Budget 2002-2003
Speech
of
Shri Yashwant Sinha
Minister of Finance
28th February, 2002
PART A
PART B
Sir,
I rise to present the budget for the year 2002-03.
2. 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.
ECONOMIC CONTEXT
3. 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: higher growth being constrained by the industrial slowdown.
The basic fundamentals of the economy remain strong: inflation has
fallen to a record low of 1.1 per cent, foreign exchange reserves
have crossed US $50 billion, and our food stocks have risen to almost
60 million tonnes. The fall in petroleum prices has provided further
relief to the economy as a whole.
4. While the country is economically secure
there are still many challenges facing us. These have been described
in detail in the Economic Survey presented to this House on February
26. My effort is to devise a budget strategy to meet these challenges.
BUDGET STRATEGY
5. 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.
6. 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.
7. The implementation of the announcements
made in the last budget has been closely monitored throughout the
year. I started the practice last year to submit to Parliament an
Action Taken Report on the previous year’s budget. Accordingly,
I am presenting a detailed ATR on last year’s budget announcements.
Some of the highlights are: deregulation of controls on agricultural
commodities; progress towards decontrol of sugar; substantial reduction
in the span of price control of drugs; decision to amend existing
legislation governing revival and/or winding up of companies, along
with abolition of SICA; substantial progress in privatization; progress
in the implementation of Expenditure Reforms Commission’s recommendations
and announcement of VRS for surplus government employees.
8. These decisions demonstrate the resolve
of this Government to carry forward the process of economic reforms,
and to ensure that the benefits reach the common man. This will
require improved implementation and governance. We shall put in
place measures to effect improvement in these areas with the objective
of eliminating poverty and improving the quality of life of our
citizens.
AGRICULTURE AND RURAL DEVELOPMENT
Deregulation
9. Having achieved great success with the
Green Revolution and then the White Revolution, the country is now
ready for its third revolution of agricultural diversification and
food processing. This requires policy changes, a renewed thrust
on agricultural research and extension, and a new climate that encourages
much greater investment in both the public and private sectors.
Removal of the remaining regulatory and procedural rigidities that
still exist and improved rural infrastructure is essential for this
new revolution. Freedom to the farmer, Kisan Ki Azaadi is the overarching
goal of our policy.
10. Even though agriculture is a State subject,
there are a number of Central Government policies that influence
this sector. 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.
We can now look forward to a countrywide integrated market for agricultural
products. 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.
§ Decanalization of the export of agricultural commodities
and phasing out of remaining export controls.
§ Expansion of futures and forward trading to cover
all agricultural commodities.
11. A multiplicity of regulations for food
standards under the Prevention of Food Adulteration Act, the Food
Products Order, the Meat Products Order, the Bureau of Industrial
Standards and the MMPO, affect the food and food processing sectors.
They need to be modernised and converged. 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.
12. This process of providing freedom to the
farmers now needs to be carried forward by State Governments. Amendment
of the Agricultural Produce Marketing Acts to enable farmers to
sell directly to potential processors would help them to receive
better prices and to access potential new markets. In addition,
the remaining State control orders which are acting as barriers
to inter-State trade need to be lifted. 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.
13. In 2000-01, I had announced a Credit Linked
Subsidy Scheme for construction of cold storages. I am happy to
report that sanction has already been given for the creation of
21 lakh tonnes capacity in cold storages, much higher than the target
of 12 lakh tonnes. The rural godown scheme announced last year has
also become operational. With the removal of various control orders
much greater investment would be forthcoming under both these schemes.
Accordingly, I propose to allocate Rs 70 crore to each of these
subsidy linked credit schemes in 2002-03.
Agricultural Credit
14. As Finance Minister I feel particularly
responsible for the flow of adequate credit to the agriculture sector.
I am glad to report that 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.
§ Kisan Credit Cards introduced in 1998-99, have
been a resounding success and have helped our farmers considerably
in their access to agricultural credit. An additional 63 lakh
KCCs have been issued upto December 31, 2001 taking the total
to 2.07 crore. The personal insurance package linked to KCCs
has also been operationalised.
