholder, who receives
over Rs. 10 lakh in dividend income in a financial year.
3. Vivad se Vishwas- In order to provide more time to the taxpayers. who are desirous of
settling disputes under Vivad se Vishwas, the Government has extended the date for
st
making payment without additional amount to 31 March, 2021 and for filing of
st
declaration to 31 January, 2021. The Scheme was introduced with the objective to
reduce pending income tax litigation, generate timely revenue for the Government and
to benefit taxpayers. by providing them peace of mind, certainty and savings on
account of time and resources that would otherwise be spent on the long-drawn and
vexatious litigation process.
What is Vivad se Vishwas Scheme
Vivad se Vishwas Scheme” or “No Dispute but Trust Scheme” is useful for taxpayers
with ongoing legal tax disputes at any level. Under this scheme, the interest and
penalty associated with the disputed tax amount is completely waived off.
In the 2019-20 budget, a scheme called “Sabka Vishwas” was launched to reduce
the number of indirect tax cases. The scheme led to settlement of more than 1.89 lakh
indirect taxation-related cases.
The new “Vivad se Vishwas” scheme has been launched with a similar goal in an attempt
to reduce the number of direct tax litigation cases that are currently pending. Presently,
4.83 lakh direct tax cases are pending in several appellate forums, namely,
Commissioner (Appeals), Income Tax Appellate Tribunal (ITAT), High Court and Supreme
Court. It is expected that the scheme will settle a significant number of these cases.
4. Equalisation Levy - In order to effectively tackle the issue of non-taxation of the

profits generated by the non-resident digital companies, India has introduced the
equalisation levy @ 6 percent on online advertising revenue as an interim measure in
2016. As the international consensus on the mechanism to tax the profits generated
by the digital companies is still taking time, the scope of the existing equalization levy
has been extended vide Finance Act, 2020 to the other revenue streams by levying
equalisation levy @ 2 percent.
What is Equalisation Levy?
Over the last decade, Information Technology has gone through an exponential expansion
phase in India and globally. This has led to an increase in the supply and procurement of
digital services. Consequently, this has given rise to various new business models, where
there is a heavy reliance on digital and telecommunication networks.
To bring in clarity in this regard, the government introduced vide Budget 2016, the
equalisation levy to give effect to one of the recommendations of the BEPS (Base Erosion
and Profit Shifting) Action Plan.
Equalisation Levy is a direct tax, which is withheld at the time of payment by the service
recipient charged at 6%. The two conditions to be met to be liable to equalisation levy:
• The payment should be made to a non-resident service provider;

• The annual payment made to one service provider exceeds Rs. 1,00,000 in one
financial year.
The following services covered:
• Online advertisement;
• Any provision for digital advertising space or facilities/ service for the purpose of
online advertisement;
Finance Act 2020 has further expanded the scope of equalization levy to non-resident e-
commerce operators by introducing a new levy of 2% (EL 2.0).
Under the new provisions, an e-commerce operator has been defined as ‘a non-resident
who owns, operates or manages digital or electronic facility or platform for online sale of
goods or online provision of services or both.
This levy of 2% would be applicable on the consideration for e-commerce supply or

services provided or facilitated by the non-resident e-commerce operator to:
a) any person resident in India;
b) non-resident in certain specified circumstances; and
c) any person who buys such goods or services or both using internet protocol (IP)
address in India.
Who have to pay this levy? Sales / turnover of the e-commerce operator does exceed 20
million rupees during the relevant financial year, thus providing relief to small players or
those having limited nexus with India.
5. Faceless Assessment – It was launched by Hon’ble PM on 13th August, 2020, as part

of “Transparent Taxation - Honoring the Honest” platform. Under the Faceless
Assessment, all income tax assessments except cases of serious frauds, money
laundering, cases is being done in faceless manner without any physical interface.
Faceless Assessment system abolishes age old territorial tax administration and
assessment. It provides for assessment by randomly chosen virtual teams with
dynamic jurisdiction. Under this new system, a taxpayer can be assessed by an officer
located anywhere in the country irrespective of his geographical location.
6. Expenditure Policy – Management
The Government of India has been funding the various developmental needs of the
country through Centrally Sponsored Schemes and Central Sector Schemes.
• In 2016, approximately 66 Centrally Sponsored Schemes were rationalized into 28

