The Hindu : Thrust to farm sector, infrastructure

Online edition of India's National Newspaper
Saturday, Mar 01, 2003

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Thrust to farm sector, infrastructure

By Alok Mukherjee

NEW DELHI FEB. 28. The Union Finance Minister, Jaswant Singh's maiden budget for 2003-04, presented in the Lok Sabha today, weaves in many a relief for individuals and provides a renewed thrust to agriculture and infrastructure. Though financial gains at the individual level are difficult to spot at first go, the overall arithmetic is that he has raised fresh resources to the tune of Rs. 8,600 crores but has handed out relief of Rs. 6,249 crores in direct and indirect taxes.

The net impact, therefore, works out to an additional Rs. 2,351 crores, mostly on account of service tax, where the rate has been increased from five per cent to eight per cent.

At the individual level, the income tax rates and slabs remain unchanged but the five per cent national security surcharge imposed last year goes.

However, those with annual incomes above Rs. 8.5 lakhs will now pay a 10 per cent surcharge. Standard deduction for the salaried class not only remains but has also been fixed at a maximum of Rs. 30,000 for all income groups up to Rs. 5 lakhs and at Rs. 20,000 for income levels beyond that.

Payments from voluntary retirement schemes up to Rs. 5 lakhs will be exempt from tax, even if taken in instalments, while leave travel concession has been restored to the Government employees. And existing benefits on housing loans remain.

Education expenses up to Rs. 12,000 per child for two children will be eligible for rebate under Section 88. Physically handicapped persons or those with such dependents will be eligible for income tax deduction of Rs. 50,000 for permanent physical disability and an enhanced deduction of Rs. 75,000 for severe disability.

Mr. Singh, however, reduced the interest rate on PPF and other small savings by one per cent with effect from March 1, 2003, and indicated that relief bonds and savings bonds will be realigned accordingly. But a new pension scheme has been introduced for those above 55 years of age. They will get a monthly pension with a nine per cent return.

Also, for senior citizens, the tax rebate has been raised to Rs. 20,000, thereby making their income up to Rs. 1.53 lakhs fully exempt from income tax. In case of senior citizens on pension, the effective exemption limit may become Rs. 1.83 lakhs.

For corporates too, the tax structure remains unaltered, except for the fact that the surcharge will be halved. Dividend in the hands of the recipient has been abolished and a 12.5 per cent dividend distribution tax has been levied on companies instead. Deductions under Section 80L remain at Rs. 15,000, though dividend income will now be tax free while long-term capital gains tax on listed equities has been abolished for one year on an experimental basis.

AC, soft drinks to cost less

For the consumers, motor cars, air-conditioners, soft drinks etc. will cost less since the excise duty on these products has been reduced from 32 per cent to 24 per cent. Imported alcohol will cost less with its duty brought down to 166 per cent. However, cars will attract a one per cent duty to be contributed to national calamity relief for one year only.

Pressure cookers, biscuits, boiled sweets and dental chairs will cost less because of lower excise duty while articles such as umbrellas, wood articles, adhesive tapes, imitation `zari,' walking sticks, bicycle and parts, utensils and kitchen articles, knives, spoons and similar items, and glasses for corrective spectacles will cost much less because the duty on them has been abolished.

While the peak customs duty has been reduced from 30 to 25 per cent, the import duty on gold has been reduced to Rs. 100 per 10 grams from the existing Rs. 250, but this will be applicable only on serially-numbered bars or gold coins. Mr. Singh has also imposed some fresh levies. First is the increase in the service tax rate from five per cent to eight per cent with the addition of 10 more items in the list.

This, by itself, is expected to generate Rs. 3,400 crores of additional revenue. Secondly, there will be a 50-paise additional cess on diesel and petrol to fetch an additional Rs. 2,600 crores, mainly to finance road development, and an additional cess of Rs. 50 per tonne on crude for one year to finance national calamity relief.

Mr. Singh has also touched fertilizer prices, by increasing urea prices by Rs. 12 and DAP and MOP by Rs. 10 per 50 kg bag. The prices of complex fertilizers will be also be raised.

On the development front, separate packages for agriculture, textiles, tourism and infrastructure development have been announced with new schemes for private-public sector collaboration in infrastructure ventures. For industry, the Finance Minister has made a firm declaration that there would be no going back on incentive commitments of the past, which resulted in investments.

On the fiscal side, he said there had been a decrease of Rs. 6,296 crores in expenditure, compared to the budget estimates of 2002-03. However, net tax revenues fell short of budget targets by Rs. 8,788 crores while non-tax revenues were Rs. 619 crores more than the estimated level. But disinvestment receipts stood at only Rs. 3,360 crores, much below the estimate of Rs. 12,000 crores.

For the coming fiscal, the total expenditure is estimated at Rs. 4,38,795 crores, of which Rs. 1,20,974 crores would be for Plan and Rs. 3,17,821 crores for non-Plan.

The Central Plan assistance for 2003-04 would be Rs. 72,152 crores — an increase of Rs. 5,281 crores. The Central assistance for the State Plans has been pegged at Rs. 48,822 crores, about Rs. 2,193 crores more than last year. On the non-Plan side, the increases are in the area of interest payments (Rs. 7,560 crores), subsidies (Rs. 7,162 crores) and defence (Rs. 9,300 crores). The total fiscal deficit, which was at the level of Rs. 1,45,466 crores in 2002-03 or 5.9 per cent of the GDP, will be Rs. 1,53,637 crores for 2003-04 or 5.6 per cent of the GDP.

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