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| Thursday, March 2, 2000, Chandigarh, India  
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"Fiscal deficit at
5.1 pc unavoidable" Up to 5 pc rise in prices expected Swadeshi given a go-by Budget to boost ‘Inspector
Raj’ |
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Birlas, Tatas, AT&T plan jv Maruti awards for Joshi Autozone PSB installs ATM
Fiscal deficit at 5.1 pc
unavoidable: FM NEW DELHI, March 1 — The Union Budget has attempted to equitably distribute the burden and has not revealed the measures to contain the fiscal deficit, the Union Finance Minister, Mr Yashwant Sinha, said here today. “I know, I am criticised for keeping the fiscal deficit target at 5.1 per cent, but when I had to increase the plan allocation by an additional Rs 36,000 crore the fiscal deficit had to be kept above 5 per cent,” Mr Sinha said while speaking at a national seminar on Union Budget organised by FICCI. He said the government could have reduced the fiscal deficit to 3 per cent figure by setting an imaginary disinvestment figure of Rs 40,000 to 50,000 crore. Mr Sinha said the government had to look into the background of certain events before preparing the budget which included higher allocation to Defence and developement schemes. The amount of additional resources made available for Defence was absolutely unavertable and it was in the national interest, Mr Sinha said adding the interim report of the 11th Finance Commission had recommended an additional Rs 11,000 crore devolution to the States and the Centre could not avoid this burden. “We had thought about all this and ultimately settled that the burden should be equitably distributed among all sections of the society,” Mr Sinha said and asserted that no special treatment was being given to any class. The Finance Minister said had the Government not budgeted for enhanced allocations for Defence and plan expenditure, the fiscal deficit would reach a level higher than the 5.1 envisaged now. “The feel good factor of the industry would not be affected with just what happened for few hours at the Bombay stock market,” Mr Sinha said. Stating that the Government had deliberately kept the disinvestment target at a modest Rs 10,000 crore, he said this was done to keep the credibility of the figures and hoped that the target would be exceeded during 2000-01. With regard to the income tax, Mr Sinha said that government had only marginally increased income tax levels for the affluent section of society who had the capability to pay more. “We had settled for a marginal increase of income only by 5 per cent and left the corporate tax out of it as any further addition would not have been in the interest of the economy,” he said. He said the government had created a conducive situation for RBI to effect a cut in the interest rate, but ruled out any role for the Centre in realising the rate reduction. “We have taken enough courage to create a situation for RBI to act, if it wishes to do so.” Stating that during the last two years of his stint as finance minister he had not intervened in the affairs of the central bank, Mr Sinha said he had created a situation for RBI to initiate steps to slash interest rate by reducing interest rate of post office savings and employees provident fund in January and a one percentage points reduction in the interest rate on general provident fund to 11 per cent yesterday. The Finance Minister said the decision to abolish the 2 per cent interest tax was also taken in view of the need to encourage more offtake of funds by industry. “The decision to amend the RBI act is aimed at giving greater autonomy to the central-bank in deciding matters on its own,” he said. Defending the move to
double the dividend tax and levy on export income, Mr
Sinha stated: “income is income and it should be
taxed.” |
Up to 5 pc
rise in prices expected NEW DELHI, March 1 — The Finance Ministry today maintained that the general impact of the Union Budget will not be inflationary and the inflation rate at the end of the next financial year will be contained at around 5 per cent. Addressing the customary post-Budget briefing for newspersons, the Finance Secretary, Mr P.G. Mankad said that the tax proposals could push up prices by over 2 per cent to five per cent in the next financial year. He said “overall the Budget is not inflationary” as genuine efforts had been made to keep fiscal deficit under control which could have otherwise shot up by an additional Rs 15,000 crore. The Chief Economic Adviser, Dr Shankar Acharya said the nominal gross domestic product has been projected at 12 per cent in the next financial year as against 10 per cent last year. The nominal GDP comprise growth rate plus inflation and with a projection of 7 per cent growth next year the annual inflation would work out to 5 per cent which is over 2.5 per cent from the present inflation level of 2.37 per cent, he said. The Chairman of Central Board of Excise and Customs, Mr G.D. Mohile said in the last Budget when the excise duty rates were rationalised to three rates, the middle duty rate of 16 per cent accounted for 63 per cent of the