- Inflation which touched a high of 8.7 per cent
on August 28, 2004 has been reined in. As on February
12, 2005, the rate of inflation was 5.01 per cent
which is more than one percentage point lower
than what it was in the same week in the previous
year. Inflation based on CPI for industrial workers
was lower, and stood at 3.8 per cent in December,
2004.
- Business confidence has been restored and investments
in 2004-05 have been buoyant. Non-food credit
has increased by 21.2 per cent.
As the year draws to a close,
we can predict confidently that all the engines
of the economy are running at nearly full speed.
7. We have also fulfilled many
of our promises to the common citizen. Last year,
I had promised that agricultural credit will be
increased by 30 per cent, and I am happy to inform
the House that, against the announced target of
Rs.105,000 crore, we are likely to achieve a disbursement
of Rs.108,500 crore. Public sector banks and regional
rural banks have added so far 58.20 lakh new farmers
to their portfolio of borrowers. I had promised
that education loans would be given liberally
to students. As against 1,08,000 loans amounting
to Rs.1,983 crore given in 2003-04, 1,40,000 loans
amounting to Rs.2,249 crore have been given up
to December 31, 2004. I had promised that the
number of families covered under the Antyodaya
Anna Yojana will be increased from 1.5 crore families
to 2 crore families, and that promise has been
kept. I had promised that a redesigned Food for
Work Programme will be launched in 150 districts.
That was done on November 14, 2004. I had promised
that a National Rural Employment Guarantee Bill
will be introduced. That has been done. I had
promised that we would promote the concept of
Self-Help Groups vigorously. In the current year,
against the target of 1.85 lakh SHGs, we have
already credit-linked 2.26 lakh SHGs, and we have
disbursed credit to the tune of Rs.1,197 crore.
Hon?ble Members will note that in each of these
areas the focus of the Government?s attention
has been the common citizen ? be it farmer, student,
self-employed woman or labourer in search of work
and food.
The Year Ahead: Where We Want
To Be in 2005-06
8. Growth, stability and equity
are mutually reinforcing objectives. The NCMP
leans towards decisive intervention by the State
in favour of the poor. Given the resilience of
the Indian economy, it is possible to mobilize
the resources and launch a direct assault on poverty
and unemployment. That is the only way to bring
immediate relief to the aam admi.
The Big Picture
9. Let me first give the big
picture. In 2004-05, Gross Budgetary Support (GBS)
for the Plan was Rs.145,590 crore to which we
added Rs.2,000 crore subsequently. As I shall
explain later, the pattern of funding has changed
consequent to the recommendations of the Twelfth
Finance Commission (TFC). On a like-to-like basis,
GBS for the Plan in 2005-06, works out to Rs.172,500
crore. This represents an increase of 16.9 per
cent. Support for the Central Plan in BE 2004-05
was Rs.87,886 crore and in BE 2005-06 this has
been enhanced to Rs.110,385 crore, representing
a very substantial increase of 25.6 per cent.
On priority sectors and flagship programmes falling
under the NCMP, I propose to provide an additional
sum of Rs.25,000 crore in the next year.
10. For example, the allocation
for education in 2005-06 will be Rs.18,337 crore.
Next only to education, the plan allocation for
rural development will be Rs.18,334 crore. On
subsidy for fertilizers, the estimate is Rs.16,254
crore. The estimated expenditure on health and
family welfare is Rs.10,280 crore.
II. ASSAULT ON POVERTY AND
UNEMPLOYMENT
Empowering the People
11. India is not a poor country,
yet a significant proportion of our people are
poor. Poverty is not only income poverty. Other
indicators of poverty are illiteracy, disease,
infant mortality, malnutrition, absence of skills
and unemployment. The whole purpose of democratic
government is to eliminate poverty and give to
every citizen the opportunity to be educated,
to learn a skill and to be gainfully employed.
The Government holds that it is its sacred duty
to empower the poor and eliminate the scourge
of poverty.
Employment
12. In the last Budget, I had
rejected the idea of jobless growth. As I unfold
the vision of the UPA Government, Hon?ble Members
will note that the central theme that runs through
the various schemes and programmes is creation
of jobs. Assured irrigation facilities to an additional
1 crore hectares of land over a period of five
years will generate employment for an additional
1 crore people at the rate 1 person per hectare.
The food processing industry is growing at a rate
which generates 2.5 lakh jobs every year. The
textile sector alone has the potential to create
1.2 crore jobs over the next 5 years. The information
technology (IT) industry is expected to offer
an additional 70 lakh jobs by 2009. Construction
industry is also expected to throw up lakhs of
jobs. Sectors with potential for generating employment
will receive the highest attention of the Government.
National Rural Employment
Guarantee Scheme
13. After the National Food
for Work programme was launched in November 2004,
provision was made for the cash component and
the foodgrain component. In overall terms, the
expenditure in the current year is estimated at
Rs.4,020 crore. For 2005-06, a provision of Rs.5,400
crore for the cash component and 50 lakh MT of
foodgrains have been made and, in overall terms,
the allocation will increase to Rs.11,000 crore.
It is Government?s intention to convert this programme
into the National Rural Employment Guarantee Scheme.
When fully rolled out, the scheme will provide
livelihood security for crores of poor families,
and I promise to find the money for the programme.
National Rural Health Mission
14. The National Rural Health
Mission (NRHM) will be launched in the next fiscal.
Its focus will be strengthening primary health
care through grass root level public health interventions
based on community ownership. The total allocation
for the Department of Health and the Department
of Family Welfare will increase from Rs.8,420
crore in the current year to Rs.10,280 crore in
the next year. The increase will finance the NRHM
and its components like training of health volunteers,
providing more medicines and strengthening the
primary and community health centre system.
15. I am also happy to announce
that work on the six AIIMS-like institutions will
start next year to augment medical education in
deficient States.
Antyodaya Anna Yojana
16. The Antyodaya Anna Yojana
now covers 2 crore Below Poverty Line (BPL) families.
The number will be increased to 2.5 crore families
in 2005-06.
ICDS
17. The universalization of
the Integrated Child Development Services (ICDS)
scheme is overdue. It is my intention to ensure
that, in every settlement, there is a functional
anganwadi that provides full coverage for all
children. As on date there are 6,49,000 anganwadi
centres. I propose to expand the ICDS scheme and
create 1,88,168 additional centres that are required
as per the existing population norms. Forty seven
per cent of children in the age group 0-3 are
reportedly underweight. Supplementary nutrition
is an integral part of the ICDS scheme. I propose
to double the supplementary nutrition norms and
share one-half of the States? costs for this purpose.
