New Delhi, February 3
Buoyed by the ‘feel good’ factor and economic numbers on his side, Union Finance Minister Jaswant Singh today unleashed the pre-monsoon sops to the agriculture sector to usher in ‘second green revolution’ in the country, ahead of the Lok Sabha polls.

Presenting the interim Budget, the minister announced reduction in rate of interest on crop loans, innovative collateral for loans, kisan credit card with ATM facility and extension of farm income insurance schemes.

Clearly accepting the fact that the economy cannot function in vacuum, Mr Jaswant Singh said “economic development is not about economics alone, it is always simultaneously, a political statement too, for ‘development’ devoid of compassion is a misnomer.”

As the monsoon showers of last year had enabled the BJP to ripe the fruits in the Assembly polls, the Union Finance Minister today announced series of measures ahead of Kharif season, perhaps with the hope that the sops would convert to votes in the forthcoming general elections during Baisakhi.

Mr Jaswant Singh said the Nabard Act would be amended so that farmers could avail of crop loans at the rate of 9 per cent. Further, the banks, which now insist of mortgaging the entire land holding of a farmer borrower, have been advised to assess individual credit worthiness. As a principle collateral security should be proportionate to the value of the loan.

Union Finance Minister said the agriculture infrastructure and credit fund, the small and medium enterprise fund and industrial infrastructure fund, would be operational shortly. All these funds would, without compromising the norms of financial prudence, provide credit at highly competitive rates, which is expected to be two percentage points below the prime lending rate.

On non-performing assets to crop loan accounts, he said a committee has been set up under Dr V S Vyas to address the issue.

Not only that the eligible farmers would get their kisan credit cards by March-end, he said upon individual request it would be modified for use on ATM machines.

Finance Minister said the farm income insurance scheme was being extended to 100 districts for the forthcoming kharif season.

To revitalise the credit structure of Cooperative banks, he announced an outlay of about Rs 15,000 crore, to be shared between the Centre and states.

He also announced the move to set up a national cattle development board with appropriate budgetary support to give boost to animal husbandry, dairying and sheep rearing.

New Delhi, February 3
The industry today gave a thumbs up sign to the interim Budget proposals saying that it was a “watershed” in Indian economy.

“This interim Budget is a watershed for the Indian economy. Not only has the fiscal deficit been brought down from the Budget estimate of 5.6 per cent of GDP to 4.8 per cent but this interim exercise has also furthered the cause of reforms through specific measures”, CII President Anand Mahindra said.

The most heartening aspect of this Budget is the “great news on the fiscal and revenue deficit fronts. We had expected the growth momentum to reduce the fiscal deficit from the targeted 5.6 per cent of GDP to around 5.2 per cent. To see it drop to an extremely creditable 4.8 per cent of GDP is a bonanza”, Mr Mahindra said.

“All reform measures announced in the Budget will increase competitiveness of the industry”, Vice- President of the CII Sunil K. Munjal said.

“The fact that the government used even this limited instrument of the interim Budget to announce policy and procedural reforms emphasise its commitment to furthering India’s competitiveness and economic growth”, Mr Munjal added.

President of FICCI said the measures would further enhance the feel good factor, which would further boost an upbeat economic sentiment.

The announcements made by the Finance Minister clearly show that the government was committed for reforms and the process would continue, Mr Modi said.

President of the PHDCCI Ravi Wig said the interim Budget aimed at accelerating growth, reflect the commitment of the government to move towards fiscal consolidation.

New Delhi, February 3
Infrastructure development continues to remain as one of the major focal points with major increases in the plan outlay for power generation, roads, highways and shipping sector.

Besides, two state-of-the-art international convention centre are going to be set up in Goa and Jaipur, which will be backed by an international airport at Jaipur.

“Both Goa and Rajasthan have great tourism potential, but need more infrastructure facilities. Goa will thus also be enabled to provide suitable facilities for holding international film festivals”, Finance Minister Jaswant Singh said.

Moreover, the airport in Jaipur will be converted into an international airport and details of these will be announced shortly, he said.

Besides, the Finance Minister said fiscal benefits available to new projects in the power sector should be extended to 2012, instead of 2006, and also be available to case of take-over from state electricity boards (SEBs).

In addition, Mr Jaswant Singh said, more than 90 per cent of world shipping tonnage is subject to very low levels of taxation.