total excise revenue of Rs 60,000 crore. In the next financial year the 16 per cent single rate Cenvat accounts for 06 per cent of the revenue indicating that 23 per cent of the revenue generated from 8 per cent category has been shifted to 16 per cent category thereby resulting in additional revenue of about Rs 10,000 crore which is expected to push up prices. On the special additional excise duty, Mr Mankad said the highest rate of 24 per cent was applicable to a few items of conspicuous consumption like cars, pan masala, aerated water and some tobacco products. On fertiliser subsidy, the officials said the cut in fertiliser subsidy would not affect agriculture production as each tonne of urea still had a subsidy of Rs 4,029 as the cut amounted to only Rs 703 per tonne. On disinvestment, Dr Sarma said the Budget has pegged the target at Rs 10,000 crore. However, the amount could be much larger as several public sector undertakings have been lined up for disinvestment. On the announcement that
Government holding in nationalised banks would be allowed
to come down to 33 per cent, Mr Sarma said this did not
amount to privatisation. The proposal, based on the
recommendations of the Narsimham Committee on banking
reforms, would ensure that the public sector nature of
the banks is maintained and the equity disinvested is
widely held. He said the disinvestment would depend on
the capital needs of the respective banks and it would
not be done uniformly. He clarified that management would
remain with the Government and the bank boards would be
given more autonomy. |
Swadeshi
given a go-by LUDHIANA, March 1 — Trade and industry here has reacted sharply to the Budget and has been left gasping for more as was found out by this correspondent while talking to various people from the industrial sector today. Most people felt that the hype that had been generated through the pre-Budget speeches and in the economic surveys turned out to be a damp squib. It has also been alleged that the budget has been dictated by the WTO regime and that the BJP has given a go-by to its “swadeshi” theme. Mr Harish Khanna, President of the Ludhiana Small Scale Manufacturers Asso-ciation, says, it seems that the government is all out to sell our economic independence to developed countries at the behest of the IMF and the World Bank. The reduction of Customs duty on various items of information technology, platinum and non-industrial diamond, while promoting imports would adversely affect the domestic industry which would have to face a stiff competition. Calling the Budget anti-trade as well as anti-farmer, Mr Jeewan Dhawan, Chairman of the Moti Nagar United Factory Association, lamented that the industry was passing through a recessionary period but no steps have been taken to give a boost or uplift the economy. “The proposal to tax exporters is not in the larger interests of the economy as they help earn foreign exchange for the country. With tax imposition on exports, it would expose local industry to wider competition from MNC’s and because of price variation, they would be affected,” he said. Mr Avtar Singh, General Secretary of the Chamer of Industrial and Commercial Undertaking (CICU), said that though the proposal for raising the composite loan limit to the small scale industry from SIDBI from Rs 5 lakh to Rs 10 lakh is a welcome step, but the introduction of a single rate central value added tax of 16 per cent from the earlier three rates will not prove beneficial for the small scale sector. However, Mr P D Sharma, President of the Apex Chamber of Commerce and Industry, has hailed the Budget as being direction-oriented and one that was keeping in line with the era of globalisation. He said that a proper balance had been maintained in fixing of Customs duty and with care taken to save domestic industry from the onslaught of MNCs. Mr Joginder Kumar, President of the Federation of Tiny and Small Industries of India, said the Budget was neighter growth-oriented nor friendly towards the small-scale sector. “The phasing out of tax concessions of exports and the rationalisation of Customs and central excise duty would lead to inflation,” he said. He, however, lauded the
simplification of the excise procedure and doing away
with the statutory records, raising of composite loan
limit to Rs 10 lakh, raising the National Equity Fund
scheme and extending the exemption period for small scale
industry to 2003. |
Budget to
boost ‘Inspector Raj’ FATEHGARH SAHIB, March 1 — The industrialists, traders, stockists of the Asia’s biggest steel town Mandi Gobindgarh in the district have strongly criticised the Union Budget. Representatives of various organisations of trade and industry said the changed method of excise collection would lead to lot of harassment and would encourage ‘Inspectri Raj’. Mr Anil Sooraj, General Secretary All India Steel Re-rollers Association expressed anguish over the replacement of ‘Cevant’ with ‘Modvat’ which was in practice in the nineties and ‘cevant’ is modified from of that Madvat. Mr Sohan Lal Gupta, President Merchant Chamber, Mandi Gobindgarh said according to new Budget the traders will have to get themselves registered with Central Excise Department for proper business, this will create lot of harassment to traders and will encourage evasion and corruption. According to Mr Surinder Singhi, President Steel Chamber of Commerce and Industry Mandi Gobindgarh, the new system is not acceptable to trade and industry. He advocated for old compound levy system which was good for the industry as well as for the government because interference of Excise Department was very nominal. He said this new system will again put pressure on industrialists and traders. Mr Channan Singh