Umbrella Schemes.
• It was also decided that the cycle of these Schemes would be made co-terminus
with the Finance Commission cycle.
• Government had also decided that every Scheme would have an evaluation-based
outcome review before it is appraised and approved for the next Finance
Commission cycle.
• Accordingly, NITI Aayog is conducting evaluation of the Centrally Sponsored
Schemes. Ministries have also been asked to get the Central Sector Schemes
evaluated.
The appraisal and approval of Schemes for the XVth FC cycle would, inter alia,
be guided by the following principles:
• Schemes with similar objectives: Many of the schemes have similar objectives
and hence, the need for their merger may be considered. This can also be viewed
from the perspective of schemes which are contributing to the same national
development agenda or SDGs.
• Schemes which have lost relevance: Some of the schemes were initiated to
support certain sectors of the economy at a point in time. Now, with growing
economy, some of these sectors have become self-sufficient and may not require
the budgetary allocations.
• Schemes with similar implementation capacities: In certain cases, the ground
level capacities/skill requirements for implementation of certain closely related
schemes are similar, if not the same. In such cases, appraisal of these schemes
would be to enable achievement of greater outcomes on the capacities deployed
and to reduce administrative overheads.
• CSS schemes with overlaps: In case of Umbrella CSS schemes, to bring in more
convergence and synergies, the requirement of having stand-alone schemes with
similar target beneficiaries would need to be looked into.
• Scheme appraisal based on forward & backward linkages: Scheme across
Ministries/Departments may have forward or backward linkages, especially those
schemes pertaining to economic activities like Agriculture and Food Processing,
MSME and Commerce related Ministries, etc. These may be looked at for
integration to unlock the synergies and values across these schemes.
References:
1. https://www.financialexpress.com/what-is/dividend-distribution-tax-
meaning/1762782/
2. https://www.paisabazaar.com/tax/vivad-se-vishwas-scheme/
3. https://www.livemint.com/money/personal-finance/equalization-levy-a-new-tax-
regime-that-has-its-own-set-of-challenges-11596709767633.html
Chapter 11: Infrastructure
Railways:
• Union finance minister Nirmala Sitharaman on Monday said that the Indian
Railways has prepared a National Rail Plan for 2030 during the presentation of
Budget for 2021–22.
• The National Rail Plan for India 2030 will create a future-ready railways system
and bring down the logistic cost for industry to enable Make in India.
• Indigenously developed automatic train protection system to be launched.
• The finance minister detailed that a record ₹1,10,055 crore has been provided to
the Railways, of which ₹1,07,100 crore has been allocated for capital expenditure.
Draft National Rail Plan
A long term strategic plan called the National Rail Plan has been developed to plan
infrastructural capacity enhancement along with strategies to increase modal share of
the Railways. The National Rail Plan will be a common platform for all future
infrastructural, business and financial planning of the Railways.
The objective of the Plan is:
• To create capacity ahead of demand by 2030, which in turn would cater to growth
in demand right up to 2050 and also increase the modal share of Railways from
27% currently to 45% in freight by 2030 as part of a national commitment to
reduce Carbon emission and to continue to sustain it. Net Zero Carbon emission
by 2030.
• To assess the actual demand in freight and passenger sectors, a yearlong survey
was conducted over hundred representative locations by survey teams spread all
over the country.
• Forecast growth of traffic in both freight and passenger year on year up to 2030
and on a decadal basis up to 2050.
As part of the National Rail Plan, Vision 2024 has been launched for accelerated
implementation of certain critical projects by 2024 such as
• 100% electrification
• multitracking of congested routes
• upgradation of speed to 160 kmph on Delhi-Howrah and Delhi-Mumbai routes
• upgradation of speed to 130kmph on all other Golden Quadrilateral-Golden
Diagonal (GQ/GD) routes and
• elimination of all Level Crossings on all GQ/GD route
Post 2030 , the revenue surplus generated would be adequate to finance future capital
investment and also take the burden of debt service ratio of the capital already invested.
Exchequer funding of Rail projects would not be required.
Renewable Energy
Union Minister for Finance Nirmala Sitharaman announced that the Hydrogen Energy
Mission will be launched in 2021-22 for generating hydrogen from green power sources,
during her budget speech February 1, 2021.
Importance of Hydrogen Energy
• Green Hydrogen Mission is not only essential to decarbonise heavy industries like
steel and cement, it also holds the key to clean electric mobility that doesn’t
depend on rare minerals.
• The emphasis on hydrogen is in line with the technological development in the
global north and with a long-term vision towards reduced dependency on minerals
and rare-earth element-based battery as energy storage.
• Green hydrogen energy is vital for India to meet its Nationally Determined
Contributions and ensure regional and national energy security, access and
availability.
• Hydrogen can act as an energy storage option, which would be essential to meet
intermittencies (of renewable energy) in the future
• Given the range of ways that green hydrogen energy could be produced and used,
it allowed the formation of a circular economy, which primarily focussed on
ensuring energy security, by utilisation of all the resources possible.
Infrastructure Financing
One of the main sources of infrastructure finance is bank finance, which suffers from
asset-liability mismatch as bank liabilities are short-term but infrastructure assets are
long-term. This gives rise to various issues including the issue of Non-Performing Assets
in banks. Efforts are being made to attract institutional investors (pension, insurance
and sovereign wealth funds etc.) into infrastructure, which does not suffer from asset-
liability mismatch. To improve public and private investment in infrastructure in India,
the following initiatives have been taken.
Infrastructure Debt Funds (IDFs): IDFs were created essentially to act as vehicles for
refinancing existing debt of infrastructure companies, thereby creating fresh headroom
for banks to lend to fresh infrastructure projects. IDFs were expected to channelize long
term funds from insurance and pension funds, sovereign wealth funds etc to supplement
lending for infrastructure projects by commercial banks which are increasingly being
constrained by their asset-liability mismatch and exposure limits. IDFs are set up by
sponsoring entities either as NBFCs – which are regulated by the RBI or as Mutual Funds
which are regulated by SEBI.
National Infrastructure Pipeline (NIP) for each of the years from FY 2019-20 to FY
2024-25. NIP aims at improving project preparation and attract investments into
infrastructure. To draw up the NIP, a High-Level Task Force was constituted under the
chairmanship of the Secretary, Department of Economic Affairs (DEA). The Final Report
on National Infrastructure Pipeline for FY 20-25 of the Task Force was released by the
Hon’ble Minister for Finance & Corporate Affairs, Smt. Nirmala Sitharaman on 29th
April, 2020. Presently the project pipeline consists of 7400 projects approximately.
Around 217 infra projects worth Rs 1.10 lakh crore have been completed.
Apart from above, Budget 2021-22 proposed following arrangements,
• PLI launched to create manufacturing global champions across 13 sectors with

