Mr Speaker,
1. I rise to present an Interim Budget, for part of the fiscal year 2004-05. This seeks aVote-on-Account to enable the Government to discharge its responsibilities and to meet all essentialexpenditure during the first four months of 2004-05.
The Demands for Grants and the Annual Financial Statement presented are, however, for the full financialyear, though, these could be revised, as is normal, at the time of presentation of the regular Budget.
I am also introducing a Finance Bill, seeking to continue the existing tax structure for the present.
2. Under the premiership of Shri Atal Bihari Vajpayee, this is the seventh successivebudget of the Government of the National Democratic Alliance (NDA). On this occasion I share with the countryand the House a sense of great satisfaction at the robust showing of our national economy, and also expressour sincere gratitude for the cooperation, support and encouragement that the people of India have soconsistently and so ungrudgingly given to the NDA and to its Government.
The country's macro-economic situation is better than it has ever been in the last fifty years.Internationally, too, there is now much greater, and a much more widespread recognition that India isprogressing in all spheres of national endeavour, that it has evolved into a stable economy, with assuredgrowth, and enhanced national prosperity.
II. NDA: Economic Policy & Approach and Achievements
3. This Government has consistently placed the citizens' well being at the core of itsresponsibilities. Our adherence to 'Panch priorities' remains.
The objectives of the life-time concerns of our citizens: enhanced employment, and eradication of poverty;a second green revolution in agriculture; infrastructure development; fiscal consolidation; and greatermanufacturing sector efficiency, are our solemn commitments.
4. We believe, Sir, that both are necessary: a vision for a resurgent India and,simultaneously an awakening so that the disadvantaged of our land are lifted beyond poverty. We hold thateconomic development is not about economics alone, it is always, simultaneously, a political statement too,for 'development' devoid of compassion is a misnomer. Of course, growth statistics are very important; theyare vital inputs, but they must also be the indices that assist us in designing distributive justice.
It is for this reason that 'gross national contentment' is so important, as the catalyst that motivatesredoubled national endeavour. It is from seeking national contentment that objectives are born: 'Garib kepet me dana, Grihini ki tukia mein anna.'
Sir, India must be amongst the leading economies of the word, that simply put is our national destiny; tobe in service of the country's destiny is the government's honour and its bounden duty. From this directlyflow our national economic objectives.
5. Economic growth indices, in the current year, Mr. Speaker, are very encouraging. Withinflation at 4 to 4.5 per cent, this year we expect the growth rate of our GDP to be between 7.5 and 8 percent.
Though, there are higher growth estimates that have been made, for the present, we prefer to remain withthe cited figures. This level of growth is a matter of great satisfaction.
Sir, employment has increased, but so have expectations. We must meet this challenge. Bold initiatives ininfrastructure have already generated several layers of immediate employment, simultaneously laying thefoundation for additional quality employment across a broad spectrum of economic activity.
The objective of enhancing job opportunities will be pursued vigorously. Our foreign exchange reservescrossed $100 billion on December 19, 2003. They continue to grow, liberating us from the mentality of want.For greater openness and to share necessary information with citizens, the first ever Report of the ReserveBank of India (RBI), on Foreign Exchange Reserves is being released today.
It can be accessed on the Ministry's, as well as the RBI's Web site.
6. Sir, a combination of moderate inflation, declining interest rates, and healthy capitalmarkets has set our economy on the path of accelerated growth. To further encourage this is ourresponsibility.
Preserving the strength of our macroeconomic fundamentals has, therefore, to be much more focused.Management of the economy is a continuing responsibility, governance can neither pause nor cease, and measuresto fully consolidate, and continuously enhance the growth momentum must always be adopted in time.
Only in that manner can we realise the vision of economic and social progress that we have cherished sinceindependence.
III. Initiatives and the Road Ahead
Reform Measures
Antyodaya Anna Yojana
7. Antyodaya Anna Yojana, launched by the Prime Minister in December 2000, currentlycovers 1.5 crore families below the poverty line (BPL). This is a highly successful programme, widelyacclaimed. It directly addresses poverty alleviation and nutritional adequacy.
This programme is now being extended by increasing its coverage to 2 crore BPL families. Whilst doing so,it will be ensured that tribal states, districts, or belts receive added allocations. This will be effectivefrom April 1, 2004.
Pradhan Mantri Swasthya Suraksha Yojana
8. Poverty and disease are interlinked. Specialty hospitals in the private sector remainbeyond the reach of many of our citizens. The Prime Minister had, therefore, last Independence Day, announcedthe establishing of six hospitals, in the government sector, on the pattern of All India Institute of MedicalSciences(AIIMS). This 'Pradhanmantri Swasthya Suraksha Yojana' envisages six new AIIMS like hospitals,one each in the States of Bihar, Chhatisgarh, Madhya Pradesh, Orissa, Rajasthan, and Uttaranchal. Hon'bleMembers are doubtless aware that no additional hospital on the pattern of AIIMS has been set up by anyGovernment, since 1956.
