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March 1, 2001 - March 1, 2001

10 new bores to be drilled in Wankaner Thursday, March 1, 2001

RAJKOT: The civic officials have decided to drill 10 new bores in Wankaner area to augment water supply in the coming summer months. The municipal corporation would have to pay for drilling five bores.

Sources close to the civic officials told TOINS on Wednesday that apart from the existing 120 bores functioning for the Wankaner project, 10 more would be needed. The civic body is lifting 100 to 130 lakh gallons of water from the bore everyday.

The water level in the bore has fallen from 30 to 35 feet. It is feared that present level might go down by more than 70 feet. This view of the civic officials is contrary to the claim made by Chief Minister Keshubhai Patel that bore level had dropped by just three feet.

In Moti Virdi area, the water level is around 45 metre and in Jambudi area it has dropped to 69 feet. During last month, the level had dropped by more than 30 feet. To meet the increased demand of water during summer months, the water supply board has decided to drill 10 new bores.

All the old 120 bores were drilled at government expense. This time the board was keen that the civic body should share the cost of five bores.

Sources in the civic body told this correspondent that sudden change of stand by the government was because the Congress was ruling the civic body. Had it been the BJP, the government would not have collected money from the civic body. The standing committee of the civic body will discuss the issue later, sources added.

It is not yet certain when Rajkot would get the promised 30 lakh gallons of water from Aji-3 scheme. Jamnagar will start getting water from March 8, it is learnt from reliable sources. The Rajkot civic body has already spent a substantial amount on Aji-3 project.

The civic body has constructed the sump and other necessary facilities to get additional water from Aji-3 project which has run into trouble. Without Aji-3 water, residents of Rajkot would be hardpressed during summer months.

If 90 lakh gallons of water is lifted from the dam, water will last till summer-end. Jamnagar will get 60 lakh gallons of water. Ten lakh gallons have been reserved for distribution in rural areas. Rajkot's share will be a meagre 20 lakh gallons which is not even half of the expected 45 lakh gallons.

The civic officials say that Rajkot is going to get water from Mahi-Narmada project by March-end and hence there is no need for more water from Aji-3 dam.

The question disturbing water supply experts is that there is no guarantee that Narmada water will reach Rajkot by the promised time. Even if water comes, the quantity would not be sufficient to meet needs of the city.


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Plan to shift Rajkot collector's office Thursday, March 1, 2001

RAJKOT: The district administration is seriously thinking of shifting the entire collector's office to the AV Parekh Technical Institute (AVPTI) on Yagnik Road as large number of buildings in the premises have been damaged by the quake.

An official note is expected to be sent to the district collector within a couple of days, it was reliably learnt on Wednesday.

The sub registrar's building which had almost collapsed has already been shifted to the AVPTI premises while plans are afoot to construct a new revenue bhawan after demolishing the existing structure.

The buildings department has already written to collector P N Patel about the condition of the buildings and has also suggested the alternatives.

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Free medical camp Thursday, March 1, 2001

NADIAD: A two-day free paediatric cardiology diagnostic camp has been organised at the DDMM Institute of Cardiology, Mission Road, Nadiad. The camp will begin on March 3. Children (upto 18 years) with congenital heart problems can get themselves checked between 9 am and 1 pm at the free medical camp.

Registration can be done at the camp desk either through telephone or in person on any day between 9 am and 1 pm till March 4.

The camp will provide free consultation, free echo and colour dopler, special concessions for interventional or surgical procedures.

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Part I - FM's SPEECH on UNION BUDGET 2001-2002 Thursday, March 1, 2001

Sir,



I rise to present the Budget for the year
2001-2002.




  • I do so in all humility. The challenges we face this year
    are awesome, made more so by the tragedy and devastation caused by the Gujarat earthquake.
    I hope I shall get the understanding and support of the whole House in my endeavour to
    meet these challenges.