amount committed nearly ₹1.97 lakh crore in next 5 years starting FY2021-22.
• Bill to set up a Developmental Financial Institution (DFI) will be introduced
• National monetisation pipeline of brownfield infra assets.
1) Production-Linked Incentive (PLI) Scheme
Union Government approved in November 2020 to introduce the Production-Linked

Incentive (PLI) Scheme in the following 13 key sectors for Enhancing India’s
Manufacturing Capabilities and Enhancing Exports – Atmanirbhar Bharat.
• The PLI scheme will be implemented by the concerned ministries/departments and

will be within the overall financial limits prescribed.
• The final proposals of PLI for individual sectors will be appraised by the
Expenditure Finance Committee (EFC) and approved by the Cabinet.
• Savings, if any, from one PLI scheme of an approved sector can be utilized to fund
that of another approved sector by the Empowered Group of Secretaries.
• Any new sector for PLI will require fresh approval of the Cabinet.
• Growth in production and exports of industrial goods will greatly expose the Indian
industry to foreign competition and ideas, which will help in improving its
capabilities to innovate further. Promotion of the manufacturing sector and
creation of a conducive manufacturing ecosystem will not only enable integration
with global supply chains but also establish backward linkages with the MSME
sector in the country. It will lead to overall growth in the economy and create huge
employment opportunities.
What is the tenure of the scheme?
The PLI scheme will be active for five years with financial year (FY) 2019-20 considered as
the base year for calculation of incentives. This means that all investments and
incremental sales registered after FY20 shall be taken into account while computing the
incentive to be given to each company.
How this scheme will be effective?
There are certain marked features of the PLI scheme that should make it effective in
implementation and predictable in results.
1. The scheme is outcome-based, which means that incentives will be disbursed only
after production has taken place in the country. The scheme is thus purely result-
oriented.
2. The calculation of incentives will be based on incremental production to be
achieved at a high rate of growth. To achieve this incremental production,
beneficiaries will be required to make additional investment in establishing green-
field facilities or carrying out expansion of existing facilities.
3. The scheme focuses on size and scale by selecting those players who can deliver
on volumes. The targeted nature of the scheme will make it highly effective and the
beneficiaries are likely to become globally competitive.
4. The selection of sectors covering cutting-edge technology, sectors for integration
with global value chains, job-creating sectors and sectors closely linked to the
rural economy, is highly calibrated.
5. Addressing fiscal disabilities of companies and helping them achieve size and scale
would allow Indian products to become competitive in global markets and lead to
an increase in exports.
2) Developmental Financial Institution (DFI)
India will set up a new development finance institution called the National Bank for
Financing Infrastructure and Development. A bill for the creation of the DFI has
already been listed for the ongoing parliament session.
• It describes the institution “as a provider, enabler and catalyst for infrastructure
financing and as the principal financial institution and development bank for
building and sustaining a supportive ecosystem across the life-cycle of
infrastructure projects".
• The institution will be set up on a capital base of Rs 20,000 crore and will have a
lending target of Rs 5 lakh crore in three years.
• The high-level task force on NIP had earlier recommended that the capacity of
banking and financial institutions, including IIFCL and SBI, be ramped up to
provide long-term infrastructure finance.
What Is A Development Finance Institution?
A development finance institution is an agency that finances infrastructure projects that
are of national importance but may or may not conform to commercial return standards.
In most cases, these agencies are government owned and their borrowings enjoy the
comfort of government guarantees, which help bring down the cost of funding.
Return To The Past
• In setting up a DFI, India will return to an earlier experiment with the idea. ICICI,
it in original form, and IDBI were both set up as DFIs but were later converted into
universal banks as it was perceived that they needed access to public deposits.
• The earlier generation of DFIs ran into the problem of financing because retail
deposit access was cornered by banks and availability of long-term financing
without government guarantees was limited.
National Infrastructure Pipeline (NIP)
The National Infrastructure Pipeline (NIP) for FY 2019-25 is a first-of-its-kind, whole-of-

