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2005-06
Direct Tax
- Rs 1,00,000 NIL tax
- Rs 1 to Rs 1.5 lakh 10% tax
- Rs 1.5 to Rs 2.5 lakh 20%
- Above Rs 2.5 lakh 30% Plus
- Surcharge of 10% to remain
- Non Agricultural product tax reduced to 15 %.
- Textile machinery and refrigerated vans duty reduced from 20%to 10%
- Food processing -- reduce 20% to 10% in refrigerated vans.
- Cooking coal duty reduced to 5%
- Polyester and nylon chips, textile fibres, yarns and intermediates, fabrics, and garments duty reduced to 15% from 20%
- Countervailing duty (CVD) of 4 % imposed on all imports.
- Duty increased to 60% from 30% on cut flowers.
- Duty dropped to 35 % on cloves.
- Import duty on atmospheric drinking water generators dropped to 5%
- Excise dudty on imitation and jewellery cut down to 8%
- Surcharge and excise duty on tea, refined edible oil and vanaspati abolished
- Cess on petro and diesel by 50 paisa per litre.
- Customs duty on crude petroleum to be reduced from 10 per cent to 5 per cent.
- Nil custom duty on LPG and Kerosene.
- Service tax exempted to them whose gross turnover does not exceed Rs 4 lakh per year.
Investment
- Government to provide equity support of Rs 14,040 crore and loans of Rs 3,554 crore to Central Public Sector Enterprises (including Railways).
- Government to promote savings & devise ways and means to channel them
INFRASTRUCTURE
Telecommunication:
- Provision of Rs 1,200 crore made.
- 1,687 subdivisions to get support under Universal Service Obligation (USO) Fund for rural household telephones.
- BSNL has undertaken to provide village public telephones (VPTs) to remaining 66,822 revenue villages.
- Rs. 1,400 crore grant for The National Highway Development Programme (NHDP) III to four-lane 4,000 kms.
- Rs. 450 crore allocated for the northeastern region.
- 1.25 lakh villages to be covered with electrification.
- Creation of a rural electricity distribution backbone, with a 33/11 KV substation in each block.
- 15 lakh houses to be constructed during this year.
- Establishment of SPV to finance infrastructure projects in specified sectors.
- For 2005-06, the borrowing limit is fixed to Rs. 10,000 crore.
- Provision of Rs 1,500 crore for “viability gap” funding for infrastructure projects.
National Urban Renewal Mission
- An outlay of Rs 5,500 crore in 2005-06.
- A grant component of Rs 1,650 crore for the Mission
FINANCIAL SECTOR
Banking
- A Comprehensive Bill to amend the Banking Regulation Act, 1949 to be introduced in the Budget Session.
- It to remove the lower and upper bounds to the SLR It to provide flexibility to RBI to prescribe prudential norms.
- It to allow banking companies to issue preference shares.
- It to remove the limits of the cash reserve ratio (CRR)
- It to enable RBI to lend or borrow securities by way of repo, reverse repo or otherwise.
- Defined contribution pension scheme for newly recruited Central Government employees.
- SEBI to set up a National Institute of Securities Markets for teaching and training intermediaries in the securities markets and promoting research.
- To amend the definition of ‘securities’ under the Securities Contracts (Regulation) Act, 1956.
- To appoint a high level Expert Committee on corporate bonds to look into the legal, regulatory, tax and market design issues.
- All stock exchanges to be corporatized and de-mutualized.
- One-time exemption grant to corporatized exchanges from stamp duty on the national transfer of assets.
- Rationalization of stamp duty for uniformity regardless of the issuing entity.
- To appoint a high powered Expert Committee to advise the Government to make Mumbai a regional financial centre.
- To permit mutual funds to introduce Gold Exchange Traded Funds (GETFs).
- To enable any household to buy and sell gold in units for as little as Rs 100.
- To bring additional one crore hectares under assured irrigation.
- To connect all villages that have a population of 1000 (or 500 in hilly/tribal areas) with a road.
- To construct 60 lakh additional houses for the poor.
- To provide drinking water to the remaining 74,000 habitations that are uncovered.
- To reach electricity to the reamaining 1,25,000 villages and offer electricity connection to 2.3 crore households.
- To give telephone connectivity to the remaining 66,822 villages.
MANUFACTURING
Textiles
- Estimate investment is Rs. 30,000 crore.
- Technology Upgradation Fund (TUF) scheme is being continued with an enhanced allocation of Rs 435 crore.
- To introduce 10 per cent capital subsidy scheme for the textile processing sector.
- Rate of interest on loans from the Sugar Development Fund reduced to 2 percentage points below the bank rate.
- Sugar factories operational in 2002-03 to be restructure with the help of NABARD, State Governments, RBI, banks and financial institutions.
PHARAMACEUTICALS AND BIOTECHNOLOGY
Government has set up Rs 150 crore research and development corpus fund for the industry.
- Government to provide a stable policy environment and necessary incentives to help the two industries become world leaders.
- 30 items of in the category of “textile products, including hosiery” to be de-reserved.
- Knowledge-based industries such as pharma, biotech, and IT to be provided equity support through SME Growth Fund.
- Small and Medium Enterprises Development Bill to be introduces in this session.
- 67 ITIs in 15 States/UTs to be upgraded at a cost of Rs.1.6 crore each.
- A PublicPrivate Partnership between Government and industry to be developed under the name Skills Development Initiative (SDI).
- an ambitious target of US$ 15 billion for exports by 2008-09 by the government
OTHER PROPOSALS
- Institutions of Excellence.
- Indian Institute of Science (IISc), Bangalore to get a grant of Rs 100 crore to make it a world class university.
- Value Added Tax (VAT) to be followed by all states.
- The Central Government to give full support and even to compensate the states in the event of revenue loss.
- The total impact on the Central Budget for 2005-06 to be approximately Rs 26,000 crore or an addition of three-quarters of a percentage point as a proportion of GDP
- Allocation for Defence increased to Rs 83,000 crore, that includes an allocation of Rs 34,375 crore for capital expenditure.
FISCAL CONSOLIDATION
Outlays versus Outcomes
- Civil society to engage Government in a healthy debate on the efficiency of the delivery mechanism.
- With the Planning Commission, the Government to put in place a mechanism to measure the development outcomes of all major programmes.
BUDGET ESTIMATES FOR 2005-06
Plan Expenditure
- Budget shows Plan Expenditure at Rs 1,43,497 crore.
- Rs 29,003 crore to be raised as loans by the State Government.
- Estimated to Rs 3,70,847 crore.
- Revenue deficit estimated to Rs 95,312 crore, equal to 2.7 per cent of estimated GDP.
- Fiscal Deficit is estimated to Rs 1,51,144 crore, which is 4.3 per cent of the estimated GDP.
