Union Budget 2001-2002

Highlights of Part ‘A’ of Union Budget 2001-02

The following are the highlights of Part ‘A’ of the Union Budget for 2001-2002:

• Fiscal deficit contained at 5.1 per cent of the GDP in 2000-01; combined fiscal deficit of centre and state at 10 per cent.
• Centre targets mopping up Rs 12,000 crore through PSU disinvestment during 2001-02; privatisation to be accelerated.
• Budgetary support for central, state and union territories goes up by 16 per cent to Rs 13,862 crore.
• Total expenditure in the Budget estimated at Rs 375,223 crore in 2001-02.
• Gross budgetary support for Central Plan enhanced to Rs 59,456 crore from Rs 48,269 crore in the current fiscal year.
• Postal rates to be revised to contain deficit.
• Facility of LTC to Central Government employees to be suspended for two years.
• Administered interest rates to be reduced by 1 to 1.5 per cent points as of March 1, 2001.
• Interest rates on loans portion of Central assistance to state Plans being reduced by 50 basis points.
• Nabard to cut lending rates from 11.5 to 10.5 per cent.
• The 40 per cent limit of investment in a company under the portfolio investment route by FIIs being increased to 49 
• Companies issuing ADRs and GDRs to be allowed to make foreign investments up to 100 per cent of these proceeds; up from current ceiling of 50 per cent.
• Indian companies may now invest abroad up to 50 million dollars annually through the automatic route.
• Indian companies that had issued ADRs and GDRs may acquire shares of foreign companies up to an amount of 100 million dollars or an amount equivalent to 10 times of their exports in a year.
• Foreign investors bringing in a minimum of 50 million dollars FDI in non-banking financial companies need not be accompanied with a divestment of minimum of 25 per cent of their holdings in the domestic market.
• Banking service recruitment boards to be abolished by July 31, 2001. Banks to do all future recruitments themselves.
• RBI to set up an electronic negotiated dealing system by June 2001 to facilitate transparent electronic bidding in auctions and dealing in government security on a real-time basis.
• Public Debt Act to be replaced by Government Security Act.
• Government to set up seven more debt recovery tribunals during 2001-2002.
• As part of state fiscal reforms, Rs 4243 crore provided towards incentive fund to encourage states to implement monitorable fiscal reforms.
• Devolution of Central taxes to states is expected to go up by about Rs 9,000 crore in 2001-2002 over the current year.
• Non-plan expenditure of Centre is estimated to go up to Rs 2,75,123 crore in 2001-2002 as against Rs 2,49,285 crore in revised estimates for 2000-2001.
• Recommendations of the Expenditure Reforms Commission to be implemented by July 31, 2001 and identified surplus staff transferred to surplus pool.
• Centre sets up a high-level expert group to review the pension system; employees entering Central Government services after October 1, 2001, to receive pension through a new programme based on defined contributions.
• Rent (standard licence fee) on government accommodation being enhanced from April 1 this year.
• In the agricultural sector Centre proposes to remove inter-state movement of foodgrains; Essential Commodities Act, 1995 to be reviwed; the number of commodities declared as essential under the Act to be brought down.
• Financial assistance to state governments to enable them to procure and distribute foodgrains to BPL families at subsidised rates under PDS. 
• Kisan credit cards (KCC) to all eligible farmers within three years and the holders to get personal insurance package to cover them against accidental death or permanent disability on subsidised premia.
• Nabard to reduce interest rates for funding the storage of crops from 10 per cent to 8.5 per cent.
• Technology mission for integrated development of horticulture in the north-eastern states with a corpus of Rs 38 crore.
• Centre proposes Rs 750 crore for rural electrification to be completed within next six years.
• A time bound programme to installation of 100 per cent metering by december 2001.
• Energy audit at all levels.
• Allocation to the accelerated power development programme (APDP) stepped up to Rs 1,500 crore from Rs 1,000 in 2000-2001.
• Commercialisation of power distribution , SEBs restructuring.
• Prior government approval not required for effecting lay-off, retrenchment and closure by industrial establishments employing less than 1000 workers; separation compensation increased to 45 days from 15 days for every completed year of service.
• Government to announce policy ( Ashraya Bima Yojana) to provide compensation to workers who lose their jobs.
• Pradhan Mantri Gram Sadak Yojana with a fund of Rs2,500 crore to provide connectivity of every village with a population of over 1,000 persons by 2003 and with a population of up to 500 persons by 2007.
• In the SSI sector 14 items related to leather goods, shoes and toys to be dereserved.
• The exemption limit has been doubled to Rs 1 crore September 1, 2000. 
• Plan allocation for Ministry of Health and Family Welfare goes up to Rs 5780 crore from Rs 4920 crore; Rs 180 crore provided for HIV/AIDS control programme.
• New comprehensive commercial bank scheme for educational loans to cover all courses in schools and colleges in India and abroad; up to Rs 7.5 lakh of loan for studies in India and Rs 15 lakh for abroad.
• All existing and on-going schemes on elementary education to converge into an integrated national education programme.
• Integrated schemes for women’s empowerment in 650 blocks through women’s self-help groups being launched.
• IRDA to look into social security issues of the unorganised sector and provide a road map for pension reforms by October 1, 2001.
• Allocation for welfare schemes for uplift of SC/ST enhanced.
• As first step towrads full decontrol of sugar futures/forward trading to be introduced; the retail price under PDS being revised to Rs 13.25 a kg from March 1, 2001.
• The allocation for textiles enhanced by more than 50 per cent to Rs 650 crore from Rs 457 crore this year.
• Journalists welfare fund being set up with a contribution of Rs 1 crore. 
• The deadline of March 2002 for dismantling of the APM in the petroleum sector to be adhered to. PTI

