The Hindu : Interim budget benefits Central Government staff

Online edition of India's National Newspaper
Wednesday, Feb 04, 2004

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Interim budget benefits Central Government staff

By Alok Mukherjee

NEW DELHI, FEB. 3. Except for Central Government employees, who will have a major portion of their dearness allowance merged with the basic pay, the interim budget for 2004-05 presented in Parliament today by the Union Finance Minister, Jaswant Singh, stopped short of handing out any major pre-election sops to voters. In fact, Mr. Singh did not announce any income tax relief and only promised to revise the exemption limits and standard deduction at a later date when the full budget for the year is presented.

The two other firm announcements concern baggage rules and stamp duty. Effective from today, the free baggage limit for Indians returning from abroad has been raised to Rs. 25,000 while the customs duty on the rest of the baggage has been reduced to 40 per cent. Another decision was to halve the duty on Central Government stamp papers and increase the threshold limit for stamp duty on receipts from Rs. 500 to Rs. 50,000.

For Central Government employees, Mr. Singh announced the merger of DA, to the extent of 50 per cent of the pay, with the basic pay. This will take effect from April 1, 2004, and cost the exchequer Rs. 3,500 crores approximately in a full year. But with a higher basic pay and allowance, the income tax burden of the employees is also expected to go up and fetch the Government an additional Rs. 500 crores, thereby bringing down the net outgo to Rs. 3,000 crores approximately. Mr. Singh said the Government was committed to revising the level of standard deduction and the current exemption limits but these would have to wait since an amendment to the Income-Tax Act was necessary and this was not being proposed now.

But he did hold out a number of promises which he felt should be fulfilled. Among these is continuation of the capital gains tax exemption on listed securities acquired on or after March 1, 2003; capital gains tax exemption on the compensation paid to farmers whose agricultural land is acquired by the Government; a review of the tax treatment of the family pension of war widows; a tonnage tax on shipping to provide a level-playing field for the shipping industry and extension of the fiscal benefits for new power projects beyond 2006 and till 2012.

For the rural population, the announcements cover expansion of the Antyodaya Anna Yojana scheme to two crore below-poverty-line families, credit to farmers at rates lower than the current threshold of nine per cent, a review of the collateral security procedure for farm loans and extension of the farm income insurance scheme to cover 100 districts. All eligible farmers are to get the Kisan Credit Cards by March 31 with the Automatic Teller Machine access where such facilities exist. Special packages for the revival of the tea and sugar industries have also been promised.

For the small-scale sector, the limit under the small units credit card scheme has been increased to Rs. 10 lakhs from the present Rs. 2 lakhs for borrowers with a satisfactory track record. This modified scheme will be operational from March 1 this year.

Drinking water supply scheme

An accelerated drinking water supply scheme for mega cities such as Bangalore, Chennai, Delhi and Hyderabad and the setting up of convention centres in Delhi, Mumbai and one each in Rajasthan and Goa have also been announced.

A long-pending demand of the defence forces for a non-lapsable modernisation fund has been conceded with an outer limit of Rs. 25,000 crores to be built up over the years. For industry, the Minister promised to consider some of the proposals seeking excise and customs relief.

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