* Bid to woo farmers, villagers * Rs 15000-cr for coop bank's revitalisation NEW DELHI, Feb 3 : Unveiling the last batch of sops before the elections, the Interim Budget for 2004-05 today promised to reconsider the present income tax exemption limits, the standard deduction for salaried class, raised the free baggage allowance and merged 50 per cent of Dearness Allowance with basic pay for central Government employees.
However contrary to expectations, no changes in the Income Tax structure were proposed in the Budget presented by Finance Ministger Jaswant Singh in the Lok Sabha.
In a bid to step up investment in the power sector, Singh said fiscal benefits available to new projects in the sector should be extended by six years beyond 2006.
Projecting a high 7.5-8 per cent growth, Singh pegged the fiscal deficit at a low 4.8 per cent of GDP as against the target of 5.6 per cent for the current fiscal.
He also reduced by 50 per cent Stamp Duty on all central government stamp papers as a first step towards reduction of stamp duty on all instruments where the authority to fix rates is of the Central government.
In the wake of massive stamp paper scam, a comprehensive reform of the entire stamp duty regime is being addressed in consultation with the state Governments as a high duty increases transaction costs restricting economic activity.
Free baggage allowance is proposed to be raised from Rs 12,000 to Rs 25,000.
Customs duty on such baggage will also be reduced from 50 to 40 per cent with immediate effect.
Singh announced setting up of a non-lapsable Defence Modernisation Fund of Rs 25,000 crore to ensure money for modernisation and procurement of weapons systems.
Outlining the mid-term perspective on the direct tax front, Singh said the regime of listed equities acquired on or after March 1,2003, now being exempt from long-term capital gains, should be extended for a further period for three years.
To make Indian shipping industry internationally competitive, a tonnage tax with notional income at a fixed rate on the basis of net registered tonnage should be considered.
Capital gains on aquisition of agricultural land should be exempt from tax.
It is also proposed that there should no deduction of tax at source on the interest earned on enhanced compensation for aquisition of such land.
If outsourced services are ancillary and auxiliary in nature and adquate remuneration is paid to the Indian call centre, then there shall be no tax on such foreign companies which have outsourced their activities to India.
The Finance Minister announced measures to fully consolidate and enhance growth momentum which the country has achieved.
As part of measures to ensure availability of timely credit at affordable rates to farmers and rural areas, Singh said banks were being urged to offer loans for agricultural purposes at rates lower than the prevailing rates.
Banks were being instructed not to insist routinely on additional collateral through a mortagage of entire land holding.
All eligible farmers will receive kisan credit cards by March 31 this year and existing cards would be modified for use in ATM machines.
Singh also announced that farm insurance schemes, introduced on a pilot basis, will be extended to 100 districts.
A special Tea term loan repayable in five years with a moratorium of one year is to be provided.
In the case of small tea growers, banks have agreed to extend fresh working capital limits upto Rs 2 lakh at an interest rate of nine per cent.
Sugar, another major agro-processing industry of the country, will also benefit from a package for the revitalisation of the industry in consultation with stake holders.
As a measure of temporary relief, restructuring of loans taken by sugar factories will be examined by the lending agencies.
Underlining the important role played by cooperative banks in the delivery of rural credits, the Finance Minister announced a scheme to revitalise the cooperative credit structure with an outlay of Rs 15,000 crore to be shared by the centre and states.
The Public sector banks will increase credit limit of cards under the Laghu Udyami Credit Card Scheme.
This will be for borrowers with a satisfactory track record and would range from Rs 2 to 10 lakh.
Underlining the problem of water scarcity, Singh announced the Prime Minister's decision to initiate an accelerated supply of Drinking Water supply scheme for mega cities like Bangalore, Chennai, Delhi and Hyderabad.
The provision for infrastructure development in mega cities is to be augmented by accessing infrastructure fund, LIC and other sources.
Agriculture Infrastructure Credit Fund is being renamed as Lok Nayak Jaiprakash Narayan Fund.
