Friday, Mar 01, 2002
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The following are excerpts of the Union Budget speech of the Finance Minister, Yashwant Sinha, in Parlaiment on Thursday:
Sir, I rise to present the budget for the year 2002-03.
The year 2001, the first year of the millennium, was a year of many tragic events. It started with the Gujarat earthquake on January 26, and ended with the terrorist attack on our Parliament on December 13, punctuated by the September 11 incident in the United States and the October 1 outrage in Srinagar. I salute the brave members of our security forces who defended this Parliament and made the supreme sacrifice. On the economic front too, it has been a difficult year. World economic growth is estimated to have slowed down to 2.4 per cent in 2001 after seven consecutive years of higher growth. International terror and the global economic slowdown have been the saddest features of the past year.
Despite the hostile economic and security environment, the economy has performed relatively well this year. After irregular monsoons in the previous two years, an agricultural recovery was enabled by a relatively well distributed monsoon this year. Economic growth this year is expected to be about 5.4 per cent.
In my last budget, I had laid out a comprehensive agenda of the second generation economic reforms. I had also deepened tax reforms aimed at providing a modern tax regime. My aim this year is to consolidate and implement these policies at all levels. I propose to take this process further at the State level through a strategy of reform-linked public funding.
The broad strategy of the budget, therefore, is to:
Continue the emphasis on agriculture and food economy reforms.
Enhance public and private investment in infrastructure.
Strengthen the financial sector and capital markets.
Deepen structural reforms and regenerate industrial growth.
Provide social security to the poor.
Consolidate tax reforms and continue fiscal adjustment at both the Central and State levels.
Agriculture and rural development
The Government has reviewed the operation of the Essential Commodities Act, 1955. Restrictive orders inhibiting storage, selling and movement of food and agricultural products are being removed. To continue this initiative, I am proposing further decontrol and deregulation of agriculture along the following lines:
Amendment of the Milk and Milk Products Control Order (MMPO) to remove restrictions on new milk processing capacity, while continuing to regulate health and safety conditions.
Removal of small-scale industry reservations related to various agricultural equipment items.
Decanalisation of the export of agricultural commodities and phasing out of remaining export controls.
Expansion of futures and forward trading to cover all agricultural commodities.
The Prime Minister has decided to set up a Group of Ministers (GOM) to propose legislative and other changes for preparing a modern integrated food law and related regulations.
This process of providing freedom to the farmers now needs to be carried forward by State Governments. I am proposing that additional allocations in respect of Centrally-sponsored schemes would be linked to decontrol and deregulation of the agricultural sector by the States.
The total credit flow to the agriculture sector through institutional channels is expected to reach the targeted level of Rs. 64,000 crore this year. It is expected to increase to Rs. 75,000 crore in 2002-2003. I propose the following steps to further improve the delivery of agricultural credit:
The funds for RIDF VIII will be enhanced from Rs. 5000 crore to Rs. 5500 crore next year, while the rate of interest will be reduced from 10.5 per cent to 8.5 per cent. Henceforth, it will be fixed at the prevailing bank rate plus 2 per cent.
Assistance to the States from RIDF will be linked to reforms in the agriculture and rural sectors.
A special OTS scheme for small and marginal farmers will be announced by RBI to cover loans up to Rs. 50,000.
To subserve the needs of farmers better and to move towards a sustainable actuarial regime, I propose to set up a new Corporation for Agriculture Insurance to be promoted by the existing public sector general insurance companies.
I propose to increase the allocation for the Accelerated Irrigation Benefit Programme (AIBP) from Rs. 2000 crore this year to Rs. 2800 crore in 2002-03.
I propose to enhance the allocation for 2002-03 for agriculture research to Rs. 775 crore from Rs. 684 crore in the current year.
A further allocation of Rs. 2,500 crore for 2002-03 is being made over and above Rs. 5,000 crore provided so far for the Pradhan Mantri Gram Sadak Yojana .