Economic Context




  • The Indian economy has continued to exhibit both growth
    and resilience that have characterized its performance in the past few years. Overall
    economic growth this year is expected to be about 6 per cent despite a series of
    unexpected setbacks. We have had a second successive year of irregular monsoon resulting
    in low agricultural growth. World petroleum prices have continued to stay at high levels
    placing strains on the economy as a whole, and have led to a significant increase in
    inflation over the past year. Fortunately, despite the increase in energy prices, the
    prices of essential commodities, and of manufactured products as a whole, have remained
    stable. Inflation, excluding energy, was around 4 per cent during the year. The economy
    remained secure with record levels of foreign exchange reserves and public food stocks.
    The creditable export performance recorded last year improved further: exports grew by
    over 20 per cent in dollar terms in April-December 2000.




  • It is now 10 years since economic
    reforms began in 1991. During this period, the economy has grown at an average rate of 6.4
    per cent per year since 1992-93 compared to the 5.8 per cent recorded in the 1980s.
    Poverty has fallen from 36 per cent in 1993-94 to 26 per cent or less now.



  • While economic reforms have placed the
    country on a much more secure and sustained growth path, we still have some serious
    concerns and cannot afford to be complacent.








  • l Agricultural reforms have been inadequate
    and our agriculture continues to be subject to the vagaries of the monsoon.



  • l Despite major industrial sector reforms,
    industrial growth has not accelerated to the double-digit level as expected.



  • l Inadequate fiscal adjustment has remained
    the most intractable problem over the past decade.








  • Interest payments now constitute over 69 per cent of the
    Centre’s tax revenues.

  • Subsidies continue to increase to
    unaffordable levels and do not necessarily reach the deserving beneficiaries.



  • The pension liability of the Government is
    becoming onerous.



  • l Public investment in infrastructure and
    social sectors is inadequate due to falling total public sector savings.



  • l Private investment is constrained due to
    high real interest rates and inadequate infrastructure.







Budget Strategy






  • Thus, despite the many achievements of economic reforms
    over the past decade, much remains to be done if we have to achieve our full potential.
    There is urgent need to further deepen reforms to set the stage for higher growth over the
    next decade. We have to intensify our effort in fiscal adjustment so that the generations
    to come are not burdened by our borrowing excesses. The economy has achieved significant
    acceleration in growth over the last 20 years. Our aspiration must be to achieve still
    higher growth in the next 20 years.



  • The broad strategy of the budget,
    therefore, with this objective of growth in mind is to ensure:-



    l Speeding up of agricultural sector
    reforms and better management of the food economy.


    l Intensification of infrastructure
    investment, continued reform in the financial sector and capital markets, and deepening of
    structural reforms through removal of remaining tiresome controls constraining economic
    activity.


    l Human development through better
    educational opportunities and programmes of social security.


    l Stringent expenditure control of
    non-productive expenditure, rationalisation of subsidies and improvement in the quality of
    Government expenditure.


    l Acceleration of the privatisation process
    and restructuring of public enterprises.


    l Revenue enhancement through widening of
    the tax base and administration of a fair and equitable tax regime.







Agriculture and Rural Development






As I have noted, reforms in the agriculture sector
have been inadequate and must be speeded up. The Government has already announced the
first ever National Policy in Agriculture.


The provision of adequate credit flow is critical for
agricultural production. Total credit flow to agriculture through institutional channels
of commercial banks, cooperative banks and regional rural banks is estimated to have
reached a level of Rs 51,500 crore this year, an increase of about 15 per cent over last
year. It is expected to increase to Rs 64,000 crore in 2001-2002 representing an increase
of 24 per cent. In order to ensure continued healthy growth of the agricultural sector, I
propose the following steps:


The operation of the Rural Infrastructure
Development Fund (RIDF), set up in 1995-96 with NABARD, has been very successful in
upgrading rural infrastructure with about 1,84,000 projects sanctioned so far. To help the
States, I have decided to reduce the interest rate charged by NABARD from 11.5 per cent to
10.5 per cent. The corpus of RIDF VII will be increased from Rs 4500 crore to Rs 5000
crore next year.


The innovation of Kisan Credit Cards has
proved to be very successful. Since the year of its introduction in 1998-99, almost 110
lakh of KCCs have been issued. I am asking our banks to accelerate this programme and
cover all eligible agricultural farmers within the next 3 years.


I am also asking the banks to provide a
personal insurance package to the KCC holders, as is often done with other credit cards,
to cover them against accidental death or permanent disability, upto maximum amount of Rs
50,000 and Rs 25,000 respectively. The premium burden will be shared by the card issuing
institutions.