§ Similarly, the scheme of micro credit through Self
Help Groups is progressing well. The target of one lakh additional
self-help groups during the current year is expected to be
achieved taking the total so far to more than 3.5 lakh covering
more than 70 lakh families, making it the largest micro credit
programme in the world. I am raising the target to 1.25 lakh
for 2002-03.
§ A one-time settlement scheme for small loan accounts
with outstanding principal balance upto Rs 25,000 as on March
31, 1998 is already in operation. A special OTS scheme for
small and marginal farmers will be announced by RBI to cover
loans upto Rs 50,000.
Crop Insurance
15. The National Agriculture Insurance Scheme
is already in operation. 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.
Irrigation
16. 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. This will assist the
States to accelerate the completion of unfinished medium and major
irrigation projects, and also to undertake reforms by revising user
charges and setting up of water users associations.
Agriculture Extension and Research
17. The accelerated diversification and modernization
of agriculture will require a new approach to research and extension
services. I therefore propose to enhance the allocation for 2002-03
for agriculture research to Rs 775 crore from Rs 684 crore in the
current year. A full review of the governance of agricultural research
is also proposed so that the system can serve the new needs creatively.
18. Linkages between research and extension
will be strengthened to improve quality and effectiveness of research
and extension systems. The extension system will be revitalised
and broad-based through Krishi Vigyan Kendras (KVKs), NGOs, farmers
organisations, cooperatives, the corporate sector and agri-business
clinics. KVKs will be designated as nodal agencies for quality certification
including organic products, bio-fertilizers, and bio-pesticides.
The supply of inputs, agro-processing and trade through such cooperatives/companies
will be encouraged through the availability of credit with the help
of NABARD. The Companies (Second Amendment) Bill 2001, already introduced
in Parliament will enable the conversion of existing producer cooperative
businesses into companies.
Agricultural Exports
19. Promotion of agricultural exports is important
for creating conditions for providing remunerative prices to farm
produce. For this purpose Agri Export zones are being promoted in
different States and 15 such zones have been approved so far. APEDA
will catalyse development of infrastructure and flow of credit to
the units in these Agri Export zones.
RURAL DEVELOPMENT
Rural Roads
20. The Pradhan Mantri Gram Sadak Yojana (PMGSY)
initiated to provide connectivity through all weather roads to all
our villages is making considerable headway. A further allocation
of Rs 2,500 crore for the year 2002-03 is being made over and above
Rs 5,000 crore provided so far. Depending on the accelerated implementation
of these works I intend to find additional resources including those
from multilateral sources in the course of the year.
Rural Electrification
21. During my last budget speech I had announced
a package of initiatives for electrification of 80,000 villages
that have no access to electricity. Considering the fact that SEBs
find it difficult to service debt, 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.
Rural Employment
22. The Sampoorna Grameen Rozgar Yojana (SGRY)
announced by the Prime Minister in his Independence Day speech of
2001 was launched on September 25, 2001 by merging the ongoing Employment
Assurance Scheme (EAS) and the Jawahar Gram Samridhi Yojana (JGSY).
Since the launch of the scheme, release of 30.6 lakh tonnes of food
grains to States has already been authorised, out of the 50 lakh
tonnes allocated. This scheme will be continued next year. I urge
upon all the States to come forward to take full advantage of the
free foodgrains being offered under this scheme.
23. Lok Nayak Shri Jai Prakash Narayan always
had a special concern for the disadvantaged. In his birth centenary
year 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. A Task Force headed by
my colleague, the Minister of Rural Development, will be set up
to design and implement a massive programme for employment generation
in these districts. KVIC, DC (SSI), and other agencies will be fully
involved in the implementation of this scheme.
24. The promotion of rural industrialisation
would be helped greatly through capacity building and technology
upgradation in Khadi and Village Industries. To help in this effort
I 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.