The Government proposes to introduce a new interest subsidy scheme called the Accelerated Rural Electrification Programme. An outlay of Rs. 164 crore has been provided for this scheme in 2002-03.
The Sampoorna Grameen Rozgar Yojana launched on September 25, 2001 will be continued next year. In the birth centenary year of Jai Prakash Narayan, I propose to launch the Jai Prakash Rozgar Guarantee Yojana (JPRGY) to provide employment guarantee to the unemployed in the most distressed districts of the country.
I also propose to upgrade the Wardha Institute started by Mahatma Gandhi in 1935 as a national institute to be called Mahatma Gandhi Institute for Rural Industrialisation.
The current situation of open-ended procurement by FCI at a high price and disposal at a heavily subsidised price is not sustainable.
The concept of decentralised procurement has not yet found favour with the States.
The report of the High Level Committee on Long Term Grain Policy is expected to be submitted shortly.
We shall formulate a more durable approach for better management of our food economy after considering this report.
To reduce the high foodgrain stocks that are posing serious problems of storage and disposal the following measures will be taken: increased allocations for BPL familiies; launching of a major food for work programme under the SGRY; allocation of 30 lakh tonnes of free foodgrains to States for relief works in areas affected by natural calamities; open market sales of 30 lakh tonnes this year compared to 5.5 lakh tonnes in 2000-2001; and enhanced incentives for export of foodgrains.
With the tariff rationalisation and other bold measures introduced by my colleague, the Minister of Railways, we can expect the Railways to serve well the key transportation needs of the country in the years to come. Other areas such as power, urban infrastructure, other transportation and the like continue to experience great difficulty because of the lack of appropriate user charges.
Thrust for power reforms
To redouble our effort in this direction, APDP is being redesigned as the Accelerated Power Development and Reform Programme (APDRP), with an enhanced plan allocation of Rs. 3,500 crore for 2002-03, up from Rs. 1,500 crore this year. Access of the States to the fund will be on the basis of agreed reform programmes. Accordingly, the focus of reform has shifted from generation to transmission and distribution. Allocation for this programme will be augmented by loans on concessional terms from the Power Finance Corporation (PFC).
Roads & Ports
The Golden Quadrilateral will be completed substantially by December 2003, a year ahead of schedule. It is proposed to corporatise major ports in a phased manner.
Private sector participation in greenfield airports will be encouraged through a package of concessions: The proposed new airports in Bangalore and Hyderabad will benefit from these concessions.
I propose to set up an Urban Reform Incentive Fund (URIF) with an initial allocation of Rs.500 crore to provide reform-linked assistance to States. The Fund will seek to incentivise reforms in the following areas:
Reform of Rent Control Laws and repeal of Urban Land Ceiling Acts.
Rationalisation of high stamp duty regimes.
Revision of by-laws to streamline the approvals process for construction of buildings, development of sites, etc.
Revision of municipal laws in line with model legislation prepared by the Ministry of Urban Development and Poverty Alleviation.
Simplification of legal and procedural frameworks for conversion of agricultural land for non-agriculture purposes.
Levy of realistic user charges and resource mobilisation by urban local bodies.
Initiation of public private partnership in the provision of civic services.
A City Challenge Fund (CCF) will also be set up as an incentive based facility that will support cities to fund transitional costs of moving towards sustainable and creditworthy institutional systems of municipal management and service delivery. It will assist in the partial financing of the cost of developing an economic reform programme and financially viable projects to be undertaken by urban local bodies. To provide a further incentive for urban local bodies to become credit worthy and to invest in urban infrastructure, I am providing for the issue of municipal tax free bonds up to Rs. 500 crore in 2002-03, up from Rs. 200 crore this year.
It is proposed to implement a comprehensive tourism development package:
6 tourism circuits would be identified for development to international standards during 2002-03.
Special Purpose Vehicles (SPVs) will be permitted to raise resources from both public and private sectors for infrastructure development in these circuits.
One special area, the World Heritage Site of Hampi, will be developed as an international destination for tourism based on an integrated master plan.