NABARD and SIDBI were asked to link one lakh
Self-Help Groups during the current year. NABARD by itself is well poised to exceed this
target by the end of next month. I expect NABARD to link 1 lakh additional Self Help
Groups during 2001-02, which would help in providing access to credit to an additional 20
lakh families. Share-croppers and tenant farmers will also become eligible for this scheme
and special attention will be given to SC/ST groups. A micro finance development fund has
also been set up in NABARD with contribution of Rs 40 crore each by NABARD and RBI.


I had permitted NABARD to issue capital gains
tax exemption bonds last year. This has helped NABARD to mobilise more than Rs 1000 crore
at lower than normal interest rates thereby reducing its cost of funds. I propose to
continue with this tax exemption.


The resources from the Watershed
Development Fund set up in NABARD would be used to promote people’s participation and
also enable water users’ associations to implement, operate and maintain irrigation
schemes.







  • In 1999, I had announced a credit linked subsidy scheme for
    construction of cold storages for perishable commodities. So far, NABARD and NCDC have
    provided Rs 161 crore of credit for creation of additional capacity of 9.69 lakh tonnes. A
    subsidy of Rs 78 crore for setting up these cold storages was provided during 2000-2001. I
    now propose to extend the coverage of this scheme to also cover rural godowns. The subsidy
    to be provided by the Government would be suitably enhanced to take care of increased
    coverage. The loans would carry an adequate long-term repayment period and would enable
    individuals, cooperative societies and others to build godowns by availing of loans from
    cooperative banks, commercial banks and RRBs.




  • This scheme will enable small farmers to enhance their
    holding capacity in order to sell their produce at remunerative prices. NABARD proposes to
    reduce its rate of interest for funding the storage of crops, from 10 per cent to 8.5 per
    cent. Small farmers will particularly benefit from this scheme by avoiding distress sales.




  • With the diversification and modernisation
    of agricultural practices, there is a need to augment support and extension services for
    agriculture. For this purpose, a scheme for setting up Agriclinics and Agribusiness
    Centres by agricultural graduates will be launched with the support of NABARD. These
    centres will provide a package of soil and input testing facilities and other consultancy
    services, They will strengthen transfer of technology and extension services and also
    provide self-employment opportunities to technically trained persons. Loans on attractive
    terms for setting up these centres will be provided by banks with refinance from NABARD.



  • There is a significant potential of
    improving crop productivity in the Eastern and North Eastern regions through crop
    diversification and adoption of improved technologies. These regions also have large
    untapped ground water resources. A sum of Rs 61 crore has been provided for the Centrally
    Sponsored Scheme on "On-Farm Water Management for Increasing Crop Production in
    Eastern India".



  • I am also happy to inform the House that I have provided Rs
    38 crore for the "Technology Mission for Integrated Development of Horticulture in
    the North-Eastern States", announced by me last year.




Rural Roads


  • In my last Budget, I had announced the
    launching of a new scheme, the Pradhan Mantri Gramodaya Yojana (PMGY) with the objective
    of undertaking time bound programmes to fulfill the critical needs of the rural people. As
    a follow up, particularly with the objective of achieving rural connectivity, the Pradhan
    Mantri Gram Sadak Yojana has been launched by the Hon’ble Prime Minister on December
    25, 2000. A Central allocation of Rs 2500 crore was provided for 2000-01. I am providing
    another allocation of Rs 2500 crore for the coming year. 50 per cent of the diesel cess is
    earmarked for development of rural roads.





Rural Electrification


  • It is a matter of concern that even
    after 50 years of planned development there are still about 80,000 villages, which do not
    have access to electricity. A package of initiatives is therefore being launched to
    improve the power distribution system in rural areas. This includes:








  • l Completion of electrification of
    bulk of the remaining villages in the next 6 years.



  • l Extension of assistance to the States
    for village electrification works under the PMGY whose funding is being augmented.



  • l Stepping up credit support from Rural
    Electrification Corporation to SEBs for speedy electrification of dalit bastis, households
    of scheduled tribes and other weaker sections of society.



  • l Improving the quality of power supply
    in villages, augmentation of distribution networks in rural areas supported by REC under
    the Accelerated Power Development Programme.



