Summary of

Union Budget
2021-22
As per Article 112 of the constitution, a union budget is basically the statement of the estimated receipts and expen-
diture of the government. It is also known as the annual financial statement of the government. Department of
Economic Affairs, Ministry of Finance is the nodal body responsible for preparing the Budget.
Budget 2021-22 is the first budget of the new decade 2021-30 and is also the first ever digital union budget.
This budget which comes in the backdrop of unprecedented COVID-19 crisis reflects the firm commitment of the
Government to boost economic growth by investing in infrastructure development.

Part A
Budget proposals for 2021-2022 rest on 6 pillars:
1. Health and Wellbeing
2. Physical & Financial Capital, and Infrastructure
3. Inclusive Development for Aspirational India
4. Reinvigorating Human Capital
5. Innovation and R&D
6. Minimum Government and Maximum Governance

Health and Wellbeing

Health Systems: PM AatmaNirbhar Swasth Bharat Yojana, a new centrally sponsored scheme will be launched
It will develop capacities of primary, secondary, and tertiary care Health Systems, strengthen existing nation-
al institutions, and create new institutions, to cater to detection and cure of new and emerging diseases.
It will be implemented over 6 years and will be in addition to the National Health Mission.
Main interventions under scheme includes:
Support for Health and Wellness Centers.
Setting up integrated public health labs in all districts
Strengthening of the National Centre for Disease
Control (NCDC).
Expansion of the Integrated Health Information Portal
to all States/UTs to connect all public health labs;
Setting up of a National Institution for One Health, a
Regional Research Platform for WHO South East Asia
Region, etc.
Nutrition: Government will merge the Supplementary Nutrition Programme and the Poshan Abhiyan and launch
the Mission Poshan 2.0 to strengthen nutritional content, delivery, outreach, and outcome.

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Universal Coverage of Water Supply and Swachch Bharat Mission:

Jal Jeevan Mission (Urban), will be launched for universal water supply in all 4,378 Urban Local Bodies with
2.86 crores household tap connections, as well as liquid waste management in 500 AMRUT cities. It will be
implemented over 5 years.
Urban Swachh Bharat Mission 2.0 will be implemented for over 5 years and main interventions would be:
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
Bio-remediation of all legacy dump sites
Vaccines:
Provision of Rs 35,000 crore made for Covid-19 vaccine in budget estimate (BE) 2021-22.
Pneumococcal Vaccine will be rolled out across the country aimed at averting 50,000 child deaths annually.
It is a Made in India product, presently limited to only 5 states.
This vaccine helps prevent pneumococcal disease, which is any type of illness caused by Streptococcus
pneumoniae bacteria.
Clean Air & Scrapping Policy:
Rs. 2,217 crore to tackle air pollution, for 42 urban centers with a million-plus population
Voluntary vehicle scrapping policy to phase out old and unfit vehicles was announced.
Fitness tests have been proposed in automated fitness centres after 20 years in case of personal vehicles,
and after 15 years in case of commercial vehicles.

Physical and Financial Capital and

Infrastructure
AatmaNirbhar Bharat-Production Linked Incentive (PLI) Scheme:
Rs. 1.97 lakh crore in next 5 years for PLI schemes in 13 Sectors
To create and nurture manufacturing global champions for an AatmaNirbhar Bharat
To help manufacturing companies become an integral part of global supply chains, possess core competence
and cutting-edge technology
To bring scale and size in key sectors
To provide jobs to the youth
Textiles: To enable Textile industry to become globally competitive, attract large investments and boost employment
generation & exports:
Mega Investment Textiles Parks (MITRA) scheme will be launched in addition to PLI.
7 Textile Parks to be established over 3 years
Infrastructure:
National Infrastructure Pipeline (NIP) has now expanded to 7,400 projects. Budget proposes three ways to
address increased funding requirements for NIP:
By creating the institutional structures;
By a big thrust on monetizing assets, and
By enhancing the share of capital expenditure in central and state budgets.
Creation of institutional structures: Infrastructure Financing
Rs. 20,000 crore to set up and capitalise a Development Financial Institution (DFI) – to act as a provider,
enabler and catalyst for infrastructure financing
Rs. 5 lakh crore lending portfolios to be created under the proposed DFI in 3 years
Debt Financing by Foreign Portfolio Investors to be enabled by amending InvITs’ and REITs’ legislations
Asset Monetisation: A “National Monetization Pipeline” of potential Brownfield infrastructure assets will be
launched. An Asset Monetization dashboard will also be created for tracking the progress and to provide visibility
to investors.
Other asset monetisation measures include: monetisation of railway infrastructure assets/sports stadi-
ums/dedicated freight corridor assets etc.
Sharp Increase in Capital Budget: Rs. 5.54 lakh crore capital expenditure in BE 2021-22 – sharp increase of 34.5%
over Rs. 4.12 lakh crore allocated in BE 2020-21.

