March 1, 2003, Chandigarh, India
Standard deduction up, IT surcharge goes
New Delhi, February 28
With a fiscal deficit of Rs 1,53,637 crore or 5.6 per cent of the GDP, the issue price of urea is being raised by Rs 12 per 50 kg bag and Rs 10 for DAP and MOP per 50 kg bag. Additional excise duty of Rs 1.50 per litre on light diesel and 50 paise per litre on diesel and motor spirit is also being slapped to mop up Rs 2,600 crore for the North-South and East West road corridors.
Mr Jaswant Singh drew pointed attention to ex-servicemen “whose welfare is so close to my heart.” He proposed granting income tax exemption to corporations set up under the Central or State Act for the benefit of ex-servicemen.
He described as of great personal satisfaction that the Prime Minister’s scheme of establishing 227 ex-servicemen medical facilities in the country will be inaugurated two months later in April.
In proposing a three-tier excise duty regime of 8 per cent, 16 per cent and 24 per cent, peak customs duty are being reduced by 5 per cent to 25 per cent. Simultaneously, there is a package of incentives for the textile sector and reduction in excise duty on a range of garments and fabrics.
At the same time, dividend with shareholders is being made tax free along with concessions to the physically challenged.
Motor cars, tyres, bicycles and their parts, airconditioners, soft drinks, kitchen utensils and tableware, pressure cookers, walking sticks, toys, glasses for corrective spectacles, umbrellas, kerosene pressure lanterns, adhesive tapes and registers and account books are being made cheaper.
It is proposed to reduce by 50 per cent the duty on electric vehicles to 8 per cent and increase the rate of cement by Rs 2.50 per 50 kg bag.
Even as Mr Jaswant Singh’s maiden Budget for 2003-2004 presented in the Lok Sabha today focused on poverty eradication, infrastructure development, fiscal consolidation through tax reforms and progressive elimination of budgetary drags, agriculture and enhancing manufacturing sector efficiency, the defence services virtually received a carte blanche for modernising itself with an allocation of about Rs 65,000 crore.
In the Budget estimates for 2003-2004, the total expenditure is estimated at Rs 438,795 crore of which Rs 120,974 crore is for Plan and Rs 317,821 crore for non-Plan. The estimated total revenue is Rs 253,935 crore, leaving a whopping fiscal deficit of Rs 153,637 crore. Proposals on direct taxes will lead to a revenue loss of Rs 2,955 crore while those on indirect taxes will mop up Rs 3,294 crore.
For eliminating poverty, Mr Jaswant Singh stressed only reforms that result in sustained growth and high employment as providing a durable solution. Underlining the need for addressing poverty alleviation through several schemes, he said a committee headed by the Deputy Chairman of the Planning Commission is being proposed to recommend “practical convergence.”
Mr Jaswant Singh focused on housing, education, health and health insurance, diversifying agriculture, games and sports, ex-servicemen, senior citizens and restructuring the pension scheme. Education expenses up to Rs 12,000 per child for two children will be eligible for rebate under Section 88 of the Income Tax Act.
For providing relief to senior citizens, the Life Insurance Corporation will launch a special pension policy called the Varishtha Pension Bima Yojana guaranteeing an annual return of 9 per cent in the form of a monthly pension. This can be availed of by any pensioner or a citizen above 55 years of age on payment of a lumpsum amount. The minimum and maximum monthly pensions proposed are Rs 250 and Rs 2000 respectively. It will start from the month following the payment of the lumpsum amount.
Emphasising that agriculture is the lifeblood of the economy, it is proposed to introduce a new Central sector scheme on hi-tech horticulture and precision farming for which an initial sum of Rs 50 crore is being provided. Major components of the scheme will be use of high-tech inventions like fertigation, use of biotechnological tools, green food production, and high-tech greenhouses. It needs to respond robustly to second generation issues like land degradation and waterlogging.
On external debt prepayment, Mr Jaswant Singh said the government has effected premature repayment of “high cost” currency pool loans to the World Bank and the Asian Development Bank totalling $ 3 billion. Touching upon the delicate financial position of the state governments, the Finance Minister said out of the total stock of debt of Rs 2,44,000 crore owed by the state governments to the Centre, a little over Rs 1,00,000 crore bear coupon rates in excess of 13 per cent annually which is far in excess of the current market rates. Twenty six of the 28 states have consented to participate from the current year itself while the remaining two states will join in 2003-04.
Over a three-year period ending 2004-05, all state loans to the Centre bearing coupons in excess of 13 per cent will have been swapped. The states will save at the very minimum an estimated Rs 81,000 crore in interest and deferred loan repayments during the residual maturity period. This will restrain the debt buildup in the states through small savings scheme.
Talking of biotech as tomorrow’s showpiece industry, it has been decided to remove the existing restriction of minimum export obligation of Rs 20 crore for availing exemption from customs duty for specified equipments.
The government proposes to amend the Constitution to levy tax on services as a specific and important source of revenue.
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