Government attempts reduction in Subsidies
- Fertiliser subsidy to be reduced, 5 per cent increase in issue price of
urea, DAP and MoP, subsidy on SSP to be slashed by Rs 50 per tonne.
- Retail price of PDS sugar reduced to Rs 13.50 per kg from March 1, 2002.
- Compulsory levy on sugar to be reduced from 15 to 10 per cent.
More Investment by Central
government to boost Economy
- Central assistance to state plans hiked by about 20 per cent.
- Public investment in key infrastructure sector stepped up to Rs 37,919 crore
(379.19 billion).
- Defence expenditure for next year provisioned at Rs 65,000 crore (650
billion).
Economic Reforms to
Continue
- Proceeds from divestment of PSUs pegged at Rs 12,000 crore (120 billion)
during 2002-03 against estimated proceeds of Rs 5000 crore (50 billion) in
2001-02.
- Most administered interest rates reduced by 50 basis points.
- Administered price mechanism for petroleum sector to be dismantled from
April 1, 2002.
- Petroleum regulatory board to be set up to oversee the sector.
- Dereservation of 50 items of knitwear, certain agricultural implements, auto
components and some chemicals and drugs in small-scale sector.
- Reform linked assistance to states pegged at Rs 12,300 crore (123 billion),
Rs 2,500 crore (25 billion) provided for policy reforms in sectors constraining
growth.
- Urban reform incentive fund to be set with Rs 500 crore (5 billion).
Deficit Financing to Continue
- Fiscal Deficit exceeds Target
- Shortfall in net revenue by Rs 20,683 crore (206.83 billion) in 2001-02.
- Non-tax revenue surpasses budget estimates of Rs 1510 crore (15.1 billion).
- For fiscal 2002-03, the total expenditure pegged at Rs 4,10,309 crore
(4103.09 billion) of which Rs 1,13,500 crore (1,135 billion) is plan and Rs
2,96,809 crore (2968.09 billion) is non-plan.
- Infrastructure equity fund of Rs 1000 crore (10 billion) will be set up.
More Focus on Agriculture -
More Funds available for Investment
- Total credit flow to agriculture sector through institutional channels is
expected to increase to Rs 75,000 crore (750 billion) in 2002-03.
- Allocation for Accelerated Irrigation Benefit Programme increased to Rs 2800
crore (28 billion) from Rs 2000 crore (20 billion).
- Allocation for agricultural research enhanced to Rs 775 crore (7.75 billion)
from Rs 684 crore (6.84 billion).
- For promotion of agri exports, Agri Export Zones will be promoted.
Plan Outlay for Infrastructure
Sector Hiked massively
- Plan outlay has been hiked by 22 per cent in power, 39 per cent in roads and
highways and 23 per cent in railways totalling to Rs 37,919 crore (379.19
billion).
- Allocation under Accelerated Power Development and Reform Programme
increased to Rs 3,500 crore (35 billion) from Rs 1,500 crore (15 billion).
- Nearly 12,200 posts in central government ministries and departments will be
abolished out of the identified surplus manpower of 42,200.
Reforms introduced in the Financial Sector
- Legislative changes to be introduced in SEBI Act for investor's protection.
- FII portfolio investment will not be subject to sectoral limits for foreign
direct investments except in certain specified sectors.
- Corporatisation of stock exchanges will be completed in 2002-03.
- Bill on banking sector reforms to be introduced to strengthen creditors'
rights.
- Industrial Development Bank of India to be corporatised within the coming
year to provide flexibility.
- Foreign banks will have the options to either operate as branches of their
parent banks or to set up subsidiaries.
- For housing finance institutions, the NHB will launch a mortgage credit
guarantee scheme to protect lenders against default.
- Indian companies can now invest up to $100 million abroad on an annual basis
through the automatic route and those making overseas investments in joint
ventures abroad by market purchases may now do so without prior approval up to
50 per cent their net worth.