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Roads and Highways Infrastructure:

More economic corridors are being planned.
Advanced Traffic management system in all new 4 and 6-lane highways:
Railway Infrastructure:
National Rail Plan for India (2030): to create a ‘future ready’ Railway
system by 2030
Western Dedicated Freight Corridor (DFC) and Eastern DFC to be commis-
sioned by June 2022, to bring down the logistic costs – enabling Make in
India strategy
Measures for passenger convenience and safety:
Aesthetically designed Vista Dome coach on tourist routes for better
travel
High density network and highly utilized network routes to have an indigenous-
ly developed automatic train protection system, eliminating train collision due
to human error
Urban Infrastructure:
Raising the share of public transport in urban areas by expansion of metro rail network and augmentation of
city bus service
Rs. 18,000 crore for a new scheme, to augment public bus transport
‘MetroLite’ and ‘MetroNeo’ technologies to provide metro rail systems at much lesser cost with similar expe-
rience in Tier-2 cities and peripheral areas of Tier-1 cities.
Power Infrastructure:
A framework will be put in place to give consumers alternatives to choose from among more than one Distri-
bution Company.
To improve viability of Distribution Companies, a revamped reforms-based result-linked power distribution
sector scheme will be launched.
The scheme will provide assistance to DISCOMS for Infrastructure creation including pre-paid smart
metering and feeder separation, upgradation of systems, etc., tied to financial improvements.
A comprehensive National Hydrogen Energy Mission 2021-22 to be launched
Ports, Shipping, Waterways:
7 projects to be offered in PPP-mode in FY21-22 for operation of major ports
A scheme to promote flagging of merchant ships in India will be launched by providing subsidy support to
Indian shipping companies in global tenders floated by Ministries and CPSEs.
This initiative will enable greater training and employment opportunities for Indian seafarers besides
enhancing Indian companies share in global shipping.
Petroleum & Natural Gas:
Extension of Ujjwala Scheme to cover 1 crore more beneficiaries
To add 100 more districts to the City Gas Distribution network in next 3 years
An independent Gas Transport System Operator to be set up for facilitation and coordination of booking of
common carrier capacity in all-natural gas pipelines on a non-discriminatory open access basis
Financial Capital:
A single Securities Markets Code to be evolved
Support for development of a world class Fin-Tech hub at the GIFT-IFSC
A new permanent institutional framework to help in development of Bond market by purchasing investment
grade debt securities both in stressed and normal times
Setting up a system of Regulated Gold Exchanges: SEBI to be notified as a regulator and Warehousing Devel-
opment and Regulatory Authority to be strengthened
To develop an investor charter as a right of all financial investors
Capital infusion of Rs. 1,000 crore to Solar Energy Corporation of India and Rs. 1,500 crore to Indian Renew-
able Energy Development Agency
Increasing FDI in Insurance Sector: Increase the permissible FDI limit from 49% to 74% and allow foreign owner-
ship and control with safeguards.
Stressed Asset Resolution: Asset Reconstruction Company Limited and Asset Management Company to be set
up to consolidate and take over the existing stressed debt and then manage and dispose of the assets to Alternate
Investment Funds and other potential investors for eventual value realization.
Recapitalization of PSBs: To further consolidate the financial capacity of PSBs, further recapitalization of `20,000
crores is proposed in 2021-22.Investment Funds and other potential investors for eventual value realization.

