Union Budget 2021 Navigating Challenges
01 Feb 2021

Union Budget 2021 Navigating Challenges

Budget 2021 had a bouquet of announcements paving the way forward for positive changes

A gist of the announcements:

  • Voluntary Vehicle Scrapping Policy
  • A new framework to choose your power distribution company
  • Big Boost to Health CareIncentives for Startups
  • A new cess: Agriculture Infrastructure and Development Cess


Budget 2021 had several important announcements. While it focused on specific industries and the economy as a whole, the Finance Minister did make a few key announcements that could directly impact your daily lives.

Union Budget 2021 Highlights: Among the key policy announcements made by the Finance Minister during the budget was the announcement of a new vehicle scrapping policy and a new framework for power consumers. Other announcements were aimed at opening up opportunities in various sectors as well as startups.

Voluntary Vehicle Scrapping Policy: The Finance Minister stated that the voluntary vehicle scrapping policy would be brought in to phase out old and unfit vehicles. Under the policy, vehicles would undergo fitness tests in automated fitness centres after 20 years in case of personal vehicles, and after 15 years in case of commercial vehicles.  The Finance Minister also stated that this move is an effort to reduce vehicular pollution and oil import bill by encouraging fuel-efficient, environment-friendly vehicles. The policy's announcement will impact the future of vehicle ownership in the country.

A new framework to choose your energy supplier:  There was an announcement that the government will outline a new framework that will give consumers alternatives to choose from more than one power distribution companies. The FM in her Union Budget 2021 speech highlighted that those distribution companies across the country were monopolies, either the government or private and that there is a need to provide choice to consumers by promoting competition.

Incentives to Startups:  In more Union Budget highlights, there is an extension to the tax incentives provided to startups to usher innovation in the country. The Finance Minister extended the eligibility to claim a tax holiday by one more year, i.e. March 31, 2022, and also extended the capital gains tax exemption provided to startup investors.

Agriculture Infrastructure and Development Cess (AIDC):  The Finance Minister ended her speech with the announcement of a new cess that will be levied on select items, including petrol and diesel, which have attracted a cess of Rs. 2.5 and Rs. 4 per litre, respectively. However, care has been taken to reduce other customs and excise duties on some of the items. The real impact of this cess will only be known when they come into effect.

Big Boost to Health Care: The budget plan for Health and Wellbeing in 2021-22 was increased by 137%  to Rs. 2,23,846 crores. The Finance Minister, in her speech, announced Rs. 35,000 crores for a COVID-19 vaccination programme as well as setting up the PM Atmanirbhar Swasth Bharat Yojana with an outlay of about 64,180 crores over 6 years to improve primary, secondary and tertiary healthcare.


There are other key highlights of the Union Budget 2021 that will also revive the economy in the aftermath of the pandemic. It was the first paperless budget and was presented through an app by the Finance Minister. In 2021-2022, India can also look forward to:

  • 15,000 schools to mentor others under the National Education Policy
  • National Research Foundation to receive Rs. 50,000 crores in funding over the next 5 years
  • 8,500 km of highways to be built by 2022
  • 2,217 crores added to the National Clean Air programme to tackle air pollution in 42 cities
  • Customs duty slashed on Gold and Silver from 12.5% to 7.5%
  • 100% electrification of railway's broad gauge routes to be completed by December 2023.
  • Two new technologies - 'MetroLite' and 'MetroNeo' - to be deployed to provide metro rail systems at a much lesser cost with the same experience, convenience and safety in Tier-2 cities and peripheral areas of Tier-1 cities. 


So did the budget meet your expectations? Let us know.


*Disclaimer: This article is for information purposes only; it is not an analysis or opinion of digibank by DBS.