  • l Earmarking a sum of at least Rs 750
    crore out of RIDF for rural electrification works.








  • l Augmenting the resources of REC, by allowing it to float
    capital gains tax exemption bonds along with NABARD and NHAI under Section 54 EC of the
    Income Tax Act.


Management of the Food Economy


  • Increased production and rising
    productivity makes the proper management of the food economy more critical then ever
    before. Our policy has to be transformed to deal with surpluses rather than only
    shortages. The present arrangement of Government of India procuring foodgrains and States
    managing the PDS has led to many problems. While the subsidy has increased from Rs 8210
    crore at B.E. to Rs 12,125 crore at R.E. stage this year, the satisfaction level has gone
    down. I propose, therefore, to give an enlarged role to the State Governments in both
    procurement and distribution of foodgrains for PDS in their respective states. Instead of
    providing subsidised foodgrains, financial assistance will be provided to the State
    Governments to enable them to procure and distribute foodgrains to BPL families at
    subsidised rates. FCI will continue to procure foodgrains for maintaining food security
    reserves and for such State Governments who will assign it this task on their behalf.
    Details for operationalising these arrangements will be worked out in consultation with
    the State Governments at the earliest.



  • The agricultural sector continues to be
    constrained by the existence of a number of inhibiting controls and regulations. The
    Essential Commodities Act, 1955 provides for the control of production, supply and
    distribution of certain commodities identified as essential commodities under the Act to
    protect the interest of consumers. State Governments have issued a large number of Control
    Orders under this Act inhibiting free movement of some food and agriculture products. In
    the changed present situation undue restrictions on movement and stocking of foodgrains
    and agricultural produce is acting as a disincentive to farmers.



  • Government therefore proposes to review the operation of the
    Essential Commodities Act, 1955 and  remove many of the restrictions that have been
    imposed on the free inter-State movement of foodgrains and agricultural produce and also
    on the storage and stocking of such commodities. It will also review the list of
    commodities declared as essential under the said Act and bring their number down to the
    minimum required. My colleague the Food Minister will issue necessary direction in this
    regard after consultations with the State Governments.


Infrastructure


  • Rapid development of the economy depends
    on adequate investment in infrastructure. A key issue here is imposition of appropriate
    user charges necessary to provide adequate returns on investment. Public resources have
    been invested in the public sector over the last 50 years for the provision of
    infrastructure services in the country. One consequence of this has been that user charges
    have inevitably become politically determined. Over time non-merit subsidies inherent in
    such low user charges have mounted to over 10 per cent of GDP, a figure similar to the
    total fiscal deficit of the Central and State Governments combined. Hence they are a major
    cause of the fiscal distress being experienced at all levels.



  • I believe that this issue is now so
    important that it needs urgent discussion throughout the country. The challenge is to
    achieve a consensus on the imposition of appropriate user charges in such a manner that
    the poor are protected while those who can pay are made to do so. Only then will we be
    able to accelerate investment in these essential services in both the public and private
    sectors. A prime example of this is the power sector.




Power


  • The importance of power in fuelling
    economic growth cannot be over emphasised. The total cost to the State Electricity Boards
    of implicit subsidies amounts to about Rs 36,000 crore this year. After accounting for
    cross subsidy and State subventions, actual commercial losses of all SEBs combined are
    estimated to be about Rs 24,000 crore. Hidden in these loss figures are extremely high
    T&D losses.



  • Although all of these losses are borne by
    SEBs and State Governments, I have to express my concern on this issue since this is a
    massive national loss and affects Central Government undertakings also. The total dues
    owed to Central Government utilities by SEBs and others now amount to over Rs 25,000
    crore. If these resources were available, the country would have no difficulty in
    investing adequately in power sector expansion to the benefit of all. Theft of electricity
    must be stopped and economic tariffs levied.



  • The most vital element of the reform process
    is the restoration of financial viability of the State Electricity Boards (SEBs). On the
    basis of consensus that has progressively emerged in the National Development Council
    Resolution of 1992, the Common Minimum National Action Programme drawn up in 1996 and the
    Power Ministers’ Conference of February 2000, the Central Government is accelerating
    the programme of reforms in SEBs on the basis of specific milestones that are being built
    into MOUs entered into with State Governments. These MOUs include specific milestones such
    as:-






  • l A time bound programme for installation of
    100 per cent metering by December 2001.