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Deposit Insurance
Amendments to the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act, 1961, to help depositors
get an easy and time-bound access to their deposits to the extent of the deposit insurance cover
Minimum loan size eligible for debt recovery under the Securitisation and Reconstruction of Financial Assets
and Enforcement of Security Interest (SARFAESI) Act, 2002 proposed to be reduced from Rs. 50 lakh to Rs. 20
lakh for NBFCs with minimum asset size of Rs. 100 crore
Company Matters
To decriminalize the Limited Liability Partnership (LLP) Act, 2008
Easing Compliance requirement of Small companies by revising their definition under Companies Act, 2013 by
increasing their thresholds for Paid up capital from “not exceeding Rs. 50 Lakh” to “not exceeding Rs. 2 Crore”
and turnover from “not exceeding Rs. 2 Crore” to “not exceeding Rs. 20 Cr”.
Promoting start-ups and innovators by incentivizing the incorporation of One Person Companies (OPCs)
To ensure faster resolution of cases by:
Strengthening National Company Law Tribunal (NCLT) framework
Implementation of e-Courts system
Introduction of alternate methods of debt resolution and special framework for MSMEs
Launch of data analytics, artificial intelligence, machine learning driven MCA21 Version 3.0 in 2021-22
Disinvestment and Strategic Sale:
Estimated Rs 1,75,000 crores as receipts from disinvestment in BE 2021-22.
New policy for Strategic Disinvestment approved; CPSEs except in four strategic areas to be privatized
NITI Aayog to work out on the next list of CPSEs to be taken up for strategic disinvestment
Incentivizing States for disinvestment of their Public Sector Companies, using central funds
Special Purpose Vehicle in the form of a company to monetize idle land
Introducing a revised mechanism for ensuring timely closure of sick or loss making CPSEs
Government Financial Reforms
Treasury Single Account (TSA) System for Autonomous Bodies to be extended for universal application
Separate Administrative Structure to streamline the ‘Ease of Doing Business’ for Cooperatives

Inclusive Development for

Aspirational India
Inclusive
Features
Sectors covered
Agriculture SWAMITVA (Survey of Villages and Mapping with Improvised Technology in Village Areas)
Scheme extended to cover all states/UTs to bring transparency in property ownership in
villages.
Scheme aims to map rural inhabited lands using drones and latest survey methods.
‘Operation Green Scheme’ will be enlarged to include 22 perishable products to boost value
addition in agriculture and allied products and their exports.
It is presently applicable to tomatoes, onions, and potatoes.
Credit increase
Agricultural credit target enhanced to Rs. 16.5 lakh crore in FY22 with focus on credit
flows to animal husbandry, dairy, and fisheries.
33% increase in Rural Infrastructure Development Fund.
Micro Irrigation Fund under NABARD doubled.
1,000 more mandis will be integrated with e-NAM to bring transparency and competitiveness.
Agriculture Infrastructure Funds would be made available to APMCs for augmenting their
infrastructure facilities.
There has been in increase in payment to farmers for wheat, pulses, Rice and cotton from
2013 to 2020.

Fisheries Investments to develop modern fishing harbours and fish landing centres - both marine and
inland.
5 major fishing harbours: Kochi, Chennai, Visakhapatnam, Paradip, and Petuaghat to be
developed as hubs of economic activity.
Multipurpose Seaweed Park to be established in Tamil Nadu to promote seaweed cultivation.

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Migrant One Nation One Ration Card plan is under implementation by 32 states and UTs, reaching a
Workers and total of 86% beneficiaries covered. Remaining 4 states and UTs will be integrated in the next
Labourers few months.
Portal to collect information on unorganized labour force, migrant workers especially, to
help formulate schemes for them.
Implementation of 4 labour codes underway
Social security benefits for gig and platform workers too
Minimum wages and coverage under the Employees State Insurance Corporation applica-
ble for all categories of workers
Women workers allowed in all categories, including night-shifts with adequate protection
Compliance burden on employers reduced with single registration and licensing, and
online returns.
Financial Under Stand Up India Scheme for SCs, STs and women,
Inclusion Margin money requirement reduced to from 25% to 15%.
To also include loans for allied agricultural activities
Rs. 15,700 crore budget allocation to MSME Sector, more than double of this year’s BE.

