Bangalore: A slew of sops to farmers, including interest waiver on electricity dues, introduction of VAT (Value Added Tax), mid-day meal scheme and power sector reforms are proposed in the 2003-2004 Karnataka Budget without any fresh imposts.

Presenting the Budget with rural flavour, Chief Minister S M Krishna hiked subsidy from 25 per cent to 50 per cent on farm machinery, including tractor, extended Kisan credit scheme to the entire state and announced Rs one lakh compensation to the families of farmers who committed suicide.

In his fourth consecutive Budget, Krishna, who holds the finance portfolio, has not proposed any more tax burden on the common man of the state, where, he noted in his post-Budget briefing, the tax rates are stated to be among the highest.

Explaining the rationale behind this, he said two successive droughts had prompted this move of government, which hoped to mobilise more resources through maximum recovery and cutting administrative expenditure.

In major initiatives, he announced privatisation of electricity distribution and repeal of Karnataka Contract Carriages (Acquisition) Act, 1976, which would pave the way for private contract carriages in the state.

Announcing VAT from April one, 2003, he said the revenue loss for Karnataka would be Rs 750 crore and said the standard rate of VAT would be 12.5 per cent.

Significantly offsetting the cut in central excise on motor cars, jeeps, omnibus and private service vehicles, Krishna increased the ad-valorem rate of tax from 7 to 9 per cent with vehicles up to floor area of 5 sq mtrs and 10 per cent for vehicles costing more than Rs 10 lakhs.

PTI