I also propose to increase the allocation for
ICDS from Rs.1,623 crore in BE 2004-05 to Rs.3,142
crore in BE 2005-06.
Mid-day Meal Scheme
18. The Mid-day Meal Scheme
for children has made a promising start throughout
the country. 11 crore children are covered today.
The Central Government is now providing the cost
of food grains as well as the conversion cost
at the rate of Re.1 per child. The allocation
in BE 2004-05 was Rs.1,675 crore. I propose to
increase the allocation for the next year to Rs.3,010
crore.
Sarva Shiksha Abhiyan
19. The Sarva Shiksha Abhiyan
programme is the cornerstone of the Government?s
intervention in basic education for all children.
Sarva Shiksha Abhiyan was allocated Rs.3,057 crore
in the Budget Estimates for 2004-05. During the
course of the year, I enhanced the allocation
to Rs.4,754 crore. A non-lapsable fund called
?Prarambhik Shiksha Kosh? has been created for
funding this programme. I propose to increase
the allocation to Rs.7,156 crore in 2005-06.
Drinking Water and Sanitation
20. All drinking water schemes
have now been brought under the Rajiv Gandhi National
Drinking Water Mission. In the current year, so
far, 31,355 uncovered rural habitations have been
provided drinking water facilities. During 2005-06
the emphasis will be on covering more habitations.
Emphasis will also be laid on tackling water quality
in about 2.16 lakh habitations in Andhra Pradesh,
Gujarat, Karnataka, Rajasthan, West Bengal and
some other States. I propose to increase the outlay
for the Mission from Rs.3,300 crore in the current
year to Rs.4,750 crore in the next year.
21. Sanitation, however, remains
critically deficient. Only about 30 per cent of
the rural households have access to safe sanitation
facilities. The Total Sanitation Campaign (TSC)
now operates in 452 districts. Government intends
to extend the TSC to all districts, and I propose
to allocate Rs.630 crore for the next year.
Scheduled Castes and Scheduled
Tribes
22. I wish to restate my commitment
to inclusive economic growth. It is important
to bring scheduled castes and scheduled tribes
into the development process. For the first time,
you will find in the Budget papers a separate
statement on schemes for the development of SCs
and STs. The allocation for the programmes is
Rs.6,253 crore.
23. The key to empowering the
scheduled castes and scheduled tribes is to provide
top class education opportunities to meritorious
students. The three on-going scholarship schemes
for SC/ST students under the Central Plan ? pre-Matric,
post-Matric, and merit-based ? will continue.
To provide an added incentive, I propose a new
window: a short list of institutes of excellence
will be notified, and any SC/ST student who secures
admission in one of those institutes will be awarded
a larger scholarship that will meet the requirements
for tuition fees, living expenses, books and a
computer. The details of the scheme will be announced
by the ministry concerned.
24. Government will also introduce
the Rajiv Gandhi National Fellowship for SC and
ST students for pursuing M. Phil and Ph.D. courses
in selected universities. I propose to provide
funds for 2000 Fellowships per year to be awarded
from 2005-06 on the pattern of UGC Fellowships.
Women and Children
25. Last July, I promised to
consider gender budgeting. Hon?ble Members will
be happy to note that I have included in the Budget
documents a separate statement highlighting the
gender sensitivities of the budgetary allocations
under 10 demands for grants. The total amount
in BE 2005-06, according to the statement, is
Rs.14,379 crore. Although this is another first
in budget-making in India, it is only a beginning
and, in course of time, all Departments will be
required to present gender budgets as well as
make benefit-incidence analyses.
Minorities
26. Minorities would have to
be brought more into the development process.
I propose to increase the equity support, as may
be required, for the National Minorities Development
and Finance Corporation.
27. A certain percentage of
new schools that will be opened under the Sarva
Shiksha Abhiyan as well as the Kasturba Balika
Vidyalaya Scheme will be located in districts
or blocks having a substantial minority population.
Likewise, a certain proportion of new anganwadi
centres will be located in blocks or villages
which have a substantial concentration of minorities.
28. Urdu is the mother tongue
of a large number of people in Uttar Pradesh and
Bihar, but there is very little provision for
teaching Urdu. I propose to provide central assistance
for recruitment and posting of Urdu language teachers
in primary and upper-primary schools that serve
a population in which at least one fourth belong
to that language group.
29. The Ministry of Social
Justice and Empowerment and the Ministry of Human
Resource Development implement a number of schemes
for pre-examination coaching of candidates belonging
to the minority communities. These schemes are
confined to Government institutions, and the results
have not been encouraging. Hence, I propose to
expand these schemes to include reputed private
coaching institutes which have a track record
of showing good results in competitive examinations.
I propose to provide funds to pay the fees on
behalf of meritorious candidates from minority
communities who enroll in these selected private
institutes.
Backward Regions Grant Fund
30. Since the announcement
in the last Budget of a Grant Fund for backward
districts, a lot of thought has gone into the
proposal. An Inter-Ministerial Group (IMG) has
identified 170 backward districts based on certain
socio-economic variables. The IMG has also proposed
that resources under the new facility will be
conditional on Panchayati Raj institutions being
properly empowered, including devolution of functionaries
and funds. I propose to accept the recommendations
of the IMG, and I am happy to announce the establishment
of a Backward Regions Grant Fund. An allocation
of Rs.5,000 crore has been made in the Plan for
2005-06, and an equal amount will be allocated
every year in the next four years. Consequent
upon the establishment of the Fund, the existing
Rashtriya Sam Vikas Yojana (RSVY), envisaged to
end in 2006-07, will be wound up with suitable
transition arrangements that will protect every
district now covered under RSVY.
Bihar
31. The NCMP refers to special
economic packages for Bihar, Jammu & Kashmir
and the North Eastern Region. Till now, Bihar
received special assistance through the RSVY.
The transition arrangements under RSVY will continue
until 2006-07. Meanwhile, the backward districts
of Bihar will begin to receive assistance from
the Backward Regions Grant Fund. I may also point
out that, recognizing the needs of Bihar, the
TFC has made substantial grants amounting to Rs.7,975
crore for the period 2005-10. Bihar has also been
identified as one of the few States requiring
special grants for the health and education sectors.