Reinvigorating Human Capital

Education:
15,000 schools will be qualitatively strengthened to include all components of the National Education Policy.
100 new Sainik Schools will be set up in partnership with NGOs/private schools/states.
Proposal to set up a Higher Education Commission of India, as an umbrella body having 4 separate vehicles for
standard-setting, accreditation, regulation, and funding.
For accessible higher education in Ladakh, Government proposed to set up a Central University in Leh.
Scheduled Castes and Scheduled Tribes Welfare: Set a target of establishing 750 Eklavya model residential
schools in tribal areas. Enhanced Central Assistance under the revamped Post Matric Scholarship Scheme for the
welfare of Scheduled Castes for 6 years till 2025-2026.
Skilling: Realign the existing scheme of National Apprenticeship Training Scheme (NATS) for providing post-ed-
ucation apprenticeship, training of graduates and diploma holders in Engineering.
Initiatives for partnership with other countries in skilling to be taken forward, similar to partnership:
With UAE to benchmark skill qualifications, assessment, certification, and deployment of certified work-
force
With Japan for a collaborative Training Inter Training Programme (TITP) to transfer of skills, technique and
knowledge

Innovation and R&D

National Research Foundation: Announced with an outlay of Rs. 50,000 crore, over 5 years. It will ensure that
the overall research ecosystem of the country is strengthened with focus on identified national-priority thrust
areas.
National Language Translation Mission (NTLM): This will enable the wealth of governance-and-policy related
knowledge on the Internet being made available in major Indian languages.
Deep Ocean Mission will be launched with a budget outlay of more than `4,000 crores, over five years. This
Mission will cover deep ocean survey exploration and projects for the conservation of deep sea bio-diversity.
New Space India Limited (NSIL), a PSU under the Department of Space will execute the PSLV-CS51 launch, carry-
ing the Amazonia Satellite from Brazil, along with a few smaller Indian satellites.

Minimum Government, Maximum

Governance
Measures being undertaken to bring reforms in Tribunals to ensure speedy justice
National Commission for Allied Healthcare Professionals already introduced to ensure transparent and efficient
regulation of the 56 allied healthcare professions

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National Nursing and Midwifery Commission Bill introduced for the same in nursing profession
Proposed Conciliation Mechanism with mandate for quick resolution of contractual disputes with CPSEs
Rs. 3,768 crore allocated for forthcoming first digital census in the history of India.
Rs. 300 crore grant to the Government of Goa for the diamond jubilee celebrations of the state’s liberation from
Portuguese.
Rs. 1,000 crore for the welfare of Tea workers especially women and their children in Assam and West Bengal
through a special scheme.

Fiscal Position
Fiscal deficit in BE 2021-2022 is estimated to be 6.8% of
GDP and in Revised Estimate (RE) 2020-21 is pegged at
9.5% of GDP - funded through Government borrowings,
multilateral borrowings, Small Saving Funds and
short-term borrowings.
Gross borrowing from the market for the next year to
be around 12 lakh crores.
Amendment to Fiscal Responsibility and Budget Man-
agement Act (FRBM Act) proposed to achieve targeted
Fiscal Deficit level.
Contingency Fund of India is to be augmented
from Rs. 500 crores to Rs. 30,000 crores through Finance Bill.
Net borrowing for the states allowed at 4% of gross state
domestic product (GSDP) for the year 2021-2022 as per
recommendation of 15th Finance Commission (FC). Finance
Commission (FC).
States expected to reach a fiscal deficit of 3% of GSDP
by 2023-24, as recommended by the 15th FC.
Fifteenth Finance Commission recommendations:
Retaining vertical shares of states at 41%.
Funds to UTs of Jammu and Kashmir and Ladakh would
be provided by Centre.
Rs. 1,18,452 crores have been provided as Revenue Defi-
cit Grant to 17 states in 2021-22, as against Rs. 74,340
crores to 14 states in 2020-21.