government exercise to provide world-class infrastructure to citizens and improving their
quality of life. It aims to improve project preparation and attract investments into
infrastructure.
All projects (Greenfield or Brownfield, under conceptualization or under implementation

or under Development) of project cost greater than Rs. 100 crore per project were sought
to be captured.
Nip Opportunities:
TRANSPORT: The transport sector in India is expected to grow at a CAGR of 5.9 percent
thereby becoming the fastest growing area of India's infrastructure sector. Transport
includes well-developed roads and highways, a widespread railway network, fast-growing
aviation and developing ports, shipping and inland waterways infrastructure.
LOGISTICS: The Indian logistics sector valued at USD 160 bn in 2019, is expected to
become worth USD 215 bn in the next two years. India’s rank has gone up from 54 in
2014 to 44 in 2018 in the World Bank’s Logistics Performance Index (LPI), in terms of
overall logistics performance.
ENERGY: The Energy sector in India includes conventional power, renewable energy (RE)
, petroleum and natural gas. The total Energy capacity in India stands at 356 GW with
major contributors being Thermal (66%), Renewable (22%), Hydro (13%) and Nuclear
(2%).
WATER & SANITATION: Water & Sanitation sector in India includes ensuring adequate
supply of water and treatment of liquid & solid waste. India through the launch of
Swachh Bharat Mission (SBM) and National Rural Drinking Water Program (NRDWP) has
made substantial investment and efforts in ensuring safe drinking water and sanitation.
COMMUNICATION: India is currently the world’s second-largest telecommunications
market with a subscriber base of 1.20 bn. Major sectors of the Indian telecommunication
industry are telephone, internet and television broadcast industry.
SOCIAL INFRASTRUCTURE: The Social infrastructure sector in India includes health

and education infrastructure. Expenditure of approximately USD 28 bn and USD 20 bn
for education and healthcare is planned respectively over 2020-25.
COMMERCIAL INFRASTRUCTURE: Commercial infrastructure in India facilitates the

necessary support required by various industries such as testing labs, terminal markets,
common infrastructure for industries and storage facilities. Testament to the quality,
India is ranked second in the 2019 Agility Emerging Markets Logistics Index.
References:
1. https://pib.gov.in/PressReleasePage.aspx?PRID=1671912
2. https://economictimes.indiatimes.com/news/economy/policy/global-ambitions-
all-about-the-production-linked-incentive-scheme/articleshow/79182428.cms
3. https://indianexpress.com/article/explained/national-policy-on-electronics-
production-linked-incentive-scheme-explained-6530777/
4. https://www.pib.gov.in/PressReleasePage.aspx?PRID=1681727
5. https://www.downtoearth.org.in/news/energy/union-budget-2021-22-india-to-
launch-hydrogen-energy-mission-75314
6. https://www.bloombergquint.com/business/budget-2021-government-to-set-up-
development-finance-institution
7. https://indianexpress.com/article/business/economy/budget-2021-to-fund-
growth-cycle-a-bad-bank-and-a-dfi-7170633/
recognition 10
Accreditation Regulation
Chapter 12: Human Capital

