Following is the summary of the budget speech of Union Finance Minister P Chidambaram in the Lok Sabha on Thursday:
The minister opened his Budget speech by citing the National Common Minimum Programme as the guiding light of his statement. He said the NCMP spells out seven clear economic objectives -- growth rate of 7-8 per cent per year for a sustained period; universal access to quality education and health facilities; generation of gainful employment in agriculture, manufacturing and services; 100 days' employment to the breadwinner in each family at the minimum wage; focus on agriculture and infrastructure; acceleration of fiscal consolidation and reform; and higher and more efficient fiscal devolution.
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(e) Rs 1180 crore earmarked for programmes concerning the Scheduled Castes and Rs 1146 crore for Scheduled Tribes.
(f) Additional allocation for Rs 50 crore for the National Minorities Development and Finance Corporation.
(g) Indicative target of credit linking 5.85 lakh self-help groups during the period up to March 31, 2007.
The key thrust areas in the Budget -- doubling agricultural credit in three years; accelerating the completion of irrigation projects and investing in rural infrastructure; providing farm insurance and livestock insurance; improving agricultural product markets, and promoting agri-businesses; drinking water for all; expanding water harvesting, watershed development and minor-irrigation and micro-irrigation schemes; enhancing investment in industry - public and private, domestic and foreign - to create new jobs; creating space for small-scale industry to thrive and grow; electricity for all; universal access to telecommunication facilities; more housing for the poor; access to medical care through health insurance; and encouraging savings, and protecting the savings of the senior citizens.
For education, the government would levy an education cess of 2 per cent. The new cess will yield about Rs 4000-5000 crore in a year.
An education loan scheme has been in operation since April, 2001 under which loans up to 7.5 lakh Rs 15 lakh are available for professional courses within the country and abroad respectively. The finance minister said that commercial banks have now agreed to waive the need for collateral for loans up to Rs 7.5 lakhs, if a satisfactory guarantee is provided on behalf of the student.
The revised Universal Health Scheme has been made exclusive to people and families below the poverty line. The revised premiums -- Rs 165 for individuals, Rs 248 for a family of five and Rs 330 for a family of seven.
A new Group Health Insurance Scheme will be introduced through public sector non-life insurance companies for members of self-help groups and other credit linked groups. The premium will be Rs 120 per person but the insurance cover would be Rs 10,000.
Boosting agricultural growth through diversification and development of agro-processing is one of the objectives of the
NCMP.
The agriculture sector requires massive investments. Such investments have to be through credit-enabled private investment and enhanced public investment.
The finance minister intends to double the flow of agricultural credit in three years. The government has entrusted the implementation of this policy to the public sector and private sector banks, regional rural banks and cooperative banks.
Under the Accelerated Irrigation Benefit Programme, last mile projects will be given priority. A corpus of Rs 8,000 crore will be provided for Rural Infrastructure Development Fund in 2004-05.
A scheme to repair, renovate and restore all water bodies that are directly linked to agriculture will be launched. In the current year, the finance minister has proposed to begin with pilot projects in at least five districts to be selected in each of the five regions of the country. The estimated cost of this project will be Rs 100 crore.
A nationwide water harvesting scheme will be launched to cover 100,000 irrigation units at an average cost of Rs 20,000 per unit.
NABARD will lend money on easy terms with no margin money and government will provide 50 per cent subsidy through NABARD.
National Horticulture Mission will be launched to double the horticulture production by 2011-12.
States will be encouraged to emulate the Anand model and establish a state-level cooperative societies.
The finance minister announced that IDBI, IDFC, ICICI, SBI, LIC, Bank of Baroda and PNB will form an Inter-Institutional Group to ensure speedy conclusion of loan agreements and implementation of infrastructure projects.
All drinking water schemes will be brought under the umbrella of the Rajiv Gandhi Drinking Water Mission with allocation of Rs 2,610 crore for Accelerated Rural Water Supply Programme in the current year.
Panchayati Raj Institutions will be encouraged to plan, implement, own, operate and maintain the rural water supply schemes in consultation with the state governments.
Plan allocation for Indira Awas Yojana has been raised by Rs 537 crore to Rs 2,247 crore. The government has set a target of 250,000 rural housing units per year.
Attempts will be made to integrate the commodities markets and the securities markets.
A Board for Reconstruction of Public Sector Enterprises will be established.
The finance minister's proposals also touched upon a legislation to provide regulatory framework for the defined contribution pension scheme for the central government employees recruited on or after January 1, 2004.
To ensure recovery process of the debts, the Securitisation Reconstruction of Financial Assets and Enforcement of Security Interest Act will be amended to make it stronger.
There is no change in the existing rate of interests on all small savings instruments. A new scheme called Senior Citizens Savings Scheme will be introduced, offering an interest rate of 9 per cent per annum.
Bihar will get Rs 3,225 crore under the Rashtriya Sam Vikas Yojana. All ministries and departments will have to spend at least 10 per cent of their plan budgets for the development of the northeastern region.
A special assistance of Rs 300 crore will be provided to Jammu and Kashmir. A Backward States Grant Fund with a corpus of Rs 25,000 crore is being set up and will become operational from 2005-06.
Defence allocation has been increased to Rs 77,000 crore this year as against Rs 65,300 crore in 2003-04, including
Rs 33,483 crore for capital expenditure.
Presenting his tax proposals, Minister of Finance P Chidambaram recalled the promise made in the National Common
Minimum Programme that "tax rates will be stable and conducive to growth, compliance and investment."
Through his policies on taxation, the finance minister signalled the government's commitment to moderation and stability in taxes; increase in revenues from direct taxes and excise duties; and expansion of the service tax net.
The minister underlined that though he himself was a votary of tax reforms, he thought it unwise to attempt any reforms in a hurried manner.
"Seven months from now there will be another Budget and there will be an occasion to visit the subject of tax reform,"
he added.
Direct Taxes
The finance minister began with a good news that "no one with a taxable income of Rs 100,000 will be required to pay
income tax any more."
The measure will give relief to1.4 crore assessees. The minister expressed his inability to give more relief, or relief across the board, in the current Budget, but he promised to revisit the subject if the compliance improves.
The minister announced relief to certain sections of deserving tax payers. Family pension received by widows, children and nominated heirs of members of the armed forces and the paramilitary forces killed in the course of operational duties would be exempt from income tax.
Chidambaram also proposed exemption from capital gains tax in cases where the compensation or the enhanced compensation for acquisition of agricultural land in certain urban agglomerations has been received on or after April 1,
2004.