TOTAL TRANSFERS TO STATES AND UTs

( in lakh crore)
16
13.89
14 13.14
12 11.95 11.45
9.86 10.85
10
8
6
4
2
0
2016-17 2017-18 2018-19 2019-20 RE 20-21 BE 21-22

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Part B
Budget seeks to further simplify Tax Administration, Litigation Management and ease compliance of Direct Tax
Administration.
Indirect proposal focuses on custom duty rationalization as well as rationalization of procedures and easing of
compliance.

Direct Tax Proposals

Relief to Senior Citizens: Exemption from filing tax
returns for senior citizens over 75 years of age and
having only pension and interest income.
Reducing Disputes, Simplifying Settlement
Time limit for re-opening cases reduced to 3 years
from 6 years.
Serious tax evasion cases, with evidence of
concealment of income of Rs. 50 lakh or more in a
year, to be re-opened only up to 10 years, with
approval of the Principal Chief Commissioner.
Setting up the Dispute Resolution Committee for taxpayers with taxable income up to Rs. 50 lakh and disputed
income up to Rs. 10 lakhs.
National Faceless Income Tax Appellate Tribunal Centre to be established.
Over 1 lakh taxpayers opted to settle tax disputes of over Rs. 85,000 crores through Vivad Se Vishwas Scheme
until 30th January 2021.
Relaxation to NRIs: Rules to be notified for removing hardships faced by NRIs regarding their foreign retirement
accounts and also of double taxation.
Incentivising Digital Economy: Limit of turnover for tax audit increased to Rs. 10 crores from Rs. 5 crores for
entities carrying out 95% transactions digitally.
Relief for Dividend:
Dividend payment to REIT/ InvIT exempt from Tax Deducted at Source (TDS).
Advance tax liability on dividend income only after declaration/ payment of dividend.
Deduction of tax on dividend income at lower treaty rate for Foreign Portfolio Investors.
Attracting Foreign Investment for Infrastructure:
Infrastructure Debt Funds made eligible to raise funds by issuing Zero Coupon Bonds.
Relaxation of some conditions relating to prohibition on private funding, restriction on commercial activities,
and direct investment in infrastructure.
Supporting ‘Housing for All’:
Additional deduction of interest, up to Rs. 1.5 lakh, for loan taken to buy an affordable house extended for loans
taken till March 2022
Tax holiday for Affordable Housing projects extended till March 2022.
Tax exemption allowed for notified Affordable Rental Housing Projects.
Tax incentives to IFSC in GIFT City:
Tax holiday for capital gains from incomes of aircraft leasing companies.
Tax exemptions for aircraft lease rentals paid to foreign lessors.
Tax incentive for relocating foreign funds in the IFSC.
Tax exemption to investment division of foreign banks located in IFSC.
Ease of Filing Taxes: Details of capital gains from listed securities, dividend income, interest from banks, etc. to be
pre-filled in returns.
Relief to Small Trusts: Exemption limit of annual receipt revised from ₹1 crore to ₹5 crore for small charitable
trusts running schools and hospitals
Labour Welfare: Late deposit of employee’s contribution by the employer not to be allowed as deduction to the
employer.
Incentives for Startups
Eligibility for tax holiday claim for start-ups extended by one more year.
Capital gains exemption for investment in start-ups extended till 31st March, 2022.