R&D
Expenditure on Education as setting
Standard % of GDP: Funding National
Higher
Education
Research
Observation: From 2014, it was stagnant for couple of years but hasFoundation
Commission increased with
since
of India
2019. So, it is not a consistent rise and definitely, not decreased. outlay of
50,000 crore
over 5 years
Expenditure on Education as per cent of GDP National
2020-21 BE 3.5 Language
2019-20 RE 3
Translation
Mission to boost
2018-19 2.8
internet access
2017-18 2.8 Deep Ocean
2016-17 2.8 Mission for
ocean
2015-16 2.8
exploration and
2014-15 2.8 biodiversity
-0.5 0.5 1.5 2.5 3.5 conservation
SKILLS: Realigning National Apprenticeship Training scheme for graduates and diploma
holders in Engineering.
National Apprenticeship Training Scheme
• National Apprenticeship Training Scheme is one of the flagship programmes of

Government of India for Skilling Indian Youth.
• It is a one year programme equipping technically qualified youth with practical
knowledge and skills required in their field of work.
• The Apprentices are imparted training by the organizations at their place of work.
• Trained Managers with well developed training modules ensure that Apprentices
learn the job quickly and competently.
• During the period of apprenticeship, the apprentices are paid a stipend amount,
50% of which is reimbursable to the employer from Government of India.
• At the end of the training period the apprentices are issued a Certificate of
Proficiency by Government of India which can be registered at all employment
exchanges across India as valid employment experience.
• The apprentices are placed for training at Central, State and Private organizations
which have excellent training facilities.
• The apprentice also learns soft skills, work culture, ethics and organisational
behaviour while undergoing training.
Research and Development (R&D)
1. National Research Foundation with outlay of ₹50,000 crore over 5 years.

2. National Language Translation Mission to boost internet access.
3. Deep Ocean Mission for ocean exploration and biodiversity conservation.
1. National Research Foundation
The National Research Foundation (NRF) is a soon-to-be-set-up autonomous body
envisaged under the New Education Policy (NEP) 2020. Considered to be one of the
biggest announcements under NEP, it will look after funding, mentoring, and building
‘quality of research’ in India.
Why Separate Body?
a) Funds: The funds allocated to research have declined from 0.84 per cent of GDP
in 2008 to 0.69 per cent in 2014, as mentioned in the draft NEP.
Lack of fund allocation has often been cited as one of the biggest reasons
behind the lack of researchers in India and NRF aims to cater to the same.
The new national education policy also acknowledges, “research and
innovation investment in India is, at the current time, only 0.69 per cent of
GDP as compared to 2.8 per cent in the United States of America, 4.3 per
cent in Israel and 4.2 per cent in South Korea.”
b) Researchers per Capita: The number of students pursuing research is also very
low in India. Currently, the number of researchers (per lakh population) in the
country is way behind China, US, as well as much smaller nations including
Israel. Less than 0.5 per cent of Indian students pursue PhD or equivalent level of
education, according to the All India Survey of Higher Education (AISHE) report.
Working Methodology:
• The NRF aims to fund researchers working across streams in India.
• In order to bring non-science disciplines of research in its ambit, NRF will fund
research projects across four major disciplines –Sciences; Technology; Social
Sciences; and Arts and Humanities.
2. National Language Translation Mission

The announcement comes in the backdrop of growing demand for accessing online
services in local Indian languages.
• The mission will build on existing projects in the Ministry of Electronics and IT
(MeitY) which has been working on various applications like text-to-speech,
text-to-text, etc.
• It will use artificial intelligence, machine learning and speech recognition
technologies to build the next generation government apps and websites that
will be “conversational” like Amazon's Alexa or Apple’s Siri.
• The Mission will work towards creating a “voice-based internet” which will be
accessible in popular Indian languages and not be dominated by Hindi or
English.
Implication
• A national level mission focusing on local language translation will provide big
boost to regional language initiatives.
• It will also encourage agencies to translate science and technology related
content, currently available mostly in English language, in Indian languages.
This will enhance access to digital content to wider demographic of Indian
users.
• In 2020, during the peak covid-19 months, the government had tied up with
Reverie Technologies and had deployed their language translation technology
Anuvadak to translate and publish the MyGov Covid-19 page in 10 Indian
languages.
Context
• More and more Indians from tier 2 and tier 3 cities are using online services
since the pandemic hit. As a result, several consumer facing businesses and
government agencies started offering services in local Indian languages.
• For instance, Google rolled out new language-centric features across its various
platforms such as Search, Maps and Lens.
• Axis Bank deployed a multi-lingual voice bot named AXAA to handle customer
queries and requests. It supported over 10 Indian languages with over 160
dialects.
• 2020 also saw increase in investments in start-ups offering services in local
languages.
3. Deep Ocean Mission