I would also like to mention that under this Pradhanmantri Swasthya Suraksha Yojana, one medicalcollege each in the six States of Andhra Pradesh, Jammu & Kashmir, Jharkhand, Tamil Nadu, Uttar Pradesh,and West Bengal will also be upgraded to the level of AIIMS.
9. I am happy to announce that a provision for both these schemes has been made in thisBudget itself.
Rural
10. The Government is committed to ensuring the availability of timely credit ataffordable rates to our farmers, and to other citizens in rural India. For this objective, the followingadditional measures will be taken:
In July, 2003, a reduction in the rate of interest for crop loans by public sector banks to 9 per cent wasannounced. The NABARD Act was also appropriately amended. I have been urging the Indian Banks' Association tofurther lower the interest rates for agricultural purposes. Some public sector banks have already done so. Iam confident that other banks will also respond by offering loans at rates lower than those prevailingcurrently.
Traditionally, banks have sought relatively higher security on credit for agriculture. To illustrate, banksinsist on mortgaging the entire land holding of a farmer borrower, as security for advances for agriculturalpurposes. Banks are, therefore, now being advised to assess individual credit-worthiness and to not routinelyinsist on additional collateral through a mortgage of the entire land holding. As a principle, collateralsecurity should be proportionate to the value of the loan.
Prescriptions relating to Non-Performing Assets (NPAs), in relation to crop loan accounts, have posedproblems in the provisioning of credit to farmers where seasonality and uncertainty of farm incomes are notfully captured. A Committee has been set up under Dr.V.S. Vyas, an eminent agriculture economist, to addressthis issue. Suitable remedial measures will be recommended within 90 days.
I expect all eligible farmers to be in receipt of their Kisan Credit Cards (KCC) by March 31, 2004. Toextend the benefit of technological developments in the banking industry to rural India, the existing KisanCredit Card will hereafter be modified, upon individual request, for use on ATM machines, wherever suchfacility exists.
A Farm Income Insurance Scheme has been introduced by the Ministry of Agriculture in 20 districts, on apilot basis. This will be extended to 100 districts, of the country from the forthcoming Kharif season.Details will be announced by the Ministry of Agriculture.
Self Help Groups (SHGs) have been a remarkable success story, but only in some states of the country.NABARD has, therefore, been asked to take up a special promotional campaign in the States where this programmeis yet to gather momentum. In the first phase, an intensive programme will, therefore, be launched in thestates of Uttar Pradesh, Rajasthan and Madhya Pradesh. Public Sector Banks will also supplement this effort inother States.
Tea is an important agro-processing industry, employing a large number of our citizens in North Bengal,Assam, the North-East and some of the Southern States. Currently, this industry is beset by many problems. Ihad, therefore, tasked the Indian Banks Association to prepare a revival package. This has now been finalized.Special Tea Term Loan, repayable in five years, with a moratorium of one year, shall be provided. In case ofsmall tea growers banks have agreed to extend fresh working capital limits up to Rs.2 lakh, at an interestrate of 9 per cent.
In addition, steps will be undertaken to examine the feasibility of a debt amelioration scheme in the teasector, too.
Sugar, another major agro-processing industry of the country, generating substantial employment, currentlyfaces a complex web of problems. Government will, therefore, prepare a package for the revitalisation of thisindustry, in consultation with all the stakeholders. In the meantime, as a measure of temporary relief,restructuring of loans taken by sugar factories will be examined by the lending agencies, including banks, inconsultation with RBI and NABARD.
11. Cooperative banks have played a vital role in the delivery of rural credit. They, too,have a variety of problems hampering their capacity to deliver credit at reasonable rates of interest. Ascheme to revitalize the cooperative credit structure, envisaging an outlay of about Rs.15,000 crore, to beshared between the Central and State Governments, in an appropriate ratio, has been prepared. It is proposedto initiate this scheme as soon as the revised regulatory framework has been put in place.
Cattle Development
12. Cattle are a vital integral of our rural economy. To give a boost to the entire gamutof this economic activity, such as animal husbandry, dairying and sheep rearing, the Government will considerthe setting up of a National Cattle Development Board with appropriate budgetary support.
Laghu Udyami Credit Cards
13. To further encourage the development of small-scale and self-employed ventures stepshave been taken to liberalise Laghu Udyami Credit Card scheme, providing small and medium enterprises easieraccess to bank credit. It has now been decided, in consultation with IBA, that the public sector banks willincrease the credit limit of their cards, for borrowers who have a satisfactory track record, from Rs.2 lakhto Rs.10 lakh. Banks are being advised to make the modified scheme operational from March 1, 2004.