Jammu & Kashmir
32. The Government will provide
special plan assistance to Jammu and Kashmir under
a recently-approved Reconstruction Plan, in addition
to the normal State Plan. As against the current
year?s State Plan of Rs.3,008 crore, the size
of the State Plan for 2005-06 has been fixed at
Rs.4,200 crore. The Baglihar project was allocated
Rs.300 crore this year and will be provided adequate
funds next year too. The Udhampur?Baramulla rail
line will be implemented as a project of national
importance.
North Eastern Region
33. All Ministries and Departments
are required to allocate at least 10 per cent
of their plan budget for schemes and programmes
in the North Eastern Region (NER). For 2005-06,
this would amount to Rs.9,308 crore. The Kumarghat?Agartala
and Lumding?Silchar?Jiribam?Imphal projects will
be supported with additional funds outside the
railway budget as projects of national importance.
A special package for highway development in the
NER has also been approved, and I have allocated
Rs.450 crore in this behalf.
Rural Infrastructure
34. Government will focus on
providing basic infrastructure to the poor, especially
those in rural India and in urban slums. The Rural
Infrastructure Development Fund which was revived
last July will, as in the current year, be provided
a corpus of Rs.8,000 crore in 2005-06 also.
III. BHARAT NIRMAN
35. In his address to Parliament,
the President outlined an overarching vision to
build India, and called it ?Bharat Nirman?. Bharat
Nirman has been conceived as a business plan,
to be implemented over a period of four years,
for building infrastructure, especially in rural
India. It will have six components, namely, irrigation,
roads, water supply, housing, rural electrification
and rural telecom connectivity. In each of these
areas, we must dare to be bold and set for ourselves
high targets to be achieved by the year 2009.
The UPA Government?s goals
are:
- to bring an 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 remaining 1,25,000
villages and offer electricity connection to 2.3
crore households; and
- to give telephone connectivity to the remaining
66,822 villages.
?Bharat Nirman? will require
huge resources. Government believes that Bharat
Nirman is an achievable project, and it is our
intention to give rural India a new deal fully
involving the Panchayati Raj Institutions in
the planning and implementation.
IV. INVESTMENT
36. I now turn to investment
which is the paramount requirement to consolidate
the growth process. In agriculture, we shall
enhance public and private investment in the
infrastructure required to support expansion,
diversification and value addition. In the industrial
sector, both the public sector and the private
sector will be allowed the space to grow and
compete with each other. Government will play
the leading role in providing and facilitating
investment in public goods such as roads, railways,
power, seaports and airports. In the services
sector, Government will recognize the leading
role played by the private sector, and provide
a supportive policy environment and stable tax
policies.
37. I am happy to announce
that in 2005-06, the Government will provide
equity support of Rs.14,040 crore and loans
of Rs.3,554 crore to Central Public Sector Enterprises
(including Railways).
38. Success, however, will
ultimately depend upon our ability to finance
the growth. Government will, therefore, through
a mix of right policies and prudent taxes, promote
savings and devise ways and means to channel
these savings into productive investment. The
capital market, banks, insurance companies,
pension funds and superannuation funds would
have a crucial role in mobilizing and disbursing
the financial resources required to sustain
high investment.
V. AGRICULTURE
39. With about two thirds
of the population dependent on agriculture,
and the sector producing only 21 per cent of
GDP in 2003-04, it is imperative that we address
the problems of our farmers with a sense of
urgency. Agriculture being a State subject,
the bulk of public investment in agriculture
takes place at the State level, and the Central
Government?s support to States acts as a catalyst.
Roadmap for Agricultural
Diversification
40. Indian agriculture has
indeed diversified from food grains to other
crops, but more needs to be done. The Ministry
of Agriculture will prepare a roadmap for agricultural
diversification. The road map will focus on
fruits, vegetables, flowers, dairy, poultry,
fisheries, pulses and oilseeds.
National Horticulture
Mission
41. The National Horticulture
Mission, announced in the last Budget, will
be launched on April 1, 2005. I propose to allocate
Rs.630 crore in 2005-06 for the Mission. The
Mission will ensure an end-to-end approach having
backward and forward linkages covering research,
production, post-harvest management, processing
and marketing, under one umbrella, in an integrated
manner. As the Mission gathers pace, more funds
will be provided.
Plantation Sector
42. I am aware of the difficulties
that the plantation sector has faced for some
years now. While the prices of commodities such
as tea and coffee have shown some improvement,
the sector still faces difficulties. The Price
Stabilization Fund has not proved very effective
or popular. Therefore, Government has set up
an expert committee to suggest improvements
to the Fund and its operation. In the case of
tea, our comparative advantage has been eroded
largely because of the declining productivity
of tea. Government will examine ways and means
of introducing a programme for massive replantation
and rejuvenation.
Agricultural Marketing
Infrastructure
43. Government proposes to
introduce a new scheme called Development/Strengthening
of Agricultural Marketing Infrastructure, Grading
and Standardization. The goal of this scheme
is to induce large investments from the private
and cooperative sectors for setting up agricultural
markets, marketing infrastructure and support
services such as grading, standardization and
quality certification. Assistance will be available
in the form of credit-linked, back-ended subsidy.
It is proposed to implement the scheme through
the National Bank for Agriculture and Rural
Development (NABARD) and the National Cooperative
Development Corporation (NCDC) in those States
which amend their Agricultural Produce Marketing
Committee (APMC) Acts. I propose to allocate
Rs.72 crore for the new scheme.
Water Resources, Flood
Management and Erosion Control
44. The National Project,
announced by me last July, for the repair, renovation
and restoration of water bodies will be launched
in the month of March 2005. The pilot project
is planned for 16 districts in 9 States and
will cover nearly700 water bodies, and 20,000
hectares of additional land will come under
irrigation. The allocation for the pilot project
has been increased to Rs.100 crore in 2005-06.
45. Uttar Pradesh, especially
its eastern part, Bihar, West Bengal, Orissa,
Assam and the North Eastern States are regularly
affected by floods in the Ganga basin and in
the Brahmaputra and Barak valleys. A Task Force
constituted to recommend measures for flood
management and erosion control has submitted
its report. The Plan outlay in 2005-06 to implement
the report will be Rs.180 crore. Besides, a
sum of Rs.52 crore has been allocated for the
Farakka Barrage Project.
46. The Accelerated Irrigation
Benefit Programme (AIBP) has been reviewed and
the focus turned to early completion of truly
last mile projects. In BE 2004-05, I had provided
a sum of Rs.2,800 crore. Having regard to the
improvement in the pace of implementation, the
outlay has been increased to Rs.4,800 crore
for the next year.