Union Finance Minister Nirmala Sitharaman announced an allocation of over Rs
4,000 crore over the next five years for the Deep Ocean Mission. This is in addition to
the Rs 1,897 crore allocated for the ministry in the current financial year.
• It is part of the Blue Economy envisioned to be developed by 2030.
• Flanked by the Bay of Bengal, the Arabian Sea and the Indian Ocean on its
three sides, India has a vast coastline measuring over 7,517 km, with nine
coastal states and 1,382 islands dependent on the seas. As much as 95 per
cent of India’s trade is handled via these seas.
• It envisages exploration of minerals, energy and marine diversity of the
underwater world, a vast part of which still remains unexplored.
• We hardly have knowledge of about 5 per cent of the explored deep oceans.
• It will give a boost to efforts to explore India’s vast Exclusive Economic Zone
and Continental Shelf.
• The mission will also involve developing technologies for different deep ocean
initiatives.
• The multi-disciplinary work will be piloted by the MoES and other government
departments like the Defence Research and Development Organisation,
Department of Biotechnology, Indian Space Research Organisation (ISRO),
Council for Scientific and Industrial Research (CSIR) will be stakeholders in
this mission.
• India will place India among select countries — US, France, Japan, Russia and
China — to have special missions dedicated for ocean studies.
References:
1. http://portal.mhrdnats.gov.in/about-us
2. https://indianexpress.com/article/education/what-is-national-research-foundation-nrf-6125159/
3. https://economictimes.indiatimes.com/tech/technology/ai-ml-to-drive-budget-2021-national-language-
translation-mission/articleshow/80674800.cms
4. https://indianexpress.com/article/india/deep-ocean-mission-rs-4000-crore-allocated-to-help-india-
strengthen-links-with-its-oceans-7170567/
5. https://theprint.in/science/india-to-launch-rs-4000-cr-deep-sea-mission-to-explore-minerals-energy-
marine-diversity/549667/
Chapter 13: Financial Reforms
• Rationalised single Securities Markets Code by 2022.
• Permanent institutional framework for Corporate bond market.
• SEBI as regulator and greater role for WDRA for development of commodity market
ecosystem.
• Asset Reconstruction Company Limited and Asset Management Company to
resolve stressed assets problem of PSBs.
1. Unified Securities Markets Code

• It was proposed to consolidate the provisions of Sebi Act, Depositories Act,
Securities Contracts (Regulation) Act and Government Securities Act into a
rationalised single securities markets code.
• By bringing Government Securities Act under the securities market code will also
increase the credibility of government's borrowings and thrust of foreign capital
with the government looking to step up its borrowing for funding the allocations
announced in the budget.
• This move will improve ease of doing business in the country’s financial markets,
cut down compliances, reduce cost and do away with friction between various
stakeholders.
• It marks a step towards a single financial regulator and streamlining multiple
laws, ordinances, guidelines and regulations.
2. Permanent institutional framework for Corporate bond market

• The government proposed to form an institution that will buy and sell corporate
bonds.
• It will likely stimulate the shallow secondary market, which usually turns dry in
times of crisis.
• Corporate bonds offer an avenue for long-term funding in a country, where banks
generally prefer short-term lending.
• The proposed body will purchase investment-grade debt securities not rated below
BBB-, both in stressed and normal times. The move is aimed at developing the
much-needed corporate bond market.
• Typically in India, bonds, barring top-rated papers, do not have adequate
secondary market liquidity, which enables investors to buy or sell it freely.
• The move should be seen in sync with the RBI that has been focussing on
corporate bonds.
• In March, the corporate bond market turned extremely arid amid fears of
redemption pressure following a select bond default. The Reserve Bank of India
had to introduce a liquidity window, christened as targeted long-term repo
(TLTRO), where banks can borrow only to subscribe bonds of non-bank entities.
3. Asset Reconstruction Company (ARC)

