The
Indian Finance Minister |
- Mr.
P.Chidambaram has started his budget speech,
exactly on schedule. 1702
hrs
- Last
years budget presented on 22 July 1996. 8 months
ago. This is the first budget to be presented by
a FM representing a coalition of 13 regional and
national parties.1704hrs
- Therefore,
this time, the budget represents a tryly federal
national consensus.
The basis of the budget, is the UF's common
minimum program. (CMP)1706hrs
- Of
the 40 promises in the last Budget, the
government has kept all barring one:
The exception is setting up an expenditure
management and reforms commision.
- AREAS
OF WEAKNESS IN ECONOMY:
Sharp drop in domestic crude oil production ,
decline in rate of increase of power production.
decline in export growth. 1709hrs
- Fresh
proposals in budget:
Government will not hesitate to import food
grains in case domestic prices rise sharply and
food grains not available for (PDS) public
distribution system1709hrs
- 250
crores for 97-97 for special schools for girl
students. 1712hrs
- Unprecedented
increase of Rs 6,600 crores in investment in
agriculture and agro industries last year. 1716hrs
- NABARD
additional 500 crores for share capital - same
for 97-98. 1714hrs
- Liberalisation
for edible oil, coal , rice mills
- SSI
sector - new guidelines for RBI credit
- 40%
credit for units less than 5 lakhs
- 20%
5-25 lakhs
- 40%
rest
1718hrs
- Housing:
- Indira Awas Yojana
got extra funds
- Rural Housing
credit enhanced for first time
- National Housing
Bank to give loans upto Rs 2 lakhs if
borrower puts in 1/3 of house value - to
grant 50,000 loans
1722hrs
- Employee
Provident Fund
- To make EPF more
attractive for employees and employers,
Rate of contributions will be up from
8.33% to 10% from 1.3.97
- In scheduled
industries it will be up from 10% to 12%
- no requirement to
keep 20% in fixed securities
1722hrs
- For
PSU's:
- 9 PSU's identified
for the CMP to support such as ONGC, SAIL
, NTPC
- More monetary
powers deregulated to profitable PSU's
1725hrs
- Oil
Industry
- Need to decrease
dependancy on POL imports
- New exploration
Licencing Policy (NELP)
- PNGC & OIL
will be paid international prices.
- Royalties will be
ad valorem
- Tax holiday for 7
years in North East
- Cess Levy
abolished
- Refineries during
9 year plan will get concessional duties
like the fertilizer industry 1727hrs
- EXIM
POLICY
- If supplies under
international competitive bidding will be
treated as deemed exports, therefore will
get the tax benefits 1730hrs
- Foreign
Investments
- FII's will be
allowed to invest upto 20% of their
corpus funds ( earlier 5%) in any company
- Companies will be
allowed to buy back shares
- Companies Act will
be amended 1730hrs
- FERA:
- FERA, 1973 will be
replaced to move towards capital accounts
convertability bill to curb money
laundering in this Parliamentary session
- to open offices
abroad, easier clearance from RBI
1734hrs
- CAPITAL
ACCOUNTS CONVERTABILITY:
RBI to appoint Group of Experts to work out
detailed timetable 1734hrs
- Science
& Technology
- CSIR, ICAR &
IITs scheme that every Rs 1.00
commercially earned will be matched by
Govt of India introduced last year, will
continue indefinitely
- Swarna Jayanti
Fellowships for outstandig scientists
under 45 years
1736hrs
- Govt
promoted Labs wil be allowed to invest in private
sector companies 1738hrs
- Information
Technology:
- One area In which
India can emerge as the leader
- In domestic
market, upto 50% of the IT goods may be
sold , rest exported 1738hrs
- New
Bills:
- Direct taxes bill
- Companies Bill
- Both to be placed
in the Parliamentary library next week
Companies bill brought to Parliament in
Monsoon session
Direct taxes bill in the Winter session 1740hrs
- Infrastructure
& Financial Reforms:
- LIC & GIC to
be given substantial financial autonomy
- Pension funds will
now be expanded under the UTI ( Unit
Trust of India)
- To expand Health
insurance, joint ventures with foreign
companies will be allowed with GIC.