Matharu, Vice President, All India Steel Re-rollers
Association also criticised the Budget. |
Govt
dithering on weak banks Lack of political will is evident from the Government’s not coming out with any significant and tangible plans to cut down non-plan expenditure. There is a tremendous scope for revamping efficiency and cutting down wasteful expenditure. But the FM’s speech is not very elaborative on this aspect, says Mr K.K. Sharma, Asst. Vice President, Indusind Bank Ltd, Chandigarh. The Government’s dithering is evident in its announcement on weak/sick public sector banks. Rationalisation of excise duties is welcome. So are reduction in Customs duties. This will spur quality improvement and lower prices of certain consumer goods. Taxing of export incomes in a phased manner seems equitable. Continuance of incentives on house construction and capital gains exemption in the event of a house sale would definitely spur the housing sector. For corporates, reduction of MAT from 10 to 7.50 per cent is good, but taxing of dividends by raising it to 20 per cent would depress market sentiments. Raising of the FIIs acquisition limit to 40 per cent in domestic companies would send strong positive signals to overseas investors. It remains to be seen how the Government would actually reduce equity in public sector banks to 33 per cent. The Government’s past track record in disinvestment has been less than impressive. Proposals on encouraging venture capitalists through suitable tax benefits are indeed very good. Future lies in conceiving, shaping and implementing new ideas. Success of Indians both in India and elsewhere, particularly, in its Silicon Valley, amply proves this. In the final analysis, success of the Budget would be judged by the bottomline ability to control expenditure and meeting targets of revenue collection. Tough on industry Mr Amarjit Geol, Chairman Punjab Committee, PHDCCI, says that the proposal of excise rules and procedure simplification is a welcome step. The benefit to the infotech industry and the new regime for venture capital funds is also a welcome step. The reduction in the Government stake in the banks up to 33 per cent is a welcome step and was long overdue. The extension of the income tax benefits for further two years to the specially backward areas/districts is praiseworthy, as also the reduction in nickel import duty from 15 per cent to 5 per cent will help the alloy steel stainless steel industry. There are certain negative steps too. While on the pretext of simplification Mr Yashwant Sinha has increased straightway central excise duty from 8 per cent to 16 per cent. It will be tough on industry and ultimately on consumers. The increase in the
dividend tax from 10 to 20 per cent on the corporates
will have a negative impact on the capital markets. |
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NEW DELHI, March 1 (PTI) — The Aditya Birla group, Tata Industries and U.S. Telecom major AT & T today announced plan to merge their cellular telephone operations in India that would cover 25 per cent of the domestic telecom subscriber base. The joint venture (JV) company, wherein in the three partners will have equal stake, will provide cellular services in the states of Maharashtra and Goa (excluding Mumbai), Gujarat and Andhra Pradesh, the companies said in a joint statement here. The Aditya Birla group, Tata Industries and AT & T today signed a memorandum of understanding (MoU) expressing their intent to merge the cellular operations. The jv will
come into effect after the conclusion of definitive
agreements and various statutory approvals, the statement
said. Maruti awards for Joshi Autozone CHANDIGARH, March, 1
— Local Maruti dealer Joshi Autozone Pvt. Ltd. has
been conferred upon with Maruti’s most prestigious
All-India five awards of excellence in the field of
sales, service and marketing for the year 1999-2000. The
dealer had also won three awards in the year 1998-1999.
This year’s awards were presented by Mr O. Suzuki
(Chairman) Suzuki Motor Corporation, Japan and Jagdish
Khattar, MD Maruti Udyog Ltd jointly at a recently held
function in New Delhi. |
PSB
installs ATM CHANDIGARH, March 1
—An ATM facillity at the Sector 17 branch of Punjab
and Sind Bank was inaugurated by Mr S.S. Virdi, a former
Director of the bank, here today. Also present were Mr
R.N. Tandon, a former General Manager of the bank and Mr
Sarabjit Singh, Managing Director of the Bank of Punjab.
Mr H.P. Singh, Zonal Manager of the Punjab and Sind Bank,
highlighted achievements of the bank. |
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