The Plan Outlay for tourism has accordingly been increased by 50 per cent to Rs. 225 crore for 2002-03.
To facilitate faster private investment in infrastructure facilities:
An Infrastructure Equity Fund of Rs. 1000 crore will be set up to help in providing equity investment for infrastructure projects. Contributions to the Fund to be managed by the Infrastructure Development Finance Company Limited (IDFC), would initially be made by public sector insurance companies, financial institutions and some banks.
An institutional mechanism is being set up to coordinate the debt financing by financial institutions and banks of infrastructure projects larger than Rs. 250 crore. IDFC will act as the coordinating institution with primary responsibility for different sectors being shared with the IDBI and ICICI.
Public private partnerships will be encouraged for the provision of infrastructure facilities, the modalities for which are being worked out by a Task Force.
Public Investment in key infrastructure sectors is being sharply stepped up. Plan outlay inclusive of internal and extra budgetary resources in power, roads and national highways and railways is being increased by 22 per cent, 39 per cent and 23 per cent respectively, to a total of Rs. 37919 crore.
Financial sector and capital market
Primary issuance of government securities is now being facilitated by an electronic Negotiated Dealing System (NDS) and efficiency of trading in government securities is being enhanced by the new Clearing Corporation of India Limited (CCIL). To help investors plan their investments better and to add transparency and stability in the market, RBI will announce an issuance calendar for dated government securities. Having now received the concurrence of all State legislatures, I also propose to introduce a new Government Securities Bill to replace the old Public Debt Act 1949 within this Parliament session.
To boost investor confidence and strengthen market integrity. The following measures are being taken:
The process of demutualisation and corporatisation of stock exchanges is expected to be completed during the course of the year, to implement the decision to separate ownership, management and operation of stock exchanges. The Securities and Exchange Board of India (SEBI) has already prohibited the induction of broker members in management positions in stock exchanges.
Legislative changes will be proposed, during the budget session, in the SEBI Act, 1992 for investor protection, and to enhance the effectiveness of SEBI as the capital market regulator.
Foreign institutional investors (FIIs) can invest in a company under the portfolio investment route beyond 24 per cent of the paid up capital of the company with the approval of the general body of the shareholders by a special resolution. I propose that now FII portfolio investments will not be subject to the sectoral limits for foreign direct investment except in specified sectors. Guidelines in this regard will be issued separately.
Further measures have been taken to develop and deepen the capital market:
Badla trading has been banned and practically all trading of stocks is now in the rolling settlement mode.
Exchange traded derivatives have become wider with a greater choice of instruments and deeper in terms of liquidity.
Individual stock options and index stock options were introduced in July 2001, and individual stock futures in November 2001.
Foreign Institutional Investors (FIIs) are now permitted to trade in all stock traded derivative products within specified trading limits.
An Investor Education and Protection Fund has been set up from October 1, 2001 to credit certain unclaimed and unpaid amounts.
The long overdue reform for making US-64 NAV based has been implemented. Further legislative changes in the UTI Act to put in place other needed reform measures will be proposed during the year.
Reforms in the banking sector will be continued to enhance the efficiency and competitiveness of the sector. To help banks and financial institutions to make provisions for NPAs as required by the RBI, additional fiscal relief is being offered A new Bill on Banking Sector Reforms is proposed to be introduced in Parliament to strengthen creditor rights through foreclosure and enforcement of securities by banks and financial institutions. A pilot Asset Reconstruction Company will be set up by June 30, 2002 with the participation of public and private sector banks, financial institutions and multilateral agencies. This company will initiate measures for taking over non-performing assets in the banking sector and also develop a market for securitised loans.
The Deposit Insurance Credit and Guarantee Corporation (DICGC) will be converted into the Bank Deposits Insurance Corporation (BDIC) to make it an effective instrument for dealing with depositors' risks and for dealing with distressed banks. Appropriate legislative changes will be proposed for this purpose.