25. The diversification of agriculture will
not succeed without appropriate infrastructure for marketing. For
this purpose, rural local bodies, cooperatives and NGOs will be
assisted to set up rural produce marketing centres and sub-centres
at the district and block levels and to upgrade village haats under
a special scheme of the Swaran Jayanti Gram Swarozgar Yojana (SJGSY).
26. Some parts of our country have been particularly
afflicted with natural calamities. Additional allocation of Rs 480
crore was provided under the Indira Awas Yojana for the affected
States. Houses constructed by the poor under the Indira Awas Yojana
(IAY) in such disaster prone areas will henceforth be provided insurance
cover through a Master Policy.
Management of the Food Economy
27. I had drawn attention last year to the
severe policy and fiscal difficulties arising from the growing mismatch
between the unprecedented level of procurement of wheat and rice
by FCI and the much lower PDS and buffer stock needs in the last
few years. 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.
28. A number of steps have been taken by the
Government to reduce the high food grain stocks that are posing
serious problems of storage and disposal. These measures include:
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 food grains.
INFRASTRUCTURE
29. Provision of efficient and world class
infrastructure is critical for our growth aspirations. A key issue
that bears repetition is the imposition of appropriate user charges
necessary to provide adequate returns on investment. Some success
has been achieved in areas such as telecom, roads and ports where
appropriate user charges exist. With the tariff rationalization
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.
Power
30. Restoration of financial viability in
the power sector remains crucial. The average rate of return for
all SEBs is about minus 40 per cent and their combined losses continue
to increase. Hence, this is one of the foremost challenges not only
in the power sector but also for the fiscal health of the state
governments and the overall performance of the economy.
31. In recognition of these severe problems
the Prime Minister held a meeting with State Chief Ministers on
March 3, 2001. While broadly agreeing with the desirability of power
sector reforms to achieve commercial viability of State Electricity
Boards, the conference placed special emphasis on distribution reforms
and elimination of theft of electricity. Subsequently, the high
level empowered group of Chief Ministers and Union Ministers has
agreed to a one time settlement scheme in regard to SEB overdues
to the Central Public Sector Utilities through securitisation and
issue of tax free bonds by the respective State Governments, subject
to the achievement of specified performance milestones and full
payment of current dues in the future. I would urge upon the States
to come forward and implement the scheme speedily.
32. The Ministry of Power has already signed
Memoranda of Understanding (MOUs) with 20 States and is expected
to complete the exercise with the remaining States soon. 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, the centre piece of which would
be the narrowing and ultimate elimination of the gap between unit
cost of supply and revenue realisation within a specified time frame.
Accordingly, the focus of reform has shifted from generation to
transmission and distribution.
33. A high level monitoring group will oversee
the progress of this programme. Allocation for this programme will
be augmented by loans on concessional terms from the Power Finance
Corporation (PFC).
Roads
34. I am glad to inform the House that the
Prime Minister’s National Highway Development Programme (NHDP) launched
three years ago is progressing well. It now promises to achieve
a totally new scenario in the road sector. The Golden Quadrilateral
will be completed substantially by December 2003, a year ahead of
schedule. The North-South East-West corridors have a length of 7300
kms., of which 716 kms. have already been four-laned. With the assistance
of multilateral funding, other borrowings by the National Highway
Authority of India (NHAI) with government guarantee, and other innovative
financing schemes, the funding for this phase will be fully tied
up in 2002-03.
Ports
35. The present Port Trust structure does
not allow Indian major ports to have the flexibility needed for
efficient management and for raising institutional funding. It is
therefore proposed to corporatise major ports in a phased manner.
Private sector investments have been facilitated and 17 projects
worth more than Rs 4,500 crore have already been approved and another
8 projects worth more than Rs 3,200 crore are under consideration.
With corporatisation of the existing ports and new private sector
ports coming up, the regulatory structure will be strengthened.
Civil Aviation
36. The Government has already announced its
decision to upgrade the international airports at Delhi, Mumbai,
Chennai and Kolkata to the standards of world class airports by
inducting private sector management and investment through long
term leasing systems. Modalities for inviting offers have been finalised
and the leasing process will be completed in 2002-03.
