India’s budget for 2021-22 is huge in many ways. Announced today by Finance Minister Nirmala Sitharaman, the budget drastically changes India’s priorities for the coming year. The most important number to note 137%. That’s the rise in the healthcare budget in the 2021 budget. Healthcare is a key part of the 2021 budget, with programs like the Swasth Bharat Initiative.
Our CEO, Yogesh Agarwal said: “The increase in healthcare spend means that infrastructure would be available for startups to create micro-risk and affordable healthcare products. It would also mean better preventive healthcare and help promote a healthy lifestyle.“
Here’s a look at all the reforms entrepreneurs and the healthcare industry will receive under the 2021 budget. Whether you are thinking about starting up, or already have a small business, these reforms do affect you.
Healthcare Budget Goes Big in 2021
In her speech, the minister called health and wellbeing a key pillar of the 2021 budget. That was swiftly followed by announcements indicating just how big healthcare would be in the coming year. The government increased the healthcare budget to over ₹2.33 lakh crore, up 137% from ₹94,452 crore. Here are some key areas the money will be spent on:
- ₹35,400 crore for vaccine
- ₹64,180 crore for “Aatma Nirbhar Health Yojana” over the next six years
- ₹2.8 lakh crore to be spent over five years for the Urban Jal Jeevan Mission
- ₹1.41 lakh crore over five years for Urban Swacch Bharat 2.0 mission
Under the Aatma Nirbhar Health Yojana, the central government will set up 15 health emergency centers and strengthen the National Centre for Disease Control. The nation will also see an additional 11,000 urban and 17,000 rural health and wellness centers set up. Each district will also get an integrated public health lab.
From these announcements, it is clear that 2021 is all about the healthcare budget.
Benefits for MSMEs and Startups
Small businesses and startups also found a mention in the 2021 budget. Amongst the many announcements, the most important one for startups is the extension of the tax holiday till March 31, 2022. The Finance Minister also announced the extension of capital tax exemptions for investments in startups for another year.
The 2021 budget also amends the requirements for one person companies (OPCs). Now, non-resident Indians (NRIs) will be eligible to form OPCs. Along with that, the government has also removed the restrictions on paid-up capital and turnover. To encourage entrepreneurship, the government has also reduced the residency limit for Indians to 120 days to form OPCs.
The minister has also proposed to amend the definition of small companies under the Companies Act, 2013. Under the new definition, a small company will refer to a company that has paid-up share capital of not more than 2 crores, up from 50 lakh. The threshold of Annual Turnover has also been raised from 2 crores to 20 crores, allowing more businesses to benefit from tax concessions for MSMEs.
The 2021 budget also decriminalises limited liability partnerships (LLP). Now, any business can be converted into any other form, including an LLP, which is expected to benefit around 2 lakh companies. Another key announcement is the allocation of ₹ 15,700 crore for the Ministry of Micro, Small and Medium Enterprises (MSME) sector.
Employee Benefits as Part of the Healthcare Budget
In 2020, the government announced reforms to the labour code. Building on that, the 2021 budget brings more employee benefits to India’s workforce. Key reforms include:
- Minimum wage codes to apply to all category of workers
- Women to be allowed to work in all sectors and night shifts
- Expansion of one nation one ration card scheme for migrant workers
Recognising the value of the gig economy, the finance minister also announced reforms specifically targeting gig workers. As mentioned in 2020’s labour code reforms, social security benefits will now extend to gig workers. They will also be eligible for contributions towards the Employees State Insurance Corporation (ESIC). That announcement makes India one of the few nations to extend employee healthcare benefits and other social security benefits to gig workers.
The finance minister proposed the setting up of a portal to collect information on gig and migrant workers so that they would be able to receive health, credit, food, and other social security benefits. Onsurity believes that the inclusion of gig workers in social security programs will help to build a more inclusive healthcare infrastructure.
Other Announcements in the 2021 Budget
Along with these, here are a few other announcements you need to know about in the 2021 budget:
- Employers who deduct but not deposit PF contributions will no longer be eligible for tax deductions.
- Senior citizens above 75 years old will no longer have to file income tax returns
- The tax audit limit has been increased from ₹5 crore to ₹10 crore where at least 95% of business transactions are done digitally.
- ₹1,500 crore allocated to incentivize the adoption of digital payments.
- The Insurance Act will be amended to allow up to 74% FDI in insurance companies, up from the previous 49%.
On the Insurance Act amendment, our CEO said “this will now bring more investment and infrastructure to the insurance space. Apart from that, the increased capital will also help bring innovative international products to India.”
We at Onsurity want to applaud the government for its announcements. We believe healthcare should be a right, and with these investments, the government can increase the adoption of healthcare benefits. We are also glad to see that employee healthcare benefits will be extended to gig workers. This is a valuable step forward to providing universal healthcare benefits.