Micro Irrigation
47. Water-use efficiency
in Indian agriculture is one of the lowest in
the world. Government will promote micro-irrigation
technology, comprising drip and sprinkler irrigation,
on a large scale. About 1.2 million hectares
have been covered under micro-irrigation so
far, and the plan is to increase the coverage
to 3 million hectares by the end of the Tenth
Plan and to 14 million hectares by the end of
the Eleventh Plan. Accordingly, I have provided
Rs.400 crore for promoting micro-irrigation
in 2005-06.
Rural Credit and Indebtedness
48. Government intends to
continue with its effort to turn the focus of
commercial banks, regional rural banks (RRBs)
and cooperative banks towards providing credit,
especially production credit, to rural households
and farm households. Particularly in agricultural
credit, innovations are possible. I propose
to request the Reserve Bank of India (RBI) to
examine the issue of allowing banks to adopt
the agency model, by using the infrastructure
of civil society organizations, rural kiosks
and village knowledge centres, to provide credit
support to rural and farm sectors.
49. In June 2004, I had announced
my intention to double the flow of agricultural
credit in three years. I had also announced
an indicative target of Rs.105,000 crore. Notwithstanding
a below par performance by co-operative banks,
together, all three arms will disburse Rs.108,500
crore in the current year. Continuing on the
same path, I propose to ask commercial banks,
RRBs and cooperative banks to increase the flow
of credit by another 30 per cent in 2005-06.
Further, the public sector banks would be asked
to increase the number of borrowers by another
50 lakh.
50. Cooperative banks in
India, with few exceptions, are in a shambles.
Six State Central Cooperative Banks and 140
District Central Cooperative Banks do not comply
with Section 11 of the Banking Regulation Act,
1949. They also have difficulty in accessing
refinance for agricultural credit. Alarmed by
the gravity of the situation, I had appointed
a Task Force to examine the reforms required
in the cooperative banking system. The Task
Force has submitted its report. The recommendations
include:
- Special financial assistance to wipe out accumulated
losses and strengthen the capital base of co-operative
credit institutions;
- Institutional restructuring to ensure democratic
institutions; and
- Changes in the legal framework to empower RBI
to enforce prudent financial management.
I propose to accept the report
in principle. I also propose to call State Governments
for consultation and begin the process of implementing
the recommendations in the States that show
willingness to accept the recommendations.
Farm Insurance
51. The National Agricultural
Insurance Scheme (NAIS) has been in operation
since rabi 1999-2000. I have received the recommendations
made by the joint group constituted by the Ministry
of Agriculture to suggest an improved farmer-friendly
crop insurance scheme. Further consultation
with all the stakeholders would be required.
I, therefore, propose to continue the NAIS in
its present form for kharif and rabi 2005-06.
Micro Finance
52. The programme of linking
Self Help Groups (SHGs) with the banking system
has emerged as the major micro-finance programme
in the country. 560 banks including 48 commercial
banks, 196 RRBs and 316 cooperative banks are
now actively involved in the programme. I propose
to enhance the target for credit-linking in
the next fiscal from 2 lakh SHGs to 2.5 lakh
SHGs.
53. At present, micro finance
institutions (MFIs) obtain finance from banks
according to guidelines issued by RBI. MFIs
seek to provide small scale credit and other
financial services to low income households
and small informal businesses. Government intends
to promote MFIs in a big way. The way forward,
I believe, is to identify MFIs, classify and
rate such institutions, and empower them to
intermediate between the lending banks and the
beneficiaries. Commercial banks may appoint
MFIs as ?banking correspondents? to provide
transaction services on their behalf. Since
MFIs require infusion of new capital, I propose
to re-designate the existing Rs.100 crore Micro
Finance Development Fund as the ?Micro Finance
Development and Equity Fund?, and increase the
corpus to Rs.200 crore. The fund will be managed
by a Board consisting of representatives of
NABARD, commercial banks and professionals with
domain knowledge. The Board will be asked to
suggest suitable legislation, and I expect to
introduce a draft Bill in the next fiscal year.
54. I propose to request
RBI to open a window to enable qualified NGOs
engaged in micro-finance activities to use the
External Commercial Borrowing (ECB) window.
Detailed guidelines containing necessary safeguards
will be issued by RBI.
Micro Insurance
55. The benefits of opening
the insurance sector are now visible by way
of vast improvement in insurance penetration
and insurance density, and the availability
of a wide variety of products. Government would
like to see these benefits percolate to rural
India and to the vulnerable sections of the
population. Micro insurance is a distinct product.
Its design and delivery are specialized functions.
The Insurance Regulatory Development Authority
(IRDA) has published draft Regulations for micro
insurance. NGOs, SHGs, cooperatives and MFIs
will be invited to become micro insurance agents.
Government will extend full support to the effort
of IRDA to promote micro insurance.
A
Knowledge Centre in Every Village
56.
The National Commission on Farmers has recommended
the establishment of Rural Knowledge Centres
all over the country using modern information
and communication technology (ICT). Mission
2007 is a national initiative launched by an
alliance comprising nearly 80 organizations
including civil society organizations. Their
goal is to set up a Knowledge Centre in every
village by the 60th anniversary of Independence
Day. Government supports the goal, and I am
glad to announce that Government has decided
to join the alliance and route its support through
NABARD. I propose to allow NABARD to provide
Rs.100 crore out of RIDF.
Agricultural
Research
57.
Agricultural Research has a vital role to play
in the strategy for reviving and encouraging
diversification. Our agricultural universities
and research institutions have done good work
in the past and now need to be strengthened
and modernized. A Task Force headed by Dr.
M S Swaminathan has recommended the creation
of a National Fund for Strategic Agricultural
Research. I am happy to announce an
initial provision of Rs.50 crore
for operationalizing this Fund.
VI. MANUFACTURING
58. India should build on
its manufacturing capacities and scale them
up to global standards. Both the Investment
Commission and the National Manufacturing Competitiveness
Council have started work in right earnest.
I believe we shall reap the first successes
of their work in the next financial year.
59. Worldwide, it is manufacturing
that has driven growth. In order to revive the
manufacturing sector, particularly small and
medium enterprises, and to enable them to adjust
to the competitive pressures caused by liberalization
and moderation of tariff rates, I propose to
launch a new scheme that will help them strengthen
their operations and sharpen their competitiveness.
The scheme will be called the ?Manufacturing
Competitiveness Programme.? The design of the
scheme will be worked out by the National Manufacturing
Competitiveness Council in consultation with
the industry.