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Indirect Taxes
Custom Duty Rationalization:
Twin objectives: Promoting domestic manufacturing and helping India
get onto global value chain and export better.
80 outdated exemptions already eliminated and further review of more
than 400 old exemptions.
New customs duty exemptions to have validity up to the 31st March
following two years from its issue date.
Electronic and Mobile Phone Industry:
For greater domestic value addition: Some exemptions on parts of char-
gers and sub-parts of mobiles withdrawn.
Reduction in Custom Duty: On certain Iron and steel products, Textile products, Gold and Silver, Chemicals etc.
Renewable Energy:
To build domestic capacity: Phased manufacturing plan for solar cells and solar panels to be notified and
Duty on solar invertors raised.
MSME Products:
Exemption on import of duty-free items rationalized to incentivize exporters of garments, leather, and hand-
icraft items.
Exemption on imports of certain kind of leathers withdrawn.
Customs duty on finished synthetic gem stones raised to encourage domestic processing.
Agriculture Products:
Customs duty on cotton increased from nil to 10% and on raw silk and silk yarn from 10% to 15%.
Agriculture Infrastructure and Development Cess (AIDC) on curtain items including petrol, diesel, gold etc. in
an attempt to boost agriculture infrastructure.
AIDC of Rs 2.5 per litre has been imposed on petrol and Rs 4 per litre on diesel.
Rationalization of Procedures and Easing of Compliance:
Turant Customs initiative, a Faceless, Paperless, and Contactless Customs measures
New procedure for administration of Rules of Origin.

Glossary
Term Description
Atal Mission for It is a Central Sponsored Scheme by Ministry of Housing and Urban Affairs aimed at
Rejuvenation and providing basic civic amenities like water supply, sewerage, urban transport, parks as to
Urban Transformation improve the quality of life for all especially the poor and the disadvantaged.
(AMRUT) Focus is on infrastructure creation to provide better services to citizens.
It covers 500 cities that includes all cities and towns with a population of over 1 lakh
with notified Municipalities.

National Infrastructure NIP for FY 2019-25 is a first-of-its-kind, whole-of-government exercise to provide

Pipeline (NIP) world-class infrastructure to citizens and improving their quality of life.
It aims to improve project preparation and attract investments into infrastructure.
NIP includes both economic and social infrastructure projects.

Capital expenditure There are expenditures of the government which result in creation of physical or finan-
cial assets or reduction in financial liabilities.
This includes expenditure on the acquisition of land, building, machinery, equipment,
investment in shares, and loans and advances by the central government to state and
UT governments, PSUs and other parties.

Revenue expenditure It is expenditure incurred for purposes other than the creation of physical or financial
assets of the central government.
It relates to those expenses incurred for the normal functioning of the government
departments and various services, interest payments on debt incurred by the govern-
ment, and grants given to state governments and other parties (even though some of the
grants may be meant for creation of assets).

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InvITs These are investment scheme similar to mutual funds that allow investment from
individuals and institutional investors in infrastructure projects to earn a portion of the
income as return.
REITs It are listed entities that owns, operates or finances income-producing real estate.
An REIT works very much like a mutual fund. It pools funds from a number of investors
and invests them in rent generating properties.
Monetization It refers to the process of turning a non-revenue-generating item into cash, essentially
liquidating an asset or object into legal tender.
Ujjwala Scheme It is a scheme of the Ministry of Petroleum & Natural Gas for providing LPG connections
to women from Below Poverty Line (BPL) households.
GIFT-IFSC Gujarat International Finance Tec-City Co. Ltd (GIFT) is being developed as the country’s
first International Financial Services Centres (IFSC).
IFSC provides services to customers outside jurisdiction of domestic economy, dealing
with flows of finance, financial products and services across borders.
Bond market It is also known as debt market, fixed-income market, or credit market.
It describes a marketplace where investors buy debt securities that are brought to the
market by either governmental entities or publicly-traded corporations.
Alternate Investment AIF means any fund established or incorporated in India which is a privately pooled
Funds investment vehicle which collects funds from sophisticated investors, whether Indian
or foreign, for investing it in accordance with a defined investment policy for the benefit
of its investors.
AIFs have been defined in Regulation 2(1)(b) of SEBI (Alternate Investment Fund) Regula-
tions 2012. And its definition includes venture capital fund, hedge fund, private equity
fund etc.
Bank Recapitalization It means infusing more capital in state-run banks so that they meet the capital adequacy
norms.
The government, using different instruments, infuses capital into banks facing shortage
of capital.
As the government is the biggest shareholder in public sector banks (PSBs), the responsi-
bility of bolstering banks' capital reserves lies with the government.
Limited Liability It is an alternative corporate business vehicle that provides the benefits of limited liabili-
Partnership ty of a company, but allows its members the flexibility of organising their internal man-
agement on the basis of a mutually arrived agreement, as is the case in a partnership
firm.
LLP as a separate legal entity, is fully liable of its assets but liability of the partners is
limited to their agreed contribution in the LLP.
It limits the liability of partners as far as civil cases are concerned.
In such a partnership, partners can’t be held liable for another’s misconduct or
negligence.
MCA21 It is an e-Governance initiative of Ministry of Corporate Affairs (MCA) that enables an
easy and secure access of the MCA services to the corporate entities, professionals and
citizens of India.
Strategic Disinvest- It is defined as the sale of substantial portion of government shareholding of a central
ment public sector enterprise (CPSE) of upto 50% or higher, along with transfer of manage-
ment control.
Unlike the simple disinvestment, where Govt retains majority & management control,
strategic sale implies some sort of privatization.
Rural Infrastructure It provide loans to State Governments to enable them to complete the rural infrastruc-
Development Fund ture projects which are ongoing.
It is created in NABARD which releases the sanctioned amount on reimbursement basis
except for the initial mobilisation advance @30% to North Eastern & Hilly States and
20% for other states.
Fiscal Responsibility Act provides a legal institutional framework for fiscal consolidation and bounds Govern-
and Budget Manage- ment to maintain a defined Fiscal deficit.
ment (FRBM) Act, It binds the government through an institutional framework to pursue a prudent fiscal
2003 policy.

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Contingency Fund of It is the emergency fund for the nation constituted under Article 267(1).
India It is used at a time when there is a crisis in the nation — a natural calamity, for instance
— and money is required to deal with it.
The Union government has its own contingency fund with a corpus of Rs 500 crore.
It is at the disposal of the President of India, who releases the funds on request of the
Union Cabinet, which later gets an approval from Parliament.
Fiscal deficit It is the difference between the government’s total expenditure and its total receipts
excluding borrowing.
Gross fiscal deficit = Total expenditure – (Revenue receipts + Non-debt creating capital
receipts)
It is a key variable in judging the financial health of the public sector and the stability of
the economy.
Revenue Deficit It is the excess of its total revenue expenditure to its total revenue receipts. It is only
related to revenue expenditure and revenue receipts of the government.
It indicates that the government doesn't have sufficient revenue for the normal func-
tioning of the government departments.
Primary Deficit It is simply the fiscal deficit minus the interest payments.
It indicates the borrowing requirements of the government, excluding interest.
Effective Revenue It is the difference between revenue deficit and grants for creation of capital assets.
Deficit It signifies that amount of capital receipts that are being used for actual consumption
expenditure of the Government.
This term was introduced in the Union Budget 2011-12.
Custom Duty It refers to the tax imposed on goods when they are transported across international
borders.
The government uses this duty to raise its revenues, safeguard domestic industries, and
regulate movement of goods.
Custom duty in India is defined under the Customs Act, 1962, and all matters related to
it fall under the Central Board of Indirect Taxes and Customs.
Types of custom duty includes: Basic Customs Duty, Countervailing Duty, Additional
Customs Duty, Protective Duty and Anti-dumping Duty
Zero Coupon Bonds Zero Coupon Bonds are issued at a discount and redeemed at par value or face value. No
interest payment is made on such bonds at periodic intervals before maturity.
A coupon is a periodic interest received by a bondholder from time of issuance of bond
till maturity.
The funds raised through issuance of these instruments, which are a variation of the
recapitalisation bonds issued earlier to public sector banks, are being deployed to capital-
ise the state-run bank.
Capital gains It is increase in the value of wealth of a bondholder due to an appreciation or reduction
in the price of her bonds in the bond mark
Cess It is a form of tax levied by the government on tax with specific purposes till the time
the government gets enough money for that purpose.
For example, the government levies an education cess to generate additional revenue
for funding primary, secondary, and higher education.
Rules of Origin It is the criteria that is used to determine the national source of a product which is a
serious concerns for exporters.
They are mainly used to implement measures and instruments of commercial policy
such as anti-dumping duties and safeguard measures etc.

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