Reforms in the financial sector have posed new challenges for the development finance institutions (DFIs) like IDBI. It is proposed to make legislative changes to corporatise IDBI within the coming year to provide it appropriate flexibility. Meanwhile, IDBI's tier one capital is being strengthened by conversion of existing IBRD and NIC (LTO) loans into appropriate long term instruments.
Consequent to certain amendments made in the year 2000 in the Companies Act, 1956, directors incur disqualification for election in the case of certain defaults by the company. It is proposed to exempt nominee directors of public financial institutions and banks from this provision.
Three public sector banks had been classified as weak banks on the basis of criteria suggested by the Committee on Banking Sector Reforms in 1997-98. Two of these banks namely, UCO Bank and United Bank of India, have turned around and have started making profits. Though the Indian Bank has also shown improvement, its capital adequacy ratio remains deficient. A provision of Rs. 1300 crore is proposed for re-capitalisation support to this bank.
Option for foreign banks
Foreign banks are permitted to operate in India as fully owned branches with specific permission of the Reserve Bank of India. As recommended by the Committee on Banking Sector Reforms, it has now been decided to give an option to foreign banks to either operate as branches of their parent banks or to set up subsidiaries. A foreign bank will have to choose only one of the two options. Such subsidiaries will have to adhere to all banking regulations, including priority sector lending norms, applicable to other domestic banks. Necessary amendments will be proposed in the Banking Regulation Act 1949 to relax the maximum ceiling of voting rights of 10 per cent for such subsidiaries.
The cooperative credit structure, which is critical for the agriculture sector, has low capital adequacy and high NPAs, is in urgent need of reform. I had appointed a Committee under the then Deputy Governor of RBI to examine its functioning closely. The recommendations of this Committee have been discussed widely by Chief Ministers and in a joint committee of Cooperation Ministers under the chairmanship of my colleague, Vikhe Patil. Reform measures such as the adoption of a Model Cooperative Act, removal of dual control between State Governments and the RBI, regular conduct of elections, larger stake of the members, professionalisation of management etc. have been recommended. The recapitalisation formula suggested is 60:40 between the Central and State Governments along with increases in share capital of members. States will have to consider and accept their funding share and implement the suggested measures for reform. Even though this is a State subject, the Government of India will go out of its way to help in the process. To start the process, I am making a token provision of Rs. 100 crore and depending on the pace of reform, provision of additional funds will be considered.
To further strengthen housing finance, the following measures are being taken:
Consequent to the amendment to the National Housing Bank Act, NHB has commenced securitisation of housing loans and is operationalising foreclosure of mortgages.
The NHB will launch a Mortgage Credit Guarantee Scheme, which would be provided to all housing loans thereby fully protecting lenders against default. This will make housing credit more affordable thereby also increasing access to housing credit in rural areas.
The target under the Golden Jubilee Rural Housing Finance Scheme is proposed to be increased to 2.25 lakh for 2002-03, up from 1.7 lakh in the current year. About 1 lakh units have already been financed up to December 2001.
The allocation of the Indira Awas Yojana is being increased by 13 per cent to Rs. 1725 crore for 2002-03.
Capital account liberalisation
I propose to take the following steps to further liberalise the capital account:
There will be full convertibility of deposit schemes for Non Resident Indians. The existing Foreign Currency Non-Resident (FCNR(B)) scheme and the Non-Resident External rupee (NRE) scheme will continue to be repatriable.
The schemes which do not offer full convertibility to NRIs will be discontinued from April 1, 2002. The existing balances in the non-resident (non-repatriable) rupee accounts will be allowed to be credited on maturity to the convertible NRE account.
NRIs will be free to repatriate in foreign currency their current earnings in India such as rent, dividend, pension, interest and the like, based on appropriate certification.
Indian companies wishing to invest abroad may now invest up to $100 million on an annual basis through the automatic route, up from the existing limit of $50 million.
Indian companies making overseas investment in joint ventures abroad by market purchases may now do so without prior approval up to 50 per cent of their net worth, up from the current limit of 25 per cent.
