Jaswant packages feel-good Budget for poll times

Singh has tried to offset this by slapping a 10 per cent surcharge on annual incomes above Rs 8.5 lakh. But he also made the process of filing taxes much more ‘saral’ with the introduction of a one-page form.

There are 10 new services which will now come under the purview of a service tax — banking services, forex services, health testing services, coaching centres and even private tutorials.

Jaswant Singh’s maiden Budget focuses on infrastructure development, employment and, for the first time, a ‘quality of life’ encompassing access to healthcare, employment generation, housing and education. These and fiscal consolidations through tax reforms and agri sector reorientation form the essence of Singh’s ‘Paanch Priorities’.

One welcome aspect has been the several sops for senior citizens — an increase in their exemption limits, making annual incomes upto Rs 1.83 lakh tax-free and a Varishtha Pension Bima Yojana to be announced by LIC soon which will guarantee a monthly pension income at an assured 9 per cent return for individuals above 55 years. These schemes could cushion some of the pain inflicted by a cut in interest rates.

After a two-year freeze, government employees can once more avail LTC.

For India Inc, Singh has slashed the surcharge on corporate tax from 5 per cent to 2.5 per cent and rationalised the excise duty structure with three tiers of 24, 16 and 8 per cent. He has also reduced the peak customs duty rate from 30 per cent to 25 per cent, making imports cheaper.

Infrastructure has received a fillip through a Rs 60,000-crore allocation for projects — Rs 40,000 for building 10,000 km of roads, Rs 8,000 crore worth rail projects and, most importantly, modernisation of two airports at Mumbai and Delhi and two sea ports at Mumbai and Kochi with private sector participation and management control later, something that has been long overdue. These will not only spur investments in a sluggish economy but also generate more employment. By declaring that part of the proceeds of the cess on diesel would go towards building up of rural roads, Jaswant Singh has not only justified the hike in rates but also also created funds for financing the building of rural roads.

But there is some bad news for corporates as the Finance Minister, in a bid to free dividends from tax in the hands of shareholders, has slapped a 12.5 per cent dividend distribution tax on Indian companies.

For the rural poor, there is a package to take care of their food requirement and a new dream of health insurance at affordable rates. The Antyodaya Anna Yojana will cover 50 lakh more BPL families as well as provide subsidised health insurance to them. For an individual insurance premium of Rs 365 every year would entitle the person to reimbursement of hospitalisation expenses of Rs 30,000 and even death due to accident for Rs 25,000. The premium would be Rs 548 every year for a family of five and Rs 730 for a family of seven, including dependents. For BPL families, the government would contribute Rs 100 per year towards premium. Here Singh has tried to emphasise the need for smaller families in rural India.

But there is a bitter pill to swallow. The finance minister has raised the issue price of fertilisers — Rs 12 for urea, Rs 10 for DAP and MOP per 50 kg bag, which has met with opposition even from within his own party as the proposal ‘‘stands out as a sore thumb in a feelgood Budget.’’

In the agriculture sector, while Singh has tried to give it a new direction and promised support to the sector by actually increasing outlays, the Budget is sketchy on details. The Budget calls for moving away from traditional foodgrain cultivation to floriculture and horticulture, oilseeds etc. It also talks of modern irrigation techniques through drip irrigation. There is also talk of sorting out of the problems of the sugar sector but has not been dealt with fully in the Budget, save a reference to converting the medium-term loans into nine-year loans.

There is the usual feelgood reference to sectors like telecom, IT, pharma and biotechnology which have been referred to as the sunrise sectors of today and showpiece sectors of tomorrow. There is also an effort to sincerely bring back investors into the capital market thanks to the removal of dividend tax and promised reforms in the capital market throught the credit information system. On the macro front, the host of sops on the direct tax front has left the Finance Minister with just Rs 339 crore as additional revenue from taxes. The proposals on the direct tax front will result in a revenue loss of Rs 2,995 crore while the proposals on the indirect tax front will result in a gain of Rs 3,294 crore.

In fact, while the revenue receipts for the year 2003-04 have been estimated to grow by a meagre 7.1 per cent, the total expenditure is expected to grow at around 8.6 per cent for the fiscal. But what’s heartening is the fact that definite efforts have been highlighted to check revenue deficit and keep revenue expenditure within manageable limits, like introducing a system of cash limits for ministries on a quarterly basis. The revenue deficit for the year 2003-04 has been pegged at 4.1 per cent and this in turn is expected to keep the fiscal deficit within the projected target of 5.6 per cent as compared to the revised estimate of 5.9 per cent for the year 2002-03.

The Budget, while complimenting the Kelkar Commission’s effort in highlighting tax reforms has adopted only the procedural suggestions on improvement. Thanks to political compulsions, it had to junk the actual tax proposals of doing away with exemptions. So, for now, it is cheers for middle-class India.