Textiles
60. In the last Budget, I
made a beginning in addressing the tax-induced
rigidities in the textile sector in order to
prepare the sector for the post-quota regime.
There is a new vigour in the sector, especially
in the handloom and powerloom segments. Government
will continue to nurture the textile sector
which has huge potential for employment and
exports. The estimate of investment made in
2004-05 is Rs.20,000 crore. The estimate for
the next year is Rs.30,000 crore. The Technology
Upgradation Fund (TUF) scheme is being continued
with an enhanced allocation of Rs.435 crore.
I propose to introduce a 10 per cent capital
subsidy scheme for the textile processing sector
in addition to the normal benefits available
under the TUF Scheme.
61. I think it is necessary
to lend further help to the handloom sector.
The Government proposes to adopt the cluster
development approach for the production and
marketing of handloom products. The Ministry
of Textiles will take up 20 clusters in the
first phase at a cost of Rs.40 crore, and the
amount will be provided during the course of
the year.
62. The Government is implementing
a life insurance scheme for handloom weavers
which provides insurance cover up to Rs.50,000.
At present, only 2 lakh weavers are covered.
I propose to enlarge the coverage of the scheme
to 20 lakh weavers in two years which will cost
Rs.30 crore per year when fully rolled out.
The Government is also implementing a health
insurance package for weavers. Here too, the
coverage is now only for 25,000 weavers. I propose
to increase the coverage to 2 lakh weavers at
a recurring cost of Rs.30 crore per year. Once
the two new and enlarged schemes are approved,
I propose to provide the required funds.
Sugar Industry
63. The sugar industry has
been under financial stress since 2001. The
position became worse due to two successive
droughts in certain parts of the country. The
Tuteja Committee appointed by the Government
has submitted its report. After a careful examination
of the report, and after consulting RBI and
NABARD, I propose the following financial package
for the revitalization of the sugar industry:
- Sugar factories that were operational in 2002-03
sugar season will be assisted to restructure.
NABARD, in consultation with State Governments,
RBI, banks and financial institutions will work
out a scheme for providing a financial package
with a moratorium of two years, on both principal
and interest, and a schedule of payment having
regard to the commercial viability of each unit.
- Government has already reduced the rate of interest
on loans from the Sugar Development Fund to 2
percentage points below the bank rate. I propose
to make the same rate applicable to outstanding
loans as on October 21, 2004.
- Indian Banks? Association (IBA) and NABARD will
be asked to work out a scheme under which individual
sugar factories may renegotiate the rate of interest
on their past high interest loans.
Pharmaceuticals and Biotechnology
64. Our human resource base
gives us an exceptional advantage in pharmaceuticals
and biotechnology. The Indian pharmaceutical
industry has declared its preparedness to produce
drugs under the new patent regime. Government
has already set up a Rs.150 crore research and
development corpus fund for the industry. The
corpus deserves to be increased, and I propose
to do so in phases beginning next year. India
has also the potential to become an attractive
destination for outsourcing in drug discovery
and clinical research, and for co-development
of drugs and manufacturing. In biotechnology,
the industry has the potential to be a global
leader supplying novel technologies and products
to the health and agriculture sectors. Government
will provide a stable policy environment and
necessary incentives to help the two industries
become world leaders.
Small and Medium Enterprises
65. In recent years, our
approach to small scale industry has evolved,
and now we are inclined to treat the sector
as the small and medium enterprises sector.
Continuing the process initiated a few years
ago, after consulting stakeholders and on the
recommendation of the Advisory Committee, the
Ministry of Small Scale Industries has identified
108 items for de-reservation. Among them, I
would like to mention 30 items in the category
of ?textile products, including hosiery?, which
is a sector poised for rapid growth.
66. In the last Budget, I
had significantly liberalized the capital subsidy
scheme, and a provision of Rs.135 crore was
made for ?Promotion of SSI Schemes?. That provision
is being enhanced to Rs.173 crore in 2005-06.
Small Industries Development Bank of India (SIDBI)
has established this year a SME Growth Fund
with a corpus of Rs.500 crore. Small and medium
units in knowledge-based industries such as
pharma, biotech, and IT will be provided equity
support through this fund.
67. There is a need for new
legislation that will provide a supportive environment
for small and medium enterprises. I am glad
to inform the House that my colleague, the Minister
of Small Scale Industries, will introduce in
this session the Small and Medium Enterprises
Development Bill.
Skills Training
68. Skills development, especially
for youth who have only minimal formal education,
is an area which can no longer be ignored. Last
July, I had proposed a programme to upgrade
500 Industrial Training Institutes (ITIs). I
am happy to inform the House that in the current
year 100 ITIs have been identified. Out of them,
67 ITIs in 15 States/Union Territories have
been linked with industry and will be upgraded
at a cost of Rs.1.6 crore each.
69. There is a demand for
specific skills of a high order which is often
unmet. I, therefore, propose a Public-Private
Partnership between Government and industry
that will take up the skills development programme
under the name Skills Development Initiative
or SDI. Details of the scheme will be worked
out and announced shortly.
Foreign Trade
70. We shall build on the
growing external strengths of the economy. Government
has delivered on the promise to accelerate foreign
trade. In April-January 2004-05 exports and
imports have grown by 25.55 per cent and 34.72
per cent, respectively, in US dollar terms.
Government has fixed an ambitious target of
US$ 150 billion for exports by the year 2008-09
in order to double India?s share in world exports
to 1.5 per cent. We intend to further liberalize
trade policy and extend full support to the
efforts of our exporters.
Foreign Direct Investment
71. On foreign direct investment
(FDI), I would urge Hon?ble Members to take
a pragmatic view. At the recent meeting of the
Finance Ministers of G-7 countries, to which
India and China were invited, the Finance Minister
of China looked in my direction and told the
gathering that China had received US$ 500 billion
worth of foreign investment since China opened
its economy in 1980. Of this, nearly US$ 60
billion came in calendar 2004. Our own experience
has been that the automobile, software, telecommunication
and electronics sectors have benefited from
FDI and have assimilated themselves into the
global production chain. I believe that there
are opportunities in other sectors as well,
such as mining, trade and pensions. Government
will, after due consultation, come forward with
suitable proposals.
VII. INFRASTRUCTURE
Telecommunications
72. Telecommunication is
the best way to provide connectivity in urban
and rural India. By the end of January 2005,
we had achieved a tele-density of 8.75 per cent.