“To provide a level-playing field so that Indian shipping becomes internationally competitive, a tonnage tax scheme, with notional income at a fixed rate, on the basis of net registered tonnage should be considered”, he said.

To address the problem of potable water shortage in metropolitan cities, a new scheme to initiate an accelerated drinking water supply scheme will be launched for mega cities such as Bangalore, Chennai, Delhi and Hyderabad. The scheme will be operational by March 1, 2004.

The provision for existing Central scheme for infrastructure development in mega-cities will be augmented by accessing the infrastructure fund, the LIC and other such funding schemes.

The proposed outlay for departments of power, roads and highways goes up by more than Rs.3,000 crore each with power getting Rs.15,630 crore and road transport and highways Rs.10,344 crore.

Presenting the interim Budget, he said other major focus areas of the government will be health and family welfare which gets Rs.7,481 crore, HRD being earmarked Rs.10,625 crore and agriculture getting Rs.4,192 crore, an increase of more than Rs.1,000 crore each.

The Department of Atomic Energy and Department of Shipping will get a hike of more than Rs.1,000 crore compared to last year. The total central plan outlay will be Rs.1,56,428 crore as compared to Rs.1,41,766 crore in the revised estimate of the year 2003-04, he said.

New Delhi, February 3
The information technology sector got a pat on its back from the government with the plan outlay going up to Rs 889.27 crore and also the official announcement by the Finance Minister that no tax would be imposed on multinational business process outsourcing (BPO) companies.

“BPO has scope for employment generation. It has been clarified that if outsourced services are ancillary and auxiliary in nature and adequate remuneration is paid to the Indian call centre, then there will be no tax on such foreign company as has outsourced its activity to India. This policy is on the line of OECD norms and double taxation avoidance agreements”, Finance Minister Jaswant Singh said in his interim Budget speech today.

Perhaps as a recognition of its growth propelling features the total plan outlay for Department of IT has been Rs 889.27 crore for 2004-05 compared to Rs 593.58 crore in 2003-04.

“It is expected that by 2008, Indian IT software and services industry will account for 7 per cent of India’s GDP and 35 per cent of total exports,” according to the interim Budget.

The BPO segment, which is a part of the overall IT-enabled Services (ITeS) segment, has been in the news in recent times for several reasons. It has been at the Centre of a major US initiated backlash with many opinion makers in the West complaining about joblessness in their respective countries due to outsourcing jobs in India.

The Finance Minister’s announcement today should come as a major relief to the growing BPO sector as the Central Board of Direct Taxes (CBDT) deciding to tax foreign companies which were outsourcing services to India.

There have been reports that many MNCs were scouting around for places in other Asian countries to avoid the high tax incidence.

The ITeS has been a major export revenue earner with export earnings from the sector expected to cross the $20 billion mark by 2008.

The IT software and services industry in India accounted for 2.4 per cent of the country’s GDP and 20.4 per cent of exports in 2002-03.

New Delhi, February 3
Ambitious as it may seem, the government has set a target of mobilising Rs 16,000 crore through disinvestment of government equity in public sector undertakings (PSUs) during 2004-05.

The government was expecting to mobilise about Rs 14,500 crore through the disinvestment of government equity in PSUs during the current fiscal year (2003-04).

As per the revised estimate for 2003-04, net tax revenues for the Centre were estimated at Rs 187,539 crore compared to the Budget estimate of Rs 184,169 crore, an increase of Rs 3370 crore. Non-tax revenue was estimated at Rs 75,488 crore, Rs 5722 crore more than the estimated level of Rs 69,766 crore. “Disinvestment receipts at Rs 14,500 crore, are also higher than the budget estimate of Rs 13,200 crore”, Finance Minister Jaswant Singh said in his Budget speech.

For 2004-05, the government had pegged the non-tax revenue at Rs 70750 crore, of which Rs 16000 crore was expected to be from proceeds generated by disinvesting government equity in PSUs. The Finance Minister, however, did not make any mention of the disinvestment target for 2004-05 in his speech, although it was clearly specified in the receipts Budget for 2004-05.

The disinvestment programme of the government had entered a phase of deceleration with the observations from the Supreme Court on certain issues pertaining to the HPCL and BPCL.

The government had also decided to offload the residual stakes in the already privatised companies of the IPCL, IBP and CMC. In addition, government would offload in the market its 20 per cent stake in Dredging Corporation.

The timing for the proposed IPOs has already been firmed up and the IPCL and CMC public offerings are scheduled to hit the market between February 16 to February 24.