37. Private sector participation in greenfield
airports will be encouraged through a package of concessions:
¨ Availability of land and related infrastructure
from the State Governments.
¨ Exemption from levy of Inland Air Travel Tax (IATT)
and Foreign Travel Tax (FTT) on departing passengers for projects
located in States that charge sales tax on Aviation Turbine Fuel
(ATF) at Central Sales Tax (CST) rate.
¨ Charging of Advance Development Fee (ADF) by way
of additional Passenger Service Fee (PSF) at the existing
airports for help in financing of the greenfield airport.
¨ Levy of User Development Fee (UDF) at the new airport.
¨ Financial assistance/equity participation by Airports
Authority of India.
The proposed new airports in Bangalore and Hyderabad
will benefit from these concessions.
Urban Development
38. The 2001 census shows that the urban population
in India is now about 285 million, greater than the total population
of the United States. The number of cities with more than one million
population has increased from 23 in 1991 to 35 in 2001. We are aware
of the sad plight of most of our towns and cities. This needs to
be changed if they have to act as engines of growth, and if they
are to provide a healthy environment for our citizens. Hence, we
can no longer afford to delay reforms in this sector.
39. 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 bye-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 mobilization
by urban local bodies.
¨ Initiation of public private partnership in the
provision of civic services.
40. 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. It is also proposed to set
up a Pooled Finance Development Scheme to provide credit enhancement
to assist local bodies to access market borrowing on a creditworthy
basis. 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 upto Rs 500
crore in 2002-03, up from Rs 200 crore this year.
Tourism
41. Tourism constitutes a priority area in
view of its beneficial impact on growth of employment, generation
of foreign exchange, and the promotion of greater national integration
through domestic tourism. It is therefore 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.
42. The Plan Outlay for tourism has accordingly
been increased by 50 per cent to Rs 225 crore for 2002-03. I will
have more to say on the fiscal measures relating to tourism in part
B of my speech.
Infrastructure Finance
43. Members are aware of the continuing effort
that we have made to attract private sector investment in the infrastructure
sector to supplement public investment. The flow of investment has
however been slow except in the telecom sector. I therefore propose
to take the following measures 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
44. Public Investment in key infrastructure
sectors is also 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
Debt Market
45. Substantial progress has been made on
the proposals made last year for the development of a transparent
and active debt market in general and the government securities
market in particular. 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.
Capital Market
46. In view of the various disturbances that
have occurred in the capital market it is important to boost investor
confidence and to 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.
¨ Following certain developments overseas, and within
the country, regarding accounting standards and effectiveness
of auditors, it is proposed to strengthen regulation in this
area.
¨ 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.
47. 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.
48. A package of measures for reforming the
US-64 scheme and the Unit Trust of India (UTI) has been announced
which seeks to balance investors’ interest while ensuring systemic
safety. 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.
Banking Sector
49. Reforms in the banking sector will be
continued to enhance the efficiency and competitiveness of the sector.
The following measures have either been taken or are being taken:
¨ Public sector banks recovered Rs 12,860 crore in
2000-01 as compared with Rs 9,883 crore in the previous year
and net NPAs as percentage of net advances came down to 6.7
per cent as on March 31, 2001 as compared to 7.4 per cent
in the previous year.
¨ 29 Debt Recovery Tribunals and 5 appellate tribunals
have been set up. As on September 30, 2001 the DRTs had disposed
of 18703 cases involving Rs 14,026 crore. Recovery made was
Rs 3,527 crore.
¨ To help banks and financial institutions to make
provisions for NPAs as required by the RBI, additional fiscal
relief is being offered, details of which will be given in
part B of my speech. This will enable banks to review their
lending rates.
¨ 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. This Bill will also enable securitisation
for money locked up in long term loans.
¨ 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 in to 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, on the basis of a commitment to Government
for implementing monitorable reform measures.
50. In the banking sector 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.
51. 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, Shri 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.
