The 5 per cent surcharge on income tax payers due to national security considerations would in real terms mean an additional tax liability of 1.94 per cent on an income of Rs 60,050 and 2.94 per cent for incomes above Rs 65,000.

Another step forward towards full convertibility of the rupee was taken when Mr Sinha announced that NRIs would now be allowed to repatriate their earnings, like income from rent and interest, from India in foreign currency.

The Budget, which would have a fiscal deficit of 5.3 per cent of GDP, proposes a revenue gain of Rs 10500 crore. Of this, Rs 6700 crore is on account of hike in excise duty and a loss of Rs 2,200 crore on account of various relief in customs duty. The proposals on the direct taxes would yield an additional gain of Rs 6,000 crore, including the surcharge of Rs 2750 crore.

In what appears to be a major step towards phasing out exemptions on income tax, the minister said the 20 per cent tax rebate available to income tax payers under Section 88 of the IT Act was being modified. He proposed to allow the rebate at the existing rate of 20 per cent only to persons having taxable income up to Rs 150,000. Persons having taxable income between Rs 1,50,000 and Rs 5 lakh would henceforth get a rebate of only 10 per cent of the amount invested and no rebate would be allowed where taxable income exceeds Rs 5 lakh.

The special rebate of 30% for persons having taxable salary income up to 1 lakh would, however, continue.

A scheme called Sampark is being launched by the IT Department which would enable tax payers to obtain information and forms through the Internet.

The Budget pins its hope on a buoyant agriculture sector to boost the economy. Coining “Kisan Ki Azaadi — freedom to the farmer” as the slogan for growth, the minister proposed several measures to decontrol and deregulate agriculture.

He proposed a substantial hike in the infrastructure sector outlay, including that for power, roads and railways.

An Infrastructure Equity Fund of Rs 1,000 crore would be set up to help in providing equity investment for infrastructure project. On the fiscal front, the non-Plan expenditure for the current year is lower by more than Rs 10,000 crore over the budgeted amount. Lower than expected revenue collection due to industrial slowdown and lowering of GDP estimate has pushed the fiscal deficit during the current year to 5.7 per cent.

The Finance Minister hoped that nearly 12,200 posts in central government ministries and departments would be abolished by the end of March 2002 out of identified surplus manpower of 42,200.

Fertiliser subsidy is to be reduced by about 5 per cent through an increase in the issue price of urea, DAP and MOP while the subsidy on SSP would be reduced by Rs 50 per tonne.

The compulsory levy on sugar is also proposed to be reduced from 15 per cent to 10 per cent. The retail price of PDS sugar would be Rs 13.50 per kg from March 1, 2002.

The administered interest rate is being reduced by 50 basis points or 0.5 per cent. This would mean a dip in the earnings on savings in the Employees’ Provident Fund and small-scale savings instruments. The benefit in the reduction of interest rates in small savings deposits would, however, be fully passed on to the states.

The Minister said he was banking on the experience of disinvestment this year, which had yielded Rs 5000 crore, to fix a target of Rs 12,000 crore under the account for the next financial year.

Due to the decision to dismantle Administered Price Mechanism in the petroleum sector from April 1, 2002 the price of diesel would come down by 50 paise and of petrol by around Re 1 per litre. The subsidy on kerosene and LPG is also being phased out and in the first step a cylinder of cooking gas would go up by Rs 40 and that of kerosene by Rs 1.50 per litre.

Net tax revenue for the Centre shows a shortfall of Rs 20,683 crore largely due to lower collection of customs and union excise duties because of industrial slowdown. However, the non-tax revenue has surpassed the Budget estimate by a modest Rs 1510 crore.

For fiscal 2002-03, the total expenditure is pegged at Rs 410,309 crore of which Rs 113500 crore is for Plan and Rs 296809 crore for non-Plan. The central Plan assistance to states and union territories is also proposed to be increased by nearly 20 per cent to Rs 46,629 crore from Rs 38,878 crore in the revised estimate.

The Finance Minister has made a provision of Rs 65,000 crore for defence expenditure for next year.

Spelling out the measures on the indirect tax front, Mr Sinha said the Central Value Added Tax (CENVAT) in the excise duty structure which introduced the rate of 16 per cent last year has been refined further. The 16 per cent Special Excise Duty on a number of items has been abolished. Hereafter, the Special Excise Duty would be confined to eight items of polyester filament yarn, motor cars, multi utility vehicles, tyres for replacement, aerated soft drinks and soft drink concentrates, air conditioners, pan masala and chewing tobacco and miscellaneous tobacco preparations.

Prices of toothbrush, imitation jewellery, powered goggles, table and kitchenware glass, black and white TV sets, watches and clocks up to Rs 500 per piece, electric bulbs up to Rs 20 per piece and candles could go up with excise duty being increased from 4 per cent to 8 per cent.

Other changes in excise includes reduction in the excise duty on tea from Rs 2 per kg to Rs 1 per kg and exemption of excise duty on specified anti-AIDS drugs.

Ten more services like Life Insurance, including insurance auxiliary services relating to life insurance, inland cargo handling, storage and warehousing services, event management, rail travel agents, health club and fitness centres, beauty parlours, fashion designers, cable operators and dry cleaning services have been brought under the net of excise duty. The tax on these services would be effective from a notified date.

The tourism industry gets a boost. Accordingly, exemption from service tax on the services provided by hotels, which expires on March 31, 2002 has been extended till March 31, 2003.

Mr Sinha laid the road map for reduction of customs duty to 10 per cent for raw materials, intermediates and components and 20 per cent for generally final products by the year 2004-05 and within that frame, reduced the peak rate from 35 per cent to 30 per cent this year.

The major announcements on customs side include increase in duty on cellular phones from 5 per cent to 10 per cent, increase in duty on pulses from 5 per cent to 10 per cent, reduction in duty on glucometers and test strips for diabetic patients and imported liquors.

Postal rates have also been increased sharply in the budget. It has been proposed that a letter (envelope) for every 20 gm be charged at the rate of Rs 5 instead of the existing Rs 4. A letter card would cost Rs 2.50 instead of Rs 2, printed postcard Rs 6 instead of Rs 3, competition postcard Rs 10 instead of Rs 5 and parcels Rs 19 for first 500 gm instead of Rs 16 being charged now. Book post charges have also been increased.