New Delhi: Finance Minister P Chidambaram presented his dream Budget in the Lok Sabha today (July 8, 2004). Chidambaram opened his Budget speech by citing the National Common Minimum Programme (NCMP) as the guiding light and said that the NCMP spells out clear economic objectives.

Chidambaram has said in his Budget speech that empowering the people, especially the poor with universal access to education and health and facilitating their full participation in the growth process through gainful employment, will enhance their welfare.

The Budget would aim at a growth rate of 7-8 %per year for a sustained period while the focus would be on Agriculture and Fiscal consolidation.

Taxation

• I-T exemption limit raised to Rs 100,000
• 1.4 crore tax assesses to go out of the net as a result.
• No change in tax slabs, says FM
• Contributions to Contributory Pension Scheme exempted form tax.
• Encouragement to the automobile sector. Industry to be provided 150 %exemption for in-house research and development.
• Rural hospitals with 100 beds to be get 80(I)(B) concessions.
• Capital Gains Tax revamped on securities. Long-term capital gains tax abolished.
• Tonnage tax introduced for shipping industry but will have option to pay either tonnage tax or corporate tax.
• Equity related Mutual Fund would continue to be exempted from Dividend Tax.
• TDS and TCS being extended to more areas.
• Companies doing Bio-tech research to get 100 % tax exemption for 10 years.
• 0.15 % tax on transaction on securities will be levied.
• 20 % tax on corporate unit holders of MF (mutual funds).
• Peak rate of Customs Duty to continue at 20 %.
• The concession of tax exemption of new industries in J & K extended by one more year.
• Reduction in customs duty in non-alloy steel from 15 % to 10 %, excise duty raised from eight per cent to 12 %.
• Number of concessions on excise duty for Agriculture.
• Tractors will be fully exempted from excise duty against existing 16 per cent.
• Dairy machinery also fully exempted. Spades and shovels also fully exempted.
• Health sector to be provided a number of concessions.
• In the health sector, braille, braille typewriters, braille computers fully exempted from customs duties.
• All ambulances to be exempt from customs duty.
• Diagnostic kits for all types of epidemics exempted from Income-Tax.
• Proposed to levy excise duty on contact lens in a bid to promote CENTVAT.
• Platinum import duty reduced from Rs 550 for 10 gms to Rs 200.
• Full exemption of excise duty for computers.
• Family pension for widows of armed forces and para-military forces killed in operations are exempted from Income-Tax.
  
  Non-Tax Highlights:
  
  
• Government proposes to wipe out revenue deficit by 2007/08 against 2008/09 target set in the Fiscal Responsibility and Budget Management Act.
• No change in existing interest rates on small savings.
• Senior citizens to get a new savings scheme with a rate of 9 per cent.
• Five-year road map for implementing the Common Minimum Programme to achieve growth and equity.
• Government would ensure that a child remains in school for at least eight years and does not go hungry.
• Plans to provide funds ensuring availability of drinking water.
• It proposes to launch new food for work programme to step up employment in rural areas.
• Rs 3,500 crore subsidy for Antodaya scheme under which, food grains would be provided for the poorest of the poor.
• Micro finance to be stepped up.
• Work has started on the national employment guarantee programme to provide 100 days work for one member of family.
• Propose to increase allocation for checking AIDS and other epidemics.
• Proposed to hold each sponsor bank of RRBs responsible for the performance in stepping up agriculture credit to farmers.
• Rs 50 crore additional allocation for providing special attention to minorities education.
• Task Force to be set up to examine the cooperative banking system in the agriculture sector.
• Budget aims at doubling agriculture credit in three years.
• While aiming to considerably enhance investment in public and private sector.
• Cess on education will realise Rs 4000 crore to Rs 5000 crore in a year.
• One lakh irrigation units will be revamped using assistance from NABARD. 50 % subsidy will be provided for such schemes.
• VAT to be implemented on April 1, 2005
• There will be a food security system for the poor.
• More housing for the poor.
• Electricity for all.
• More ITIs to be set up.
• Existing Universal Health Insurance Scheme to be redesigned.
• Food grain production to be stepped up to 300 million tonnes by 2011-12.
• A new health insurance scheme being launched.
• The allocation for prevention of AIDS will be Rs 259 crores.
• Fiscal instruments will be used to enhance investment in agriculture.
• Allocation of Rs.1,000 crore provided for utilisation of biotechnology for agriculture development.
• Task force to examine reforms in cooperative sector.
• National Agriculture Insurance Scheme to be redesigned by LIC.
• Rs 8000 crore for Rural Infrastructure Development fund to be provided.
• Proposal to launch National Horticulture Mission on the Anand model of cooperatives.
• Airports, Sea ports and Tourism would be the focus of growth in the infrastructure sector.
• Government proposes insurance cover for both farming and livestock.
• Equity support of Rs 14,194 crore and loan of Rs 2132 crore to be given to the PSEs including the Railways during 2004-05.
• Investment Commission will be established to make India an attractive destination for investment.
• Investment commission to suggest measures to woo domestic and foreign investment.
• Proposed to raise sectoral caps on FDI on telecom from 49 % to 74 %, civil aviation from 40 % to 49 % and insurance from 26 % to 49 %.
• Basic health care, Sarvashiksha Abhiyan, investment in agriculture, science and technology including bio-technology would be given priority and additional funds.
• Government to divest 5 % of stake in NTPC.
• 85 items to be removed from the reserved list of SSIs.
• A compensation formula for any loss of revenue to states with the introduction of VAT will be worked out.
• Rs 5,823 crore to be invested in schemes in North-Eastern states and Sikkim.
• Government to provide special assistance to J and K.
• Rs 100 crore fund to be set up for encouraging cottage industries.
• PPF/GPF and Special Deposit scheme will have 8 % interest.
• National Institute of Public Finance and Policy has been asked to prepare a report on better targeting of subsidies.
• States share of Union duties will go up to Rs 82,000 crore from Rs 63,752 crore.
• Loans to states from the Centre will attract an interest rate of 9 % from 10.5 %.
• Defence allocation to be raised to Rs 77000 crore as against Rs 65300 crore in budget estimates 2004-05.
• Non-Plan expenditure lowered to Rs 3,32,239 crore as against Rs 3,49,785 crore.
• Revenue deficit pegged at 2.5 %of GDP as against 3.5 %last year. Fiscal deficit pegged at 4.4 %of GDP at Rs 1,37,407 crore.