Housing Finance
52. The initiatives taken in the housing finance
area in the last four years have shown positive results. Total disbursement
from housing finance institutions in 2000-01 was Rs 26,300 crore,
a growth of about 28 per cent in the year. This amount financed
the construction of about 28 lakh houses, much higher than the annual
target of 20 lakh houses. In the current year the growth rate is
expected to be around 35 per cent. 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.
I will have more to say on housing in Part B of my
speech.
Capital Account Liberalisation
53. Capital account convertibility has been
on our agenda for quite some time. In view of the many disturbances
that have taken place in international capital markets in recent
years I propose to continue with our policy of liberalisation with
caution. Accordingly, 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 US $ 100 million on an annual basis through the
automatic route, up from the existing limit of US $ 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 upto
US $ 50 million.
The Reserve Bank of India will be issuing guidelines
for each of these measures separately.
54. While liberalising the capital account
is necessary we have to exercise careful vigilance in curbing illegal
capital flows. Recent evidence indicates transfer of large sums
of money through various channels in support of terrorist activities
in the country. The Government, therefore, proposes to bring suitable
legislation during the current session of Parliament to empower
the enforcement agencies to arrest and prosecute the hawala operators/money
launderers suspected to be engaged in financial transactions linked
with terrorist activities.
STRUCTURAL REFORMS
Administered Price Mechanism (APM) for Petroleum
55. 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 concerned oil companies.
¨ 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 oil 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
markets.
¨ These subsidies will be phased out in the next
3 to 5 years.
¨ The post APM excise and customs duty changes will
be spelt out in Part B of the speech. Since the subsidy burden
will be borne by the Union budget from next year, the taxation
measures have been designed to raise the required resources.
56. I believe that this package of measures
for dismantling of APM meets the requirements of consumers and producers.
It will also create a more competitive environment in this vital
sector.
57. Further details of the dismantling of
APM will be announced separately by my colleague, the Minister for
Petroleum and Natural Gas.
Industrial Restructuring
58. To deal with forces of competition, industrial
and other companies require restructuring on a continuous basis.
For this purpose it is essential to promote out of court mechanisms
for timely and transparent corporate debt restructuring of viable
entities, in addition to the use of legal avenues of financial restructuring.
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 Deputy Governor, Reserve Bank of India
to suggest measures to make its operation more efficient.
59. In Part B of my speech I will provide
for specific fiscal measures for strengthening certain key industries
including steel and textiles and other measures for improving the
competitiveness of the manufacturing sector.
Small Scale Industries
60. As Hon’ble Members are aware, small scale
industries are now subject to increasing competition with the completion
of trade liberalisation. A new approach to the promotion of small
scale industries therefore, has already been adopted.
61. Adequate credit flow is essential for
the small scale sector. The net bank credit outstanding to small
scale industries increased from Rs 45,789 crore on March 31, 2000
to Rs 48,445 crore on March 31, 2001. In order to further increase
the flow of credit:
¨ The limit for composite loans has been increased
from Rs 2 lakh to Rs 5 lakh.
¨ 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 lakh. The project cost
limit under the National Equity Fund has been increased from
Rs 25 lakh to Rs 50 lakh.
¨ The extension of credit to SSI has already been
facilitated through the Credit Guarantee Scheme and the Credit
Linked Capital Subsidy Scheme for Technology Upgradation.
¨ Encouraged by the Kisan Credit Card Scheme, public
sector banks have now decided to introduce a scheme called
Laghu Udyami Credit Card (LUCC) Scheme for providing simplified
and borrower friendly credit facilities to small businessmen,
retail traders, artisans and, small entrepreneurs, professionals
and other self employed persons, including those in the tiny
sector.
62. Members will recall that last year I had
announced the dereservation of 14 items in the footwear, leather
goods and toy sectors. The Government has been engaged in discussions
with stake holders in respect of certain other items in the reserved
list. Over 50 items of knitwear, certain agricultural implements,
auto components, some chemicals and drugs, and others will now be
dereserved. My colleague, the Minister of Small Scale Industries
will announce the details of these items separately.