- Some other private
sector companies ( indian controlled )
will be allowed 1740hrs
- Last
year, the FM promised that he will move to phase
out ad hoc Treasury Bills by 1997-98.This will be
discontinued from 1st April 1997
- A
25 year capital bond indexed to inflation will be
introduced Tenth finance Commission
recommendation : that states will get 29% share
of consumed total taxes/revenues collected :
accepted
- Sharp
decrease in non - Plan expenditure.
- Greatest
satisfaction that Central Govt has given extra
funds to State Govts for externally funded
projects
- Will
honour the PM's assurance to give North East Rs
6,000 crores in the 9th Plan period 1750hrs
- Revenue
Deficits decreased Fiscal Deficit will remain at
5% of GDP
- Budget
1997-98 Estimates Central support to Plans will
be largest ever, concentrated on rural
development, employment generation, HRD, poverty
alleviation
- Social
services- Amount Rs 11,785 increased to Rs 15,000
- Rs
41 crores for Minorities Investment Commission
- Rs
47 Crores for National Backward classes
Development Commission 1754hrs
- Subsidies
- Fertiliser
subsidies increased to 5,240 crores
- Subsidies on
Imported Fertilisers also increased
- Will provide more
funds for targetted PDS if necessarry
- Rs
8,907 crores for Defence Capital Expenditure 1757hrs
- Rs
4,205 crores for 5th Pay Commision excluding
Defence and Railways personnel which will be part
of their own Budgets ( as proposed in the earlier
Railway Budget )
- The
Government will approve more PSU Restructuring
proposals this year 1800hrs
- Tax
Proposals
- Plans
to augment central tax revenues at least
by 15-16%
- Moderate
rates, wider tax base. Need to increase
the proportion of direct taxes.
- To
amend income tax, in metropolitan areas,
those who own 4 wheel vehicle, reside in
accomodation and have travelled abroad
last year and have NOT filed tax returns,
will be served IT notice
- Traders
with turnover less than Rs 8lakhs will be
assessed at 5% of turnover
- Lowering
rates of personal income taxes of 10, 20
and 30% ( new rates) salaried class :
standard deduction will be increased to
Rs 20,000 this year anyone of an income
of Rs 70,000 per annum and contributing
10% to PF will pay NO tax
- Voluntary
Disclosure Scheme till Dec 31st, 1997
- Senior
citizens will get Rs 10,000/- relief - those with
annual income of upto Rs 1 lakh will pay no tax
- 100%
tax deduction for contributions to CM/Lieutentant
Governer's funds.
- Corporate
Tax surcharge abolished
- Tax
rates decreased
domestic Companies - 35%
foreign companies - 48%
- Should
lead to better compliance, more revenues, and
attract more FDI 1810hrs
- NRI
capital gains tax will be the same as FII's MAT
Changes : Export profits exempted Credit for MAT
paid will be carried forward for 5 years 1812hrs
- Tax
on dividends
- Abolish this for
shareholders
- Taxes on interest
income on FI's will be decreased from 10%
to 2% , which will decrease interest
rates Indirect taxes 1813hrs
- Duty
on coking coal will be decreased duty on nickel
from 20% to 10% to benefit steel industries
- Non
coking coal 20% to 10% to benefit power sector
tax on ships brought for breaking wil be reduced 1815hrs
- Indirect
taxes duties on essential chemicals will be
reduced across the board
- Quantitative
Restrictions (QR's) Will provide funds for
textile industries to become more competive to be
prepared to face the removal of QR's
- Sharp
decrease of duties
- Computers: on
computer parts and peripherals
- on cellular
telephones
- the customs duties
decreased on catalytic convertors and
their parts
- Medical Equipment
- Reduction
in duty tourism reduction on Hotel imports plus
reduction of duty on foods imported for foreign
tourists 1817hrs
- Excise
duties reduced across the board 1820hrs
- Finance
Minister closes speech with a long quote, as
usual1838hrs
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