Corporates with proven track record will be allowed to contribute funds from their foreign exchange earnings for setting up chairs in educational institutions abroad and for other welfare measures, likely to benefit the community abroad, on a case by case basis by the RBI.
Indian mutual funds will now be allowed to invest in rated securities in countries with fully convertible currencies, within the existing limits. Earlier such investment was only permitted in ADR/GDRs issued by Indian companies in overseas markets.
Pre-payment of ECBs is permissible to the extent of balances available in EEFC accounts, which are currently restricted to 50 per cent of export proceeds. To enable ECB holders to benefit from lower interest rates, utilisation of higher amounts from export proceeds will be considered by RBI.
With a view to further liberalising the capital account transactions, it is proposed to put the Foreign Currency Convertible Bond (FCCB) scheme under the automatic route up to $50 million.
APM for Petroleum
As decided by the Government in November 1997 and reiterated by me last year, I am glad to announce the dismantling of the Administered Price Mechanism (APM) in the petroleum sector from April 1, 2002. As a result, the following measures are being taken:
The pricing of petroleum products will become market determined.
The Oil Pool Account will be dismantled on April 1, 2002 and the outstanding balances will be liquidated by issue of oil bonds to the oil companies concerned.
Private companies will be permitted in distribution subject to specified guidelines.
A Petroleum Regulatory Board will be set up to oversee the sector.
Subsidies to refineries in the North-East will continue on a rationalised basis.
Freight subsidies will continue to be provided for LPG and kerosene to far-flung areas.
As a result of the dismantling of APM, the price of diesel will come down by around 50 paise per litre and of petrol by around Re 1 per litre. These changes in prices will come into effect from March 1, 2002, initially as part of the Oil Pool Account.
The 1997 Government decision on the dismantling of APM mandated the subsidy on LPG and kerosene oil to be reduced to 15 and 33 per cent respectively by April 1, 2002. Accordingly, the price of LPG is being raised by about Rs. 40 per cylinder and of kerosene for PDS by about Rs. 1.50 per litre from March 1, 2002. These subsidies will be borne by the consolidated fund from April 1, 2002.
The subsidies on LPG and kerosene will be on a specified flat rate basis from April 1, 2002. The retail prices will then vary as the price of crude oil changes in international market.
These subsidies will be phased out in the next 3 to 5 years.
To deal with forces of competition, industrial and other companies require restructuring on a continuous basis. A mechanism for Corporate Debt Restructuring (CDR) has been set up under the guidelines issued by the Reserve Bank of India. I have decided to set up a small group consisting of bankers and others, under the chairmanship of the Deputy Governor, Reserve Bank of India, to suggest measures to make its operation more efficient.
Adequate credit flow is essential for the small scale sector. The net bank credit outstanding to small scale industries increased from Rs. 45,789 crores on March 31, 2000 to Rs. 48,445 crores on March 31, 2001. In order to further increase the flow of credit:
The limit for composite loans has been increased from Rs. 2 lakhs to Rs. 5 lakhs.
391 specialised branches of public sector banks have been opened for small scale industries as of September 30, 2001.
The exemption limit for collateral security has been increased from Rs. 25,000 to Rs. 5 lakhs. The project cost limit under the National Equity Fund has been increased from Rs. 25 lakhs to Rs. 50 lakhs.
Public sector banks to introduce a scheme called Laghu Udyami Credit Card. Over 50 items of knitwear, certain agricultural implements, auto components, some chemicals and drugs, and others will now be dereserved.
The plan allocation to the Department of Elementary Education and Literacy is being enhanced from Rs. 4,000 crores this year to Rs. 4,900 crores for 2002-03.
An insurance scheme called "Janraksha" is being designed by the public sector insurance companies to provide protection to the needy population.
I am increasing the plan allocation for the Department of Women and Child Development by 33 per cent to Rs. 2,200 crores.
In order to encourage the entry of large number of women into scientific professions, the Government intends to institute at least 100 scholarships a year to be provided by the Department of Science and Technology to women scientists and technologists.