However, we are concerned with the low tele-density
in rural areas. So far, Government has released
Rs.1,700 crore to the Universal Service Obligation
(USO) Fund, which has been fully utilized. A
provision of Rs.1,200 crore has been made for
2005-06. 1,687 subdivisions will get support
under the USO Fund for rural household telephones.
5.20 lakh village public telephones (VPTs) have
been installed so far, and BSNL has undertaken
to provide VPTs in the next three years to the
remaining 66,822 revenue villages
National Highway Development
Project
73. The National Highway
Development Programme (NHDP) has made steady
progress, and 5,172 kms of National Highways
have been four-laned till January 2005 under
NHDP I and NHDP II. To be launched in the next
fiscal, NHDP III will target selected high density
highways not forming part of the Golden Quadrilateral
or the North-South and East-West corridors.
I have provided Rs.1,400 crore for this purpose
in 2005-06 to four-lane 4000 kms. A special
package for the North Eastern region has also
been approved, and I have allocated Rs.450 crore
in this behalf. In overall terms, the outlay
for National Highway development will be increased
from Rs.6,514 crore in BE 2004-05 to Rs.9,320
crore in 2005-06.
Rural Electrification
74. A massive programme for
rural electrification will begin in 2005-06
with the objective of covering 1.25 lakh villages
in five years. The focus will be on deficient
States. The programme envisages creation of
a rural electricity distribution backbone, with
a 33/11 KV substation in each block and at least
one distribution transformer in each village.
I have provided Rs.1,100 crore for this programme
in the next year.
Indira Awas Yojana
75. Indira Awas Yojana is
the flagship rural housing scheme for weaker
sections. The allocation is being increased
from Rs.2,500 crore in the current year to Rs.2,750
crore in BE 2005-06. About 15 lakh houses will
be constructed during the next year.
Special Purpose Vehicle
76. The importance of infrastructure
for rapid economic development cannot be overstated.
The most glaring deficit in India is the infrastructure
deficit. Investment in infrastructure will continue
to be funded through the Budget. However, there
are many infrastructure projects that are financially
viable but, in the current situation, face difficulties
in raising resources. I propose that such projects
may be funded through a financial Special Purpose
Vehicle (SPV). When large infrastructure projects
are implemented, the foreign exchange resources
could be drawn for financing necessary imports.
Accordingly, I propose to establish an SPV to
finance infrastructure projects in specified
sectors. Roads, ports, airports and tourism
would be sectors that can benefit most from
the SPV. The projects will be appraised by an
Inter-Institutional Group of banks and financial
institutions. The SPV will lend funds, especially
debt of longer term maturity, directly to the
eligible projects to supplement other loans
from banks and financial institutions Government
will communicate the borrowing limit to the
SPV at the beginning of each fiscal year. For
2005-06, I propose to fix the borrowing limit
at Rs.10,000 crore.
77. I have also made a provision
of Rs.1500 crore for ?viability gap? funding
for infrastructure projects. That mechanism
will be used also in conjunction with the funding
mechanism through the SPV.
PURA Clusters
78. The unorganized or informal
sector accounts for 92 per cent of the employment
and absorbs the bulk of the annual accretion
to the labour force. PURA or Provision of Urban
Amenities in Rural Areas is an idea that contains
within itself possible solutions to a number
of problems that afflict rural India such as
unemployment, isolation from markets, lack of
connectivity and migration to cities. The National
Commission on Enterprises in the Unorganized/
Informal Sector has proposed pilot projects
for ?growth poles? applying the PURA principles.
The objectives are to expand production and
employment in the unorganized enterprises around
existing clusters of industrial activities and
services as well as encourage the formation
of new clusters. Once the proposals are firmed
up, Government will take up the creation of
a few growth poles, as pilot projects, in 2005-06.
National Urban Renewal
Mission
79. The demographic trends
in the country indicate a rapid increase in
urbanization. India needs urban facilities of
satisfactory standards to cope with the challenge.
If our cities are not renewed, they will die.
The National Urban Renewal Mission is designed
to meet this challenge. It will cover the seven
mega cities, all cities with a population of
over a million, and some other towns. I propose
to make an outlay of Rs.5,500 crore in 2005-06,
including a grant component of Rs.1,650 crore
for the Mission.
80. The Mumbai Metro Rail
Project, the Mumbai Trans Harbour Link, the
Mumbai Western Expressway Sealink and the Bangalore
Metro Rail Project are examples of projects
which could be supported through the Mission.
VIII. FINANCIAL SECTOR
81. The incipient investment
boom in infrastructure, industry (including
housing), and services needs to be nurtured
through further reforms in the financial sector
including reforms in bank finance and debt and
equity markets.
Banking
82. The banking sector presents
a picture of paradoxes. There are many banks
in India but none among the top twenty in the
world. Our largest bank, the State Bank of India,
ranks 82 in terms of business. It is universally
acknowledged that the key drivers of the banking
sector in the future will be Competition, Consolidation
and Convergence. RBI has prepared a road map
for banking sector reforms and will unveil the
same. While most proposals will be implemented
by the RBI on its own authority, some legislative
changes would be required to be made.
83. I had promised that a
comprehensive Bill to amend the Banking Regulation
Act, 1949 will be introduced in the Budget Session.
In consultation with the RBI, I propose to introduce
amendments to the Act ?
- ? to remove the lower and upper bounds to the
statutory liquidity ratio (SLR) and provide flexibility
to RBI to prescribe prudential norms;
- ? to allow banking companies to issue preference
shares, since preference share capital can be
treated as regulatory capital under specified
circumstances as per Basel norms;
- to introduce specific provisions to enable the
consolidated supervision of banks and their subsidiaries
by RBI in consonance with the international best
practices in this regard;
I also propose to introduce
amendments to the Reserve Bank of India Act,
1934-
- to remove the limits of the cash reserve ratio
(CRR) to facilitate more flexible conduct of monetary
policy; and
- to enable RBI to lend or borrow securities by
way of repo, reverse repo or otherwise.
PFRDA
84. With increasing longevity,
the problem of old-age income security can no
longer be ignored. Government had announced
a defined contribution pension scheme for newly
recruited Central Government employees which
would also be extended to the unorganized sector.
I am happy to inform the House that seven State
Governments ? Andhra Pradesh, Chhattisgarh,
Himachal Pradesh, Jharkhand, Manipur, Rajasthan
and Tamil Nadu ? have introduced similar schemes
for their employees. Other States have also
evinced interest. An Ordinance was promulgated
on December 29, 2004 to set up a Pension Fund
Regulatory and Development Authority (PFRDA).