• Finance Minister Nirmala Sitharaman, while presenting Budget 2021,
proposed to set up an asset reconstruction company (ARC) for non-performing
asset (NPA) management.
• Additionally, the government proposed to infuse Rs 20,000 crore of capital
into state-owned banks for the financial year 2021-2022.
When does a loan turn 'bad'? An asset, including a leased asset, becomes non-
performing when it ceases to generate income for the bank.
A ‘non-performing asset’ (NPA) was defined as a credit facility in respect of which the
interest and/ or instalment of principal has remained ‘past due’ for a specified period
of time.
Several leading economists feel “bad bank” could be a good idea to free the banks from
the mounting burden of the NPAs. In May, the Indian Banks Association (IBA) had
suggested to the finance ministry and RBI to set up a bad bank.
What is a bad bank? A ‘bad bank’ is a bank that buys the bad loans of other lenders
and financial institutions to help clear their balance sheets. The bad bank then
resolves these bad assets over a period of time. When the banks are freed of the NPA
burden, they can take a more positive look at the new loans. Ideally, such a bank
should be owned by the banks which have the most of NPAs.
The RBI in its Financial Stability Report has warned that gross non-performing
assets (NPAs) on bank balance sheets could rise from 7.5 percent in September
2020 to 13.5 percent in September 2021 in the baseline scenario. In a medium
stress scenario, RBI projects that Gross NPAs of all banks may rise from 7.5
percent as of September 2020 to 14.1 percent by September 2021.
The RBI report showed that Public Sector Banks (PSBs), who account for 60
percent of the banking sector’s assets, may see gross NPAs rise from 9.7 percent
in September 2020 to 16.2 percent by September 2021 in the baseline scenario,
16.8 percent in the medium-stress scenario and as much as 17.6 percent in a
severe stress scenario.
References:
1. https://economictimes.indiatimes.com/markets/bonds/budget-proposal-to-
stimulate-corporate-bond-market/articleshow/80634506.cms?from=mdr
2. https://www.livemint.com/budget/news/budget-2021-govt-proposes-to-
introduce-single-securities-markets-code-11612193014677.html
3. https://www.cnbctv18.com/finance/union-budget-2021-fm-proposes-to-set-up-
arc-for-npa-management-rs-20000-cr-to-be-provided-for-psb-recap-8167701.htm
2 NSSF loan to FCI for food subsidy to be replaced by
making budget provisions
Chapter 14: Different Indicators

3 1,1analysis through
, 2 crore as Graphs
Revenue Deficit grant to 17 state
2021-22
Fiscal Position
1. Fiscal Deficit from 2014-15 to 2021-22
10.00 9.50
Fiscal Deficit Capital Expenditure
• Allowing a normal ceiling
9.00 of net borrowing for the
states at 4% of GSDP for
8.00 2021-22
Fiscal Position
Percent of GDP
1 • Additional Borrowing 7.00
6.80
ceiling of 0.5% of GSDP subject
6.00
to conditions 5.00
4.60
4.10 3.90
a normal ceiling of net borrowing for the • 3.50
3.50 Allowing
3.40
4.00
states at 4% of GSDP for 2021-22
2 NSSF loan to FCI for food subsidy
3.00 to be replaced by Borrowing ceiling of 0.5% of GSDP subje
• Additional 1
2015-16
2014-15
2016-17
2017-18
2018-19
2019-20 Actuals
2020-21 RE
2021-22 BE
making budget provisions to conditions
3 1,1 , 2 crore as Revenue DeficitNSSF

grant loan
to 17
to states
FCI for 2
infood subsidy to be replaced by
2021-22 making budget provisions
2. Capital Expenditure from 2014-15 to 2021-22 35 External Debt
30
10.00 9.50 3 1,1 , 2 crore as Revenue Deficit

25
grant to 17 states in
Fiscal Deficit 2021-22
Capital Expenditure
Per cent
9.00 20
8.00 15
6.80 GENERAL
7.00 10
10.00 GOVERNMENT 9.50
6.00 Fiscal Deficit Capital Expenditure
4.60 9.00 DEBT TO GDP 5
5.00 4.10 3.90
Percent of GDP
8.00 0
4.00 3.50 3.50 3.40 6.80
2013
2018
2019
2020
7.00
3.00
6.00
2015-16
2014-15
2016-17
2017-18
2018-19
2019-20 Actuals
2020-21 RE
2021-22 BE
4.60 Debt Service Ratio

5.00 4.10 3.90
3.50 3.50 3.40 External Debt to GDP
4.00
Ratio of Short-term debt to reserv
3.00
2015-16
2014-15
2016-17
2017-18
2018-19
2019-20 Actuals
2020-21 RE
2021-22 BE
35
3. General Govt Debt to GDP from External
2014-15 Debt
to 2019-20 12
30 10
25
8 35 External Debt
Per cent
Per cent
20
30
6
15 25
GENERAL 4
10
Per cent
GOVERNMENT 20
DEBT TO GDP 5 2
15
GENERAL
0 0 10
GOVERNMENT
2013
2018
2019
2020
2020 (Sept-end)
DEBT TO GDP 5
0
Debt Service Ratio
2013
2018
2019
2020
2020 (Sept-end)
External Debt to GDP