The National Institute of Siddha at Chennai is being provided Rs. 4 crores for commencing its activities. A National Ayurvedic Hospital will be set up at Delhi with private sector participation. I am further increasing the budgetary support for ISM next year by 25 per cent to Rs. 150 crores.
The allocation for the welfare and uplift of Scheduled Castes in the Ministry of Social Justice and Empowerment has been increased from Rs. 792 crores this year to Rs. 879 crores in the coming year. In order to meet the requirements of various schemes, I have increased the plan outlay for tribal welfare by 21 per cent to Rs. 290 crores for 2002-03.
Development of the northeast
During the current year, an additional sum of Rs. 500 crores was provided to the northeastern States from the Central Pool.
Science and technology
The plan allocation for the Department of Science and Technology is being raised to Rs. 625 crores in 2002-03, an increase of more than 52 per cent over the current year.
More funds for I & B Ministry
India's global leadership in computer software must now be complemented by another area of our core competence, the vast terrain of the entertainment industry. Accordingly, the budgetary support for the Ministry of Information and Broadcasting is being increased by 22 per cent to Rs. 415 crores for 2002-03.
In every budget speech I have, at the risk of irritating repetition, expressed my deep concern at the poor fiscal situation of the Central and State Governments. Reflecting this concern, I had introduced in Parliament the Fiscal Responsibility and Budget Management Bill in December 2000.
I had proposed to reduce the estimated fiscal deficit of 5.1 per cent in RE 2000-2001 to 4.7 per cent of GDP in BE 2001-02. The industrial slowdown experienced in both 2000-01 and the current year has reflected itself in the much lower than expected revenue collections from customs duties, excise duties and corporate income tax. The non-Plan expenditure, however, has been kept under strict check. Plan expenditure has not only been protected but is actually higher than BE. The GDP estimate for the year has also been lowered. As a result fiscal deficit in now expected to be 5.7 per cent of GDP in the current year.
The success achieved in containing non-Plan expenditure has encouraged me to deepen the efforts in this direction. The recommendations of the Expenditure Reforms Commission (ERC) provide a very useful framework for immediate moderation in expenditure growth. The ERC completed its work in September 2001 and submitted 10 reports covering 36 ministries/departments that had a total sanctioned staff of 8.65 lakh. Of the identified surplus manpower of 42,200 in these ministries/departments, nearly 12,200 posts are expected to be abolished by the end of March 2002. The remaining reports are at different stages of consideration. The decision to limit fresh recruitment to one per cent of total civilian staff strength will continue to be implemented over the next four years. The ERC has recommended that the Government should increase fertiliser prices seven per cent every year and move towards decontrol over the next five years. I propose a modest increase in the issue price of urea, DAP and MOP by about five per cent and to reduce the subsidy for SSP by Rs. 50 per tonne. In a further move towards price and distribution control, the compulsory levy on sugar will be reduced from 15 to 10 per cent from March 1, 2002. Accordingly, the retail price of PDS sugar will be Rs 13.50 per kg. from March 1, 2002.
Because of the rising cost of postal service, a modest increase in postal rates is being proposed.
Small savings and interest rates
Last year, I had announced the setting up of an expert committee headed by the Deputy Governor, RBI, to suggest rationalisation of administered interest rates. The committee has given its report, which has been examined by the Government. Accordingly, I propose to take the following measures:
Administered interest rates will now be benchmarked to the average annual yields of Government securities of equivalent maturities in the secondary market. Accordingly, most administered interest rates are being reduced by 50 basis points from March 1, 2002. Such adjustments will henceforth be made annually on a non-discretionary automatic basis. The benefit of reduction in interest rates on small savings deposits will be fully passed on to the States.
A corresponding reduction of 50 basis points will be made in the interest rate applicable to Government of India relief bonds. Further, a ceiling of Rs. 2 lakhs per year is being put on investment in these bonds.
The entire net proceeds of small savings will be transferred to State Governments beginning April 1, 2002, up from the current transfer of 80 per cent. Consequently, additional loan assistance of about Rs 10,000 crores will be available to States along with the benefits of a lower interest rate.