Similarly, the small and medium enterprises fund will address the problem of inadequacy of financial resources for the small sector.The Industrial infrasructure fund will provide credit at competitive rates for power generation, seaports, airports, telecomunication and urban infrastructure.
On the indirect tax front, the Finance Minister said his ministry would examine the suggestion that wherever there is exemption from countervailing duty on an imported capital good, deemed export benefits should be given to very same capital goods manufactured indigenously.
The suggestion is to be examined in consultation with Commerce Ministry.
Singh also announced a number of user friendly tax administration measures including the round-the-clock electronic customs document for clearance of goods to be extended to 23 customs formations.
Customs clearance is to be based on self assessment and selective examination from June this year.
An eight-digit code classification of goods for levy of excise to be adopted from September this year and e-filing of excise returns from June this year.
On the Service tax front, only a simple verification is to be made for grant of registration.
For assessees providing more than one taxable service, a single registration and single return will suffice.
On revenue and budget estimates for the current year, Singh said the revised estimates have shown a decrease of 11,143 crore as compared to the budget estimates.
This reduction in expenditure has been achieved despite spending on rural development, the sarva shikshan abhiyan, Delhi metro rail project and additional support for Railways.
The net tax revenues have shown an increase of Rs 3,370 crore.
Non-tax revenue is estimated to be Rs 5722 crore more than estimated level.
Disinvestment receipts at Rs 14,500 crore were also higher than the budget estimates of Rs 13,200 crore.
The Finance Minister said the fiscal deficit stood at 4.8 per cent of GDP and revenue deficit at 3.6 per cent of the estimated GDP.
He said the Government has demonstrated its resolve on fiscal consolidation by performing better than the budgetary targets.
The gross budgetary support for the plan 2004-05 has been fixed at Rs 1,35,071 crore, an increase of 11.6 per cent over the current year.
Out of this, an amount of Rs 81,367 crore is the budgetary support for central plan, a 12.8 per cent increase over the current year.
On the non plan side, the budget estimate for the next year shows a net increase of Rs 16,218 crore.
The increase is mainly due to interest payment, debt servicing, defence, grants and loans to state Governments and food subsidies.
Govt cuts subsidy on LPG, Kerosene NEW DELHI, Feb 3 : Government today cut subsidy on domestic gas LPG and Kerosene to Rs 22.58 per cylinder and 81 paise per litre respectively for 2004-05 but ruled out passing the burden on the consumers.
During 2003-04 Government was offering a subsidy of Rs 45.17 per LPG cylinder and Rs 1.63 per litre on Kerosene.
Petroleum Ministry officials said the cut in subsidy would be absorebed by oil companies and would not be passed on to the consumbers.
The subsidy would be eliminated altogether from 2005-06.
Government had in 2002-03 charted a three year subsidy phase out programme by providing fix subsidy on LPG and Kerosene, they said.
In the first year, that is 2002-03, Government provided state-run oil firms a subsidy of Rs 67.75 per LPG cylinder and Rs 2.45 per litre on Kerosene.
As against a budget estimate of Rs 6300 crore for LPG and Kerosene subsidy, and a revised estimate of Rs 6292 crore in 2003-04, the budget estimates for 2004-05 has been fixed at Rs 3500 crore.
Subsidy is provided to oil companies for transporting essential fuels to far-flung and hilly areas.
The budget estimates for 2004-05 with regard to investment in public enterprises in Petroleum sector is pegged at Rs 23,575 crore and that in case of petro-chemicals sector is Rs 1406.20 crore.
Interim budget fails to enthuse stock market KT NEWS SERVICE MUMBAI, Feb 3 : Notwithstanding the Interim Budget's projection of 7.5-8 per cent GDP growth for current fiscal, share values continued to reel under selling pressure for the fourth straight session at the stock exchange today, pulling the sensex down by another sharp 75 points.
Starting on a better note at 5715.46, the BSE Benchmark 30-share Index later fluctuated erratically in range between 5715.46 and 5550.17 before ending at 5620.98 as against last Friday's close of 5695.67, a net fall of 74.69 points or 1.31 per cent.