Stamp Duty Reform
14. A comprehensive reform of the entire stamp duty regime is being addressed inconsultation with State Governments, as high stamp duty increases transaction costs, restricting economicactivity. The Government has, in the meantime, decided to reduce stamp duty on all such instruments where theauthority to fix rates is of the Central Government.
As a first step, and as the first reduction, the existing stamp duty structure is being halved, that is,being reduced by 50 per cent on all Central Government stamp papers. As for duty on Receipts, here too, thethreshold for payment of stamp duty is to be increased from Rs.500 to Rs.50,000.
As, however, this last reform requires an amendment to the Act, it can not be taken up at this stage.
Special Areas
Island territories
15. The district of Nicobar, in the Andaman and Nicobar Islands, is one of our remotestdistricts. These islands, separated by vast distances across the sea are relatively inaccessible. Therefore,in the Nicobar group of islands, a hard area allowance at the rate of 25 per cent of basic pay will, witheffect from April 1, 2004, be paid to all Government employees posted there.
16. Due to high cost of construction, consequently the high rentals prevailing in thisregion, and as directed by the Prime Minister it has been decided that the status of Port Blair be raised froma 'C' to a 'B-1' class city, for purposes of house rent allowance (HRA).
Simultaneously, rural areas of the Union Territory of Andaman and Nicobar Islands and the entire UnionTerritory of Lakshadweep will also stand upgraded from their existing status of 'unclassified' to 'C' classcity, for the purpose of payment of this allowance.
Consequently, HRA will also be raised from 7.5 per cent to 15 per cent of the basic pay in all other areasof the Union Territory of Andaman and Nicobar Islands, as well as in the Union Territory of Lakshadweep.
The status of State of Goa is also being raised from 'C' to 'B-1', from April 1, 2004, for the purposes ofHRA.
Desert areas
17. The desert areas of the country are under a variety of stresses. Most of them are alsoeither border districts or are contiguous to it. Last year, I had announced the 'Maru Gochar Yojana', aspecial programme for rehabilitation and development of traditional pasture lands in the desert districts ofRajasthan. I am glad to inform Hon'ble Members that implementation of this programme has commenced. I nowpropose to establish a Task Force for Integrated Development of Desert Areas, with a mandate to address theproblem of sustainable livelihood in our deserts.
This Task Force will review all relevant current programmes, identify gaps, define thrust areas, and makeappropriate recommendations. It will also examine the establishment of a Rural Technology Centre, in one ofthe desert districts, and give its recommendations in this regard.
18. The Indira Gandhi canal project has languished for decades, slowly inching its way,year after year, through the desert.
Considering the inordinate delay in its completion and the critical importance of water in our desertareas, this canal project will, hereafter, be accelerated through a fresh Centre-State initiative, includingadditional, innovative funding. Similarly, for an extension into Rajasthan of the Narmada Canal too, theMinistry of Finance will work with the Government of Rajasthan and assist it in financing an early completion.
Kutch and adjoining districts
19. At present, new industrial units in the Kutch Districts of Gujarat, established duringthe period from July 31, 2001 to July 31, 2004 and which start commercial production on or before July 31,2004 are exempt from excise duty.
In order to give some more time for completion of such projects, I am extending the last date, for settingup of such new units, from July 31, 2004 to December 31, 2004. The period of exemption from excise duty willcontinue to be five years from the date of start of commercial production.
Water Scarcity in Metropolitan Cities
20. Several initiatives have been taken by this Government to address the vital questionof providing an assured supply of potable water to rural India. Metropolitan cities have until now had toaddress this shortage through either their own municipal resources or on the strength of support received fromtheir respective State Governments.
The need and demand for water has grown much faster than additional supply measures. The Prime Ministerhas, therefore, decided to initiate an accelerated drinking water supply scheme for mega cities, such asBangalore, Chennai, Delhi and Hyderabad. The provision for existing Central scheme for infrastructuredevelopment in mega-cities will be augmented by accessing the Infrastructure Fund, the Life InsuranceCorporation and other such funding sources.
Details will be finalised by the Ministry of Finance to ensure that the scheme is operational by March 1,2004.
Convention Centres
21. Government has now decided upon the venues for four global standard internationalconvention centres, to be established through private-public partnership. I am glad that two of these will belocated in the metropolitan cities of Delhi and Mumbai, and one each in Goa and Rajasthan. Both Goa andRajasthan have great tourism potential, but need more infrastructural facilities. Goa will thus also beenabled to provide suitable facilities for holding international film festivals.
So that the convention centre in Jaipur functions effectively, the airport in Jaipur will be converted intoan international airport. Details of all these will be announced shortly.
Development Finance
22. There is no alternative to development finance. Steps to revive and re-structure theIndustrial Development Bank of India (IDBI) are already in hand.
In accordance with the mandate of the Parliament, the Ministry of Finance is committed to preserving andstrengthening the IDBI's role as a development financial institution.