State Governments will be enabled to pre-pay their high cost debt of the past from these additional resources which would be at a lower interest rate.
Modalities of this pre-payment of small savings debt of State Government will be worked out in consultation with them and the Reserve Bank of India.
The interest rate on the loans portion of Central assistance to State plans is being reduced by 50 basis points.
Alignment of interest rates on GPF by the State Governments with the reduced GPF interest rates at the Centre will further reduce the interest burden of State Governments.
The present pension scheme for Government employees casts an open-ended financial burden on the Government. A high-level expert group to develop a new pension scheme has proposed a hybrid scheme. The new pension scheme for new recruits will be announced and implemented by June 1, 2002.
We expect to complete the disinvestment in another six companies and the remaining hotels of the HCI and the ITDC this year.
Modernisation and upgradation of our defence preparedness is an area of highest national priority. I have made a provision of Rs. 65,000 crores for defence expenditure next year. In case of need, I shall not hesitate to provide more funds for this purpose.
As a measure of welfare for the defence forces and their families and as announced by the Prime Minister in his Independence Day speech, a major programme of housing construction for defence personnel is also being taken up.
State fiscal reforms
The challenge of fiscal management is equally acute in the case of States. We have been working jointly with the States through the Fiscal Reforms Incentive Fund set up on the recommendations of the Eleventh Finance Commission. The reform of small savings schemes together with interest rate reductions and debt swap facility that I have already mentioned will also help the States. As I have mentioned earlier, we are now providing reform-linked assistance to States for a number of sectors like APDRP, AIBP, URIF, RIDF for which a total amount of Rs. 12,300 crores has been provided. In addition, a lump-sum amount of Rs. 2,500 crores has been provided for policy reforms in sectors which are constraining growth and development.
I am confident that with the joint efforts of Centre and States we will be able to put in place programmes and policies which will remove barriers to growth, accelerate the development process and improve the quality of life of our people.
Revised estimates for 2001-2002
The revised estimates for the current fiscal year show a decrease in expenditure of Rs. 10,787 crores as compared to the budget estimates.
Net tax revenues for the Centre are estimated to be Rs. 1,42,348 crores compared to the budget estimate of Rs. 1,63,031 crores, thereby reflecting a shortfall of Rs. 20,683 crores. The major shortfall is due to lower collection of customs and Union excise duties due mainly to the industrial slowdown. Non-tax revenue is estimated at Rs. 70,224 crores, Rs. 1,510 crores more than the estimated level of Rs. 68,714 crores. However, disinvestment receipts, at Rs. 5,000 crores are much lower than the budget estimate of Rs. 12,000 crores.
Budget estimates for 2002-2003
In the budget estimates for 2002-2003, the total expenditure is estimated at Rs. 4,10,309 crores, of which Rs. 1,13,500 crores is for Plan and Rs. 2,96,809 crores for non-Plan.
The budget support for Central, State and UT Plans has been placed at Rs. 1,13,500 crores, an increase of Rs. 18,400 crores over budget estimates for 2001-2002. This amounts to an increase of 19.35 per cent over the last year, which is the highest increase in over a decade. Gross budgetary support for the Central Plan is being enhanced from Rs. 60,276 crores in the revised estimates of 2001-2002 to Rs. 66,871 crores in 2002-2003.
Central Plan assistance to States and Union Territories in 2002-2003 is also proposed to be increased to Rs. 46,629 crores from Rs. 38,878 crores in the revised estimates of 2001-2002. While the increase in Central Plan outlay is about 11 per cent, the increase in Central assistance to State Plans is nearly 20 per cent.
Non-Plan expenditure in 2002-2003 is estimated to be Rs. 2,96,809 crores compared to Rs. 2,65,282 crores in the revised estimates for 2001-2002. The increase in non-Plan expenditure is mainly in interest payments (Rs. 10,133 crores), subsidies (Rs. 9,278 crores), defence (Rs. 8,000 crores) and grants to State Governments (Rs. 2,196 crores).
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