Exports
63. The Government is committed to provide
all assistance to accelerate export growth. A key new initiative
is the establishment of Special Economic Zones (SEZs). I will announce
a comprehensive package for SEZs in Part B of my speech.
64. To provide incentives to State Governments
for export promotion through the creation of new export promotion
industrial parks and associated facilities, I propose to increase
the outlay for the scheme from Rs 97 crore this year to Rs 330 crore
for 2002-2003. Overall outlay for the Department of Commerce for
the year 2002-03 has been increased by 55 per cent to Rs 775 crore.
HUMAN DEVELOPMENT
Education
65. The 93rd amendment of the Constitution has
made free and compulsory education for all children in the 6 to
14 age group a fundamental right. Necessary infrastructure for making
this possible will be created. Accordingly, the plan allocation
to the Department of Elementary Education and Literacy is being
enhanced from Rs 4,000 crore this year to Rs 4,900 crore for 2002-03.
66. Last year I had announced a new comprehensive
educational loan scheme to cover all courses in schools and colleges
in India and abroad. The scheme has served the students well and
loans amounting to about Rs 670 crore have already been given to
almost 50,000 students.
Social Security
67. Last year I had mentioned that the Insurance
Regulatory and Development Authority (IRDA) would be asked to provide
a road map for a new pension scheme so that the unorganised sector
is provided adequate social security coverage. IRDA has recommended
a regulatory framework for setting up pension funds to enable individuals
to subscribe on a defined contribution basis to obtain the benefit
of pensions on their retirement. Action on these recommendations
will be taken by June 30, 2002.
68. Access to good and responsive health care
is still a distant dream for the majority of the rural population.
An insurance scheme called "Janraksha" is being designed by the
public sector insurance companies to provide protection to the needy
population. With a payment of Re. 1 per day as insurance premium,
a person will be entitled to indoor treatment up to Rs 30,000 per
year at selected and designated hospitals. Out patient treatment
upto Rs 2,000 per year will also be covered at designated clinics
which would include civil hospitals, medical colleges, private trust
hospitals and other NGO run institutions.
Women and Children
69. The year 2001 was celebrated as the Women’s
Empowerment Year and several policy, legislative and programme initiatives
have been launched
to help in the empowerment of women. I am increasing the plan allocation
for the Department of Women and Child Development by 33 per cent
to Rs 2200 crore.
70. In order to encourage the entry of large
numbers 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.
71. Far too many children in our country continue
to suffer from malnutrition. Accordingly, the Prime Minister announced
a National Nutrition Mission in his Independence Day speech on August
15, 2001. Under this Mission food grains at subsidised rates would
be made available to adolescent girls and expectant and nursing
mothers belonging to below poverty line families through the ICDS
structure.
Indian System of Medicine
72. The National Institute of Siddha at Chennai
is being provided Rs 4 crore 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 crore.
Scheduled Castes and Scheduled Tribes
73. The allocation for the welfare and upliftment
of Scheduled Castes in the Ministry of Social Justice and Empowerment
has been increased from Rs 792 crore this year to Rs 879 crore in
the coming year. The Ministry of Tribal Welfare has launched a number
of schemes to improve the social and economic life of scheduled
tribes. In order to meet the requirements of various schemes such
as scholarships and hostels for improved access to quality education,
the establishment of Grain Banks, and other support schemes under
the National Scheduled Tribes Finance and Development Corporation
(NSTFDC), I have increased the plan outlay for tribal welfare by
21 per cent to Rs 290 crore for 2002-03.
Development of the North Eastern Region
74. I am glad to inform the House that during
the current year an additional sum of Rs 500 crore was provided
to the North Eastern States from the Central Pool set up in 1998-1999.
This is Rs 187 crore more than last year. The provision for expenditure
in North Eastern States out of the Central Plan of various Ministries
has also been increased from Rs 3,457 in the current year to about
Rs 5,016 crore next year.