Other deregulation measures
- Amendment to milk and milk products control order to remove restrictions on
milk processing capacity.
- Removal of small-scale industry reservations related to various agricultural
equipment items.
- Decanalisation of export of agricultural commodities and phasing out of
remaining export controls.
- Expansion of future and forward trading to cover all agri commodities.
- 75,000 kms proposed to be added to the optic fibre cable network in 2002-03.
Direct Tax Measures
- Fiscal deficit pegged at 5.3 of the GDP.
- No change in personal income tax rates; the rates of 10, 20 and 30 per cent
and corporate tax at 35 per cent.
- Corporation tax rate applicable to foreign companies has been reduced to 40
per cent from 48 per cent.
- Additional depreciation at the rate of 15 per cent on new plant and
machinery has been proposed for setting up a new industrial unit or for
expanding the capacity by 25 per cent.
- Capital gains exemption under 54 EC on amounts invested in bonds issued by
Small Industries Development Bank of India and National Housing Bank.
- Service tax extended to new sectors, including corporate bodies.
Excise and Custom Duty
rationalizations Continue
- The scheme of excise duty assessment extended to nine more categories.
- Sixteen per cent special excise duty abolished on a number of items;
confined to 8 items only.
- LPG, kerosene, auto CNG and diesel engine up to 10 HP to attract central
value added tax at the rate of 16 per cent.
- Cigars, cheroots and cigarillos of tobacco or tobacco substitutes also to
attract 16 per cent CENVAT.
- Excise duty of 4 per cent imposed last year on certain items has been
doubled. Some more items to attract 4 per cent excise duty.
- Changes in the duty structure of petroleum products; cess on indigenous
crude oil doubled, ad valorem excise duty rate on motor spirit reduced from 90
per cent to 32 per cent, but to attract a surcharge of Rs 6 per litre.
- Special incentive for textile industry for modernisation.
- Excise duty to be half for refineries in the northeast.
- Air travel to and from the northeast states exempted from Inland Air Travel
Tax.
- Exemption from service tax on services by hotels extended for one more year
to help the tourism industry.
- Excise duty on tea reduced by half to Re 1 per kg.
- Specified anti-AIDS drugs exempted from excise duty.
- Customs duty peak rate reduced to 30 per cent from 35 per cent as part of
the effort to have only two basic rates of customs duties by 2004-05.
- Basic customs duty on seconds and defectives of steel increased to the bound
rate of 40 per cent.
- Customs duty reduced to 10 per cent on a number of refractory raw materials
to reduce production costs in steel industry.
- CENVAT duty reduced to one rate only (16 per cent) in the next two years.
- A surcharge of five per cent across the board on all categories of taxpayers
has been imposed while abolishing the surcharge of two per cent imposed last
year.
- Ten per cent reduction in customs duty on copper, zinc, lead, aluminium and
tin.
- Customs duty on specified equipment for modernisation of infrastructure at
ports and airports reduced to 10 per cent
- Special economic zones entitled to procure duty free equipment, raw
materials and components.
- Zero duty regime proposed on IT products from 2005.
- Customs duty reduced to five per cent on a number of hardware inputs and to
15 per cent on certain capital goods.
- Cellular phones and pagers exempted from counter vailing duty; basic customs
duty raised from five per cent to 10 per cent.
- Customs duty on various agricultural products increased; tea and coffee to
attract 100 per cent duty.
- Customs duty on non-PDS kerosene reduced from 35 per cent to 25 per cent,
but increased from 5 per cent to 10 per cent on kerosene sold under PDS scheme
as part of rationalisation measure.
- Expenditure tax on hotels to apply only on room charges exceeding Rs 3000
per day.
In a Nut Shell
- The estimated total tax revenue receipts for the Centre have been pegged at
Rs 1,72,965 crore (1729.65 billion) and the fiscal deficit at Rs 1,35,524 crore
(1355.24 billion) or 5.3 per cent of GDP.
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