Highlights of Part 'B' of Union Budget 2001-02 

The following are the highlights of the Union Budget 2001-02 Part 'B' (direct and indirect taxes):

• All surcharges on income and corporate taxes withdrawn except 2 per cent levy for the Calamity Contingency Fund.
•  Income and corporate tax rates remain unchanged.
• Assessees having an income of up to Rs 60,000 will not be subject to any surcharge.
• Cooperative societies to be taxed at 30 per cent from 35 per cent now.
• Direct taxes proposals to result in a revenue loss of Rs 5,500 crore, which would be made up with tax buoyancy.
• Loss-making companies also to file their returns.
• Salaried persons in the lower income range to Rs 1 lakh will get an enhanced tax rebate at the rate of 30 per cent in respect of their eligible investments under Section 88 of the Income Tax Act as against 20 per cent at present.
• In case of EOUs and units located in EPZs, free trade zones and software technology parks, the Centre has proposed to provide for the taxation of profits from their domestic sales; 25 per cent of their sales in the domestic market are currently tax exempt.
• The Centre reduces three rates of special excise duty to a single rate of 16 per cent.
• Proposes a surcharge of 15 per cent on cigarettes and duty on bidis to increase from Rs 6 to Rs 7 per thousand.
• Excise duty on high-speed diesel and motor spirit to be increased to 16 per cent; levies 8 per cent duty on CNG.
• Special excise duty on aerated soft drinks, soft drink concentrates for vending machines and motor cars to be reduced to 16 per cent from 24 per cent; total duty now stands at 32 per cent.
• The Centre proposes an excise duty of 16 per cent on garments sold under a registered name.
• Withdraws excise duty exemption on certain SSI products of cotton yarn, ball or roller bearings, arms and ammunition for private use.
• In the customs duty government proposes to withdraw the surcharge of 10 per cent, with this the peak level of custom duty will decline to 35 per cent from 38.5 per cent.
• Custom duty on tea, coffee, copra and coconut goes up from 35 per cent to 70 per cent.
• Custom duty on crude edible oils to be increased to a uniform rate of 75 per cent from the existing range of 35 to 55 per cent and on refined oils to 85 per cent from 45-65 per cent.
• Duty in IT and telecom products reduced to 15 per cent.
• Basic custom duty on second hand cars to be increased to 105 per cent; total duty rate will be more than 180 per cent.
• To provide a level playing field for domestic liquor producers, the Centre proposes to levy CVD at a suitable rate on imported liquor.
• Basic custom duty on specified textile machinery reduced to 5 per cent from 15 per cent.
• Custom duty on silk waste, cotton waste and flax fibre reduced to 15 per cent.
• Custom duty on soda ash to be reduced to 20 per cent.
• Custom duty on polyester chips and nylon chips for manufacture of fibre and yarns to come down to 25 per cent.
• Customs duty on cut and polished coloured gem stones reduced to 15 per cent from 35 per cent.
• Duty on rough diamond to be reduced to five per cent.
• LNG to be exempted from CVD levy.
• Custom duty on cement and clinkers to be reduced to 25 per cent from 35 per cent.
• Duty on gold to be reduced to Rs 250 per 10 grams from Rs 400.
• Custom tariffs to be brought down to East-Asian levels; to reduce the number of rates to the minimum with a peak rate of 20 per cent.
• Proposals on the excise side are estimated to result in a revenue loss of Rs 4,677 crore in a year and on the customs side, proposals are estimated to result in revenue loss of Rs 2,188 crore and total indirect tax revenue pegged at Rs 1,40,992 crore.
• In the direct tax proposals, winnings from lotteries, crossword puzzles to be taxed at 30 per cent from 40 per cent now; TV gameshow winners to be taxed at source at the rate of 30 per cent.
• In order to widen the tax net, income tax at source will, henceforth, be deducted at a rate of 10 per cent on income by way of commission or brokerage exceeding Rs 2,500 except on transactions related to shares and securities.
• Tax payable on the distribution of dividends of domestic companies and income in respect of units of MFS and UTI to be reduced to 10 per cent.
• Ten-year tax holiday for core sector of infrastructure.
• In case of airports, ports, inland ports, industrial parks and generation and distribution of power which may become commercially viable in the long run will also have a tax holiday of 10 years.
• Five-year tax holiday available to the telecom sector till march 31, 2000, is being reintroduced for units commencing their operations on or before March 31, 2003.
• These concessions to be extended to Internet service providers and broad band networks. PTI

Courtsey :: The Tribune

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