Science and Technology
75. The plan allocation for the Department
of Science and Technology is being raised to Rs 625 crore in 2002-03,
an increase of more than 52 per cent over the current year.
76. A fund for the improvement of Science
& Technology (FIST) was established in 2000-01 for augmenting
laboratory facilities in Universities. Encouraged by the enthusiastic
response to this fund I propose to increase the allocation for this
programme to Rs 75 crore in 2002-03, an increase of almost 115 per
cent. Resources from this fund can now also be used to augment library
facilities in the Universities.
77. The National Innovation Foundation was
set up in March 2000 with a corpus of Rs 20 crore, in order to build
a national register of outstanding traditional knowledge and grass
root innovations. This initiative has shown good results. In the
second annual campaign NIF has received more than 11,000 entries
from all over the country, up from 948 entries in the first year.
Encouraged by this enthusiastic response I propose to set up a micro
venture capital fund for small innovations to be initiated by the
Small Industries and Development Bank of India (SIDBI), in cooperation
with the National Innovation Foundation, to facilitate the transition
of innovations into enterprises.
Entertainment
78. 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. Today, we are the
world’s largest producer of films; we have a rapidly expanding broadcasting
sector; a huge reservoir of talent in music; and a promising potential
to become the international hub for all types of inputs for the
entertainment industry. Accordingly, the budgetary support for the
Ministry of Information and Broadcasting is being increased by 22
per cent to Rs 415 crore for 2002-03.
79. With the industry status to the entertainment
sector brought into effect last year, banks and financial institutions
have sanctioned more than Rs 236 crore, so far, for film and TV
software production. Good money will certainly lead to good films.
Film exports have been roughly doubling every year, during the last
3 years. It is time we brought about a fiscal regime to usher in
more "Khushi" and take away the remaining "Gham" from the entertainment
industry.
80. "Filhal" I shall have more to say on this
in Part ‘B’ of my speech.
FISCAL CONSOLIDATION
81. 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. The recommendations
of the Parliamentary Standing Committee of Finance are receiving
our attention and I propose to bring the Bill for consideration
in this august House within the current session.
82. 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: as a consequence, Mr. Speaker, Sir,
you will be pleased to hear that Non-Plan expenditure for the current
year is lower by more than Rs 10,000 crore over the budgeted amount.
However, mindful of the industrial slowdown, and the need for continued
public investment, 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.
83. Putting our fiscal house in order must
remain our highest priority. We have to make every effort to contain
non productive expenditure and make substantive improvements in
our tax machinery so that revenue collections show higher buoyancy
in coming years. I will shortly outline my plans in this regard
in Part B of my speech.
84. The fastest increasing component of expenditure
is that of subsidies. It is essential that they are reduced to a
minimum over the next 3 to 5 years. However, access of the poor
to adequate levels of nutrition through a well targetted PDS will
have to be ensured along with employment generation programmes.
Expenditure Management
85. 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 1 per cent of total civilian staff strength
will continue to be implemented over the next 4 years. The availability
of a VRS package that has now been approved will help this effort
to reduce staff strength while ensuring adequate security to the
affected employees.
86. We have made efforts to contain the fertiliser
subsidy by plugging inefficiencies in the production system which
were earlier passed on to the government by the producers and by
periodical increases in the issue prices. The ERC has recommended
that the Government should increase prices by 7 per cent every year
and move towards decontrol over the next 5 years. Fertiliser prices
have not been increased for the last two years. I propose a modest
increase in the issue price of urea, DAP and MOP by about 5 per
cent and to reduce the subsidy for SSP by Rs 50 per tonne. The prices
of complex fertilisers will also be suitably modified. The Ministries
of Agriculture and Chemicals and Fertilisers will notify the specific
increases.
87. 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.
88. Because of the rising cost of Postal Service,
a modest increase in postal rates is being proposed.
Small Savings and Interest Rates
89. Last year I had announced the setting
up of an Expert Committee headed by 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 lakh 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 crore will be available to the 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.