Ratio of Short-term debt to reserves
Debt Service Ratio
External Debt to GDP
Ratio of Short-term debt to reserves
etc. one more year af
Indirect Tax
6. GST Collections April to Dec comparison 2019 to 2020
GST Collection Rationalisation of c
1.4 structure by elimin
2020-21 2019-20
exemptions
1.2 1.14 1.15 Support to MSMEs
1.00 1.00 1.02 0.98
1.05 1.05 sharp rise in iron an
1.0 0.95 and relief to metal
1.031.03
In Rs Lakh crore Rationalisation of d
0.8 0.91
0.87 0.92 0.95 material inputs to m
0.86
0.62 textiles
0.6 Rationalisation of c
gold and silver
0.4 0.32 Increase in duty on
and lanterns to pro
0.2 production
Agriculture Infrast
0.0 Development Cess
Apr May Jun Jul Aug Sep Oct Nov Dec
number of items
Rupee comes in
7. Budget 2021 Expectation, Rupee Comes from,
Non Debt Capital

Receipts
5%
Borrowings and other
Liabilities
36%
Income Tax
14%
Union Excise Duties

8%
Non Tax Revenue

6%
Corporation Tax
Customs 13%
3%
GST
15%
info@analogeducation.in Rupee goes out 56 www.analogeducation.in
Pensions
Other Expenditure
5%
GST
15%
Rupee goes out

8. Budget 2021 Expectation, Rupee Goes to,
Pensions
Other Expenditure
Centrally Sponsored 5%
10%
Schemes
9%
Central Sector
Schemes
Subsidies 14%
8%
Defence
8%
Finance Commission
and Other Transfers
10%
Interest Payments
20% States' Share of Taxes
and Duties
16%
9. Tax Revenues Trajectory, as a % of GDP

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Indian Economy

Topic: Budget 2021-22

ANALOG IAS ACADEMY

Category Documents in this category

Example growth numbers from Economic Survey 2020-21:

• The real GDP in 2019-20 is ₹146 trillion.

What is nominal GDP and how is it different from real GDP?

Charged expenditure includes expenditure which is not required to be voted on by

Revised Estimates: Revised Estimates are mid-year review of possible expenditure,

Annual Financial Statement (AFS)

(i) The Consolidated Fund of India,

• According to Article 150, the Annual Financial Statement shows, certain

Demands for Grants

Statements mandated under FRBM Act.

i. Macro-Economic Framework Statement

The Macro-Economic Framework Statement is presented to Parliament under Section 3 of

ii. Medium-Term Fiscal Policy cum Fiscal Policy Strategy Statement

The Statement includes the underlying assumptions, an assessment of the balance

To facilitate a more comprehensive understanding of the major features of the Budget,

Under the Umbrella of Centres’ Expenditure there are 3 sub-classification

(b) Establishment expenditure of the Centre

The Umbrella of Transfers to States/UTs includes the following 3 sub- classification:

(a) Centrally Sponsored Scheme

Pre-Budget Consultation Process

Printing of Budget Documents:

President’s Prior Approval:

Discussion on the Budget

a) General Discussion on the Budget :

b) Consideration of the Demands for Grants by Departmentally Related Standing

With the creation of Departmentally Related Standing Committees of Parliament in

c) Discussion on Demands for Grants

It is open to members to disapprove a policy pursued by a particular Ministry or to

Cut Motions can be classified into three categories:—

(i) Disapproval of Policy Cut;

Government in order to allow it to run the administration of the country Government

Supplementary Demand for Grants

Note: In 2020-21, FD is 9.5, RD is 7.5 and PD is 5.9. Also in 2021-22, FD is 6.8, RD is

• The original fiscal deficit target for 2020-21 was 3.5%.

Towards Fiscal Transparency

Off-Budget Borrowings: According to the last Budget documents, in the 2020-21

What is government borrowing?

The central government is increasingly turning to external sources of financing to meet

Short-term Borrowings: It is through a mechanism called Ways and Means Advances

Improving the quality of Expenditure:

A TSA can be defined as a unified structure of government bank accounts enabling

An effective TSA system is founded on three key principles:

• The government banking arrangement should be unified, to enable ministry of

Recommendations accepted by the Govt.:

No Clear decision on,

Similarly, the Commission’s recommendation to overhaul the Fiscal Responsibility and

Southern State’s Fear:

Tax Devolution Formula:

The Demographic Performance criterion is to reward efforts made by states in controlling

Non-Lapsable Defence Fund:

• FC was of the opinion that a non-lapsable Defence Capital Fund Account is an

Finance Commission Grants

15th Finance Commission Recommendations:

Revenue deficit grants:

Disaster Risk Management: