Indian Economy
Budget 2021 Highlights: Physical and Financial Capital
- 03 Feb 2021
- 3 min read
Why in News
Recently, the Minister of Finance presented the Union Budget 2021-22. This was the first digital budget.
- This section deals with proposals related to Physical and Financial Capital.
Key Points
- Financial Capital:
- A single Securities Markets Code to be evolved.
- To develop an investor charter as a right of all financial investors.
- A new permanent institutional framework to help in development of the Bond market.
- Setting up a system of Regulated Gold Exchanges.
- Securities and Exchange Board of India (SEBI) to be notified as a regulator and Warehousing Development and Regulatory Authority to be strengthened.
- Stressed Asset Resolution:
- Asset Reconstruction Company Limited and Asset Management Company (Bad Bank) to be set up.
- Increasing Foreign Direct Investment (FDI) in Insurance Sector:
- To increase the permissible FDI limit from 49% to 74% and allow foreign ownership and control with safeguards.
- Deposit Insurance:
- Amendments to the Deposit Insurance and Credit Guarantee Corporation Act, 1961, to help depositors get easy and time-bound access to their deposits to the extent of the deposit insurance cover.
- Deposit insurance increased from Rs. 1 lakh to Rs. 5 lakh for bank depositors.
- 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.
- Amendments to the Deposit Insurance and Credit Guarantee Corporation Act, 1961, to help depositors get easy and time-bound access to their deposits to the extent of the deposit insurance cover.
- For Companies and Firms:
- To decriminalize the Limited Liability Partnership (LLP) Act, 2008.
- Easing Compliance requirement of Small companies by revising their definition under Companies Act, 2013.
- 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 Appellate Tribunal (NCLAT) framework.
- Implementation of e-Courts system.
- Introduction of alternate methods of debt resolution and special framework for Micro, Small and Medium Enterprises (MSMEs).
- Disinvestment and Strategic Sale:
- New policy for Strategic Disinvestment approved; Central Public Sector Enterprises (CPSEs) except in four strategic areas to be privatized.
- Initial Public Offering (IPO) of Life Insurance Corporation (LIC) in 2021-22.
- 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.