¨ Revisions are being made in the tax treatment of
small savings, which will be outlined in Part B of my speech.
90. The implementation of this long sought
reform in the treatment of small savings and administered interest
rates is another step forward in the deregulation of interest rates
in the economy that has been carried out in phases over the last
10 years. This should help in reducing the interest burden on the
government and private sector alike in future.
Pension Reform
91. The present pension scheme for Government
employees casts an open-ended financial burden on the Government.
I had announced the appointment of a High Level Expert Group to
develop a new pension scheme, based on defined contributions, for
new recruits entering government service. The Expert Group has submitted
its report to the Government. It has proposed a hybrid scheme that
combines contributions from employees and the Union Government on
matching basis, on the one hand, while committing to the employees
a defined benefit as pension. The report is being considered by
the Government and the new pension scheme for new recruits will
be announced and implemented by June 1, 2002.
Privatization
92. With the streamlined procedure for disinvestment
and privatization, I am happy to report that the Government has
now completed strategic sales in 7 public sector companies and some
hotel properties of the Hotel Corporation of India (HCI) and the
India Tourism Development Corporation (ITDC). The change in approach
from the disinvestments of small lots of shares to strategic sales
of blocks of shares to strategic investors has improved the price
earning ratios obtained. We expect to complete the disinvestment
in another 6 companies and the remaining hotels in HCI and ITDC
this year. Disinvestment receipts for the present year are estimated
at Rs 5,000 crore excluding the special dividend from VSNL of Rs
1,887crore. Encouraged by these results, I am once again taking
credit for a receipt of Rs 12,000 crore from disinvestment next
year.
Defence
93. Modernisation and upgradation of our Defence
preparedness is an area of highest national priority. I have made
a provision of Rs 65,000 crore for defence expenditure for next
year. In case of need, I shall not hesitate to provide more funds
for this purpose. As a measure of welfare of 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
94. 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. Some
State governments have taken bold measures to bring down non-productive
expenditure to improve their fiscal situation. 12 States have so
far drawn up medium-term fiscal reform programmes in consultation
with the Central Government in the current year and have been provided
assistance from the Incentive Fund. 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. It will
be our joint endeavour to bring down the consolidated debt to GDP
ratios to sustainable levels by 2005.
95. 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
crore has been provided. In addition, a lump-sum amount of Rs 2,500
crore 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 the 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.
BUDGET ESTIMATES
Revised Estimates for 2001-2002
96. The revised estimates for the current
fiscal year show a decrease in expenditure of Rs 10,787 crore as
compared to the Budget estimates.
97. Net tax revenues for the Centre are estimated
to be Rs 1,42,348 crore compared to the Budget estimate of Rs 1,63,031
crore, thereby reflecting a shortfall of Rs 20,683 crore. 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 crore, Rs 1,510 crore more than the estimated
level of Rs 68,714 crore. However, disinvestment receipts, at
Rs 5000 crore are much lower than the Budget estimate of Rs 12,000
crore.
Budget Estimates for 2002-2003
98. In the budget estimates for 2002-2003,
the total expenditure is estimated at Rs 4,10,309 crore, of which
Rs 1,13,500 crore is for Plan and
Rs 2,96,809 crore for non-Plan.
Plan Expenditure
99. The budget support for Central, State
and UT Plans has been placed at Rs 1,13,500 crore, an increase of
Rs 18,400 crore over Budget estimates 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 crore in the revised estimates
2001-2002 to Rs 66,871 crore in 2002-2003. Central Plan assistance
to States and Union Territories in 2002-2003 is also proposed to
be increased to Rs 46,629 crore from Rs 38,878 crore in the revised
estimates 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
100. Non-plan expenditure in 2002-2003 is
estimated to be Rs 2,96,809 crore compared to Rs 2,65,282 crore
in Revised estimates for 2001-2002. The increase in non-plan expenditure
is mainly in interest payments (Rs 10,133 crores), subsidies (Rs
9,278 crore), defence (Rs 8,000 crore) and grants to State Governments
(Rs 2,196 crore).
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