The trading session failed to show any kind of impact of the Interim Budget 2004-05 presented in the Lok Sabha as the market had already discounted this factor.
Except for some provision for Power and Shipping sectors in the central plan outlay, there was nothing in the Interim budget for the market, dealers said.
The market witnessed buying by institutional investors whenever stock prices tended to move downwards, a trader said adding "Foreign Institutional Investors (FIIs) and domestic funds made selective purchases." Investors seemed to be willing to carry foward positions as Lok Sabha elections are likely to take place once the Parliament is dissolved on February 6, 2004.
The broad-based BSE-100 Index dropped substantially by 90.43 points to 2855.71 from previous close 2946.14.
Meanwhile, Industry has welcomed the interim budget and termed it consistent with the Government's policy of achieving eight per cent growth target and creating a business-friendly environment in the country.
Lower fiscal deficit is a growth dividend: RBI MUMBAI, Feb 3: Reserve Bank of India today said reduction in fiscal deficit estimates for current year and 2004-05 in the Union interim budget, will work as "growth dividend" for the Indian economy.
The inflation projections at 4-4.5 per cent for 2003-04 were consistent with the central bank's estimates, RBI deputy governor Rakesh Mohan said responding to the interim budget for 2004-05, presented by the Union Finance Minister Jaswant Singh.
Mohan said the reduction in deficit figures was welcome, which would further boost confidence in the economy.
The budget statement pegged fiscal deficit for 2003-04 at 4.8 per cent of GDP as against earlier projection of 5.6 per cent while placing a target of 4.4 per cent for the 2004-05.
The proceeds from the disinvestment - Rs 14,500 crore for FY-04 and Rs 16,000 crore for next fiscal - have a bearing on the fiscal deficit figures, he said.
Asked about impact of fiscal deficit on liquidity for investments, he said lower deficit would lead to more resources being available for investments.
The market was awash with funds, despite RBI absorbing about Rs 30,000 crore daily and government's borrowings programme was reasonable to manage, he added.
On economic growth and inflation estimates, Mohan said RBI has pegged the growth in gross domestic product (GDP) upwards of seven per cent for 2003-04.
RBI was watching inflation trends and would review the situation in April, he added.
'Revenue deficit to be wiped out by 2005-06' KT NEWS SERVICE NEW DELHI, Feb 3 : Enthused by a marked improvement in government's fiscal performance, Finance Minister Jasawant Singh today said revenue deficit would be wiped out by 2005-06 much ahead of the schedule prescribed in Fiscal Responsibility and Budget Management Act.
"The improvement in fiscal deficit at 4.8 per cent of GDP in 2003-04 compared to the budgeted 5.6 per cent is due to various steps.
It will be further reduced," Singh said, adding revenue deficit would be brought down to 2.9 per cent and further lowered to nil by 2005-06.
The FRBM prescribes that the revenue deficit should be wiped out in 2007-08.
Giving the reasons for lowering the fiscal and revenue deficits, Singh told PTI: "It was due to better expenditure management, lower growth in subsidy bill, higher growth in revenue at 17 per cent and higher GDP growth." "Non-plan expenditure grew by only 2.0 per cent while plan expenditure increased by 11 per cent," he said, adding the significant aspect was that the rise in subsidies on food, fertiliser and petroleum was only 1.0 per cent this fiscal as against 20 per cent growth in 2002-03.
Government's interest outgo also grew by only 5.0 per cent this fiscal compared to 6.5 per cent last fiscal, he said Moreover, revenues surged by 17 per cent this fiscal and the disinvestment target of Rs 13,200 crore was exceeded.
The receipts from sell-off would be Rs 14,500 crore as government was confident of divesting 10 per cent each in stakes in ONGC and GAIL by March 31.
Singh did not subscribe to the view that this was a "election Budget" saying that all budgets are prepared keeping polls in mind.
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