  • l Energy audit at all levels.



  • l A specific programme for reduction and
    eventual elimination of power theft.



  • l Tariff determination by SERCs and
    compliance thereof.



  • l Commercialisation of distribution and



  • l SEB restructuring.






  • To demonstrate the importance of this task,
    the Prime Minister will hold a meeting of State Chief Ministers on March 3, 2001.



  • MOUs have already been entered into
    with 5 States and we expect more States to adopt the reform process. Accordingly, plan
    allocation to the Accelerated Power Development Programme (APDP) has been stepped up to Rs
    1500 crore next year from a level of Rs 1000 crore this year. Priority under APDP would be
    given to those states that undertake such reform. The key to restoration of financial
    viability is reform of distribution. Assistance from the Fiscal Reform Incentive Fund
    recommended by the 11th Finance Commission would also, inter-alia, be linked to the
    achievement of power reforms. The reforming States would also receive support from the
    Central Government in form of preferential allocation of power to SEBs from CPSUs,
    additional investment by CPSUs in generation and transmission, and preferential allocation
    of external aid.



  • In order to help accelerate the
    reform process in the power sector and to unify all existing central legislations in the
    sector, my colleague the Minister for Power will introduce the Electricity Bill 2001
    within this session.



  • The Plan outlay for central sector power utilities is being
    raised from Rs 9,194 crore this year to Rs 10,030 crore for 2001-02. This demonstrates the
    commitment of the Central Government to accelerate public sector power investment along
    with power sector reforms.





Roads


  • The National Highway Development
    Programme (NHDP) represents a new road vision for this country. Its unprecedented scale is
    symbolic of government’s earnestness to provide connectivity and mobility of an
    altogether different order. The key to government’s success in accelerating the road
    development programme lies in its bold policy of levying a cess on petrol and diesel as a
    user charge for road usage. Resources for Phase I, to be completed by December 2003, have
    already been tied up. Work has already been awarded for more than 1500 Kms. of the golden
    quadrilateral in addition to the completed sections totalling 600 Kms. The balance portion
    is expected to be awarded by the middle of this year.




  • The cess has paved the way for integrated
    road development in the country, including village roads, district roads, state roads, and
    national highways. Rs 962 crore from the cess fund is being made available to States for
    state roads. The total plan outlay for this sector is being enhanced by 93 per cent to Rs
    8727 crore in 2001-02.





Telecom


  • Another area of success is in the
    telecommunications sector. Almost all the policy measures announced in the New Telecom
    Policy 1999 regarding basic and cellular services, national long distance, Internet
    services, and corporatisation of Department of Telecom Services have been implemented.
    Competition is being introduced in all service segments.



  • By March 2001, overall teledensity is
    expected to reach 3.5 per hundred, about double the teledensity of only two years ago.
    Moreover, the new competition has already reduced prices for consumers. There are now
    almost 800,000 STD/ISD/Local booths around the country bringing telephone service within
    reach of almost all consumers, apart from generating considerable employment.



  • Looking ahead, having recognised the
    imperatives of technological change in this area, the Government proposes to introduce the
    Convergence Bill to cover telecommunications, information technology, and information and
    broadcasting sectors in an integrated manner.





Ports


  • Coming to the port sector, I am glad to
    report that policy initiatives designed to increase private sector participation in ports
    have also been successfully implemented. Overall, capacity in Indian major ports is
    expected to go up to 314 million tonnes this year and further to 376 million tonnes by the
    end of 2001-2002, along with substantial capacity addition in minor ports. There is now
    adequate capacity in major ports. Ships no longer have to wait for berths as was the case
    before.



  • Ennore port has already been corporatised and Jawahar Lal
    Nehru Port in New Mumbai is next, and with experience, other major ports can also be
    corporatized, enabling them to raise resources in the market. Successful investment is
    being enabled by the setting of economic tariff levels. With the formation of the Tariff
    Authority for Major Ports, these tariffs are being rationalised further on a continuing
    transparent and fair basis.



Financial