I propose to introduce a Bill to replace the
Ordinance during this session.
85. Through the new scheme,
it is proposed to offer a menu of investment
choices to the subscriber and to provide a strong
regulatory mechanism to ensure that the interests
of subscribers are protected. I appeal to workers
all over the country to join the new pension
system.
Capital Market
86. The capital market has
emerged as a major vehicle for converting savings
into investment. It is also the preferred investment
destination of foreign savings. The steps announced
by me last July, and implemented, have strengthened
the capital market. It is time for more measures
and, hence, I propose to ?
- authorize Securities and Exchange Board of India
(SEBI) to set up a National Institute of Securities
Markets for teaching and training intermediaries
in the securities markets and promoting research;
and
- permit FIIs to submit appropriate collateral,
in cash or otherwise, as prescribed by SEBI, when
trading in derivatives on the domestic market.
While India?s equity market
has made progress, the corporate bond market
still lags behind. In order to address this
gap, I propose to ?
- amend the definition of ?securities? under the
Securities Contracts (Regulation) Act, 1956 so
as to provide a legal framework for trading of
securitized debt including mortgage backed debt;
and
- appoint a high level Expert Committee on corporate
bonds and securitization to look into the legal,
regulatory, tax and market design issues in the
development of the corporate bond market.
Over the Counter (OTC)
Derivatives
87. Over the counter (OTC)
derivatives play a crucial role in mitigating
the risks of corporates, banks and other financial
entities. There is, however, some ambiguity
regarding the legality of OTC derivative contracts
which has inhibited their growth. I, therefore,
propose to take measures to provide for clear
legal validity of such contracts.
Stamp duty on Stock Exchange
Corporatization
88. The Securities Contracts
(Regulation) Act, 1956, as amended recently,
requires all stock exchanges to be corporatized
and de-mutualized. Three stock exchanges are
not yet corporatized. In order to facilitate
their corporatization, I propose to grant a
one-time exemption to them from stamp duty on
the notional transfer of assets.
Stamp Duty on Commercial
Paper
89. In order to create a
level playing field for banks and non-bank entities
to issue commercial paper, and to bring the
Indian commercial paper market closer to international
standard, I propose to rationalize the stamp
duty so that it applies uniformly regardless
of the issuing entity.
Mumbai ? A Regional Financial
Centre
90. When I look at the map
of the world, I am struck by the strategic location
of Mumbai. It lies almost midway between London
and Tokyo, two nerve centres of world finance.
Mumbai is also home to the National Stock Exchange
(NSE) and the Bombay Stock Exchange (BSE) which
now rank no.3 and no.5 among the stock exchanges
of the world by the number of trades per year.
In the last decade, we have built world class
institutions on the securities markets and we
now compare with the best in terms of technological
sophistication, risk management and sound governance.
I believe the time has come to begin work on
making Mumbai a regional hub for finance. In
consultation with the RBI, I propose to appoint
a high powered Expert Committee to advise the
Government on how to make Mumbai a regional
financial centre.
Gold Units
91. Ten years ago we embarked
on the process of ensuring that gold inflows
are through the official channels alone. I believe
that we are now in a position to introduce ?gold
units? and create a market for such units. I
propose to ask SEBI to permit, in consultation
with RBI, mutual funds to introduce Gold Exchange
Traded Funds (GETFs) with gold as the underlying
asset, in order to enable any household to buy
and sell gold in units for as little as Rs.100.
Such units could be traded in the same manner
as units of mutual funds.
IX. OTHER PROPOSALS
Institutions of Excellence
92. On January 6, 2005, the
Prime Minister spoke about his intention to
set up a Knowledge Commission to look into the
issue of building quality human capital. Government
believes that investments in institutions of
higher education and Research and Development
organizations are as important as investments
in physical capital and physical infrastructure.
What we need are world class universities, and
we must make a beginning with one institution.
We must have a university that will be ranked
alongside Oxford and Cambridge or Harvard and
Stanford. I am happy to inform the House that
we have selected the Indian Institute of Science
(IISc), Bangalore, which enjoys a high reputation
as a centre of excellence in research and development.
We shall work to make IISc, in a few years,
a world class university. I propose to provide
an additional sum of Rs.100 crore as a grant
for this purpose.
VAT
93. In a remarkable display
of the spirit of cooperative federalism, the
States are poised to undertake the most important
tax reform ever attempted in this country. All
States have agreed to introduce the value added
tax (VAT) with effect from April 1, 2005. VAT
is a modern, simple and transparent tax system
that will replace the existing sales tax and
eliminate the cascading effect of sales tax.
It is in force in more than 130 countries ranging
from Sri Lanka to China. India too has a VAT
at the Central level (CENVAT), but only for
goods.
94. In the medium to long
term, it is my goal that the entire production?distribution
chain should be covered by a national VAT, or
even better, a goods and services tax, encompassing
both the Centre and the States.
95. The Empowered Committee
of State Finance Ministers, with the solid support
of the Chief Ministers, has laboured through
the last 7 years to arrive at a framework acceptable
to all States. The Central Government has promised
its full support and has also agreed to compensate
the States, according to an agreed formula,
in the event of any revenue loss. I take this
opportunity to pay tribute to the Empowered
Committee, and wish the States success on the
introduction and implementation of VAT.
Twelfth Finance Commission
96. On February 26, 2005
I laid before Parliament the recommendations
made by the Twelfth Finance Commission (TFC).
TFC?s recommendations cover tax devolution,
grants to States, debt relief, financing of
relief expenditure and related matters. States
stand to gain considerably by the award.
97. However, the implementation
of the TFC recommendations will put a large
burden on Central finances through the period
2005-10, and especially in the first year, 2005-06,
when the change to the new pattern will take
place. Consolidation and rescheduling of Central
loans, reduction in the interest rate and specific
grants under different heads will affect both
capital and revenue receipts of the Central
Government. The total impact on the Central
budget for 2005-06 will be approximately Rs.26,000
crore or an addition of three-quarters of a
percentage point as a proportion of GDP. Needless
to say, this will have an impact on Government?s
capacity to abide by the Fiscal Responsibility
and Budget Management Act (FRBM) in 2005-06.
Defence Expenditure
98. Last July, in order to
catch up with the backlog of expenditure that
had not been provided for, I had increased the
allocation for Defence to Rs.77,000 crore. I
am happy to inform the House that, after a gap,
defence expenditure in 2004-05 has matched the
Budget Estimates. I propose to increase the
allocation for Defence in 2005-06 to Rs.83,000
crore, which will include an allocation of Rs.34,375
crore for capital expenditure.
X. FISCAL CONSOLIDATION
99. The current phase of
high growth provides us an opportunity that
should not be frittered away. We must use this
opportunity to improve the fiscal health of
the country. We must increase our revenues and
reorient expenditure to pay for more outlays
on education, health and infrastructure.
Outlays versus Outcomes
100. At the same time, I
must caution that outlays do not necessarily
mean outcomes. The people of the country are
concerned with outcomes. The Prime Minister
has repeatedly emphasized the need to improve
the quality of implementation and enhance the
efficiency and accountability of the delivery
mechanism. During the course of the year, together
with the Planning Commission, we shall put in
place a mechanism to measure the development
outcomes of all major programmes. We shall also
ensure that programmes and schemes are not allowed
to continue indefinitely from one Plan period
to the next without an independent and in-depth
evaluation. Civil society should also engage
Government in a healthy debate on the efficiency
of the delivery mechanism.
Subsidies
101. Following my announcement
last July, I placed before Parliament a report
on Central Government subsidies. There are three
main products that involve large explicit subsidies
from the Budget and otherwise. These are food,
fertilizer and petroleum. Subsidies provide
a measure of protection for the poor and we
shall continue to provide subsidies. However,
we must now take up the task of restructuring
the subsidy regime in a cautious manner and
after a thorough discussion.
102. The Ministry of Agriculture
intends to make procurement of food grains more
cost effective through decentralized procurement,
especially in the non-traditional States, without
impairing the present MSP-based procurement.
A Working Group constituted by the Department
of Fertilizers is now examining several issues
for implementing the next stage of the New Pricing
Scheme for fertilizers commencing from April
1, 2006. The fertilizer subsidy bill could be
pruned if naphtha and FO/LSHS, now used as feedstock,
are replaced by natural gas. As far as petroleum
products are concerned, the Government has received
the recommendations of the Lahiri Committee,
and appropriate decisions have been taken, to
which I shall refer in Part B of my speech.
103. What gives me satisfaction
is that, while faithfully attempting to implement
the mandate of the NCMP, I have been able to
remain on the path of fiscal consolidation.
According to the revised estimates for 2003-04,
the revenue deficit was 3.6 percent and the
fiscal deficit was 4.8 per cent of GDP. The
FRBM Act requires a reduction in the two ratios,
respectively, of 0.5 per cent and 0.3 per cent
every year. I am happy to inform the House that
we will achieve this degree of fiscal correction
in 2004-05, and the year is expected to end
with a revenue deficit of 2.7 per cent and a
fiscal deficit of 4.5 per cent of GDP.
XI. BUDGET ESTIMATES FOR
2005-06
104. Now I turn to the Budget
Estimates for the next fiscal.
Plan Expenditure
105. Plan expenditure for
2005-06 is estimated, on a like-to-like basis,
at Rs.172,500 crore. However, the Budget shows
Plan expenditure at Rs.143,497 crore, and the
balance amount of Rs.29,003 crore will be raised
as loans by the State Governments directly,
in accordance with the recommendations of the
TFC.
Non-Plan Expenditure
106. Non-Plan expenditure
in 2005-06 is estimated to be Rs.370,847 crore,
the increase being mainly due to enhanced grants
to the States as recommended by TFC.
Revenue Deficit and Fiscal
Deficit
107. Mr. Speaker, Sir, in
the Budget Estimates for 2005-06, the total
expenditure is estimated at Rs.514,344 crore.
I estimate total revenue receipts of the Central
Government at Rs.351,200 crore and the revenue
expenditure at Rs.446,512 crore. Consequently,
the revenue deficit is estimated at Rs.95,312
crore which is equal to 2.7 per cent of the
estimated GDP. The fiscal deficit is estimated
at Rs.151,144 crore, which is 4.3 per cent of
the estimated GDP.
108. Consequent to accepting
the recommendations of the Twelfth Finance Commission
and the drastically changed pattern of devolution
and funding, there has been a considerable strain
in making the Budget for 2005-06. I was left
with no option but to press the ?pause? button
vis-a-vis the FRBM Act. I am relieved that we
have not been forced to go in the opposite direction.
I may add that we are perilously close to the
limits of fiscal prudence and there is no more
room for spending beyond our means. I am confident
that we can resume the process of fiscal correction
with effect from 2006-07 and achieve the FRBM
goals by 2008-09.
PART ? B
XII. TAX PROPOSALS
109. Mr. Speaker, Sir, I
shall now present my tax proposals.
110. I had articulated the
UPA Government?s principles and our approach
to taxation in my Budget speech in July 2004,
and, hence, there is no need to repeat them.
While adhering to those principles, it is Government?s
intention, as announced by the Prime Minister,
to undertake major tax reforms to improve the
tax to GDP ratio, expand the tax payer base,
increase tax compliance and make tax administration
more efficient.
Indirect Taxes
111. I shall begin with my
proposals on indirect taxes. First, customs
duties.
112. I intend to advance
the Government?s declared policy of making the
customs duty structure closer to that of our
East Asian neighbours. Therefore, I propose
to reduce the peak rate for non-agricultural
products from 20 per cent to 15 per cent.
113. Consistent with the
peak duty rate, I propose to bring down the
customs duty rates on capital goods and raw
materials as well as correct any inverted duty
structures.
114. In order to promote
investment, I propose to reduce the customs
duties on selected capital goods and parts thereof
to below 15 per cent, to 10 per cent in some
cases and to 5 per cent in some others.
115. For most textile machinery,
I propose to reduce the duty from 20 per cent
to 10 per cent, in order to help the textile
industry acquire a competitive edge in the post-quota
regime. Similarly, to encourage the food processing
industry, I propose to reduce the duty on refrigerated
vans from 20 per cent to 10 per cent.
116. To give a leg-up to
the leather and footwear industry, I propose
to reduce the customs duties on seven specified
machinery from 20 per cent to 5 per cent. The
duty on ethyl vinyl acetate (EVA), an input
for the footwear industry, is also proposed
to be reduced from 20 per cent to 10 per cent.
117. Pharmaceuticals and
biotechnology are sunrise sectors. I propose
to reduce the customs duty on nine specified
machinery used in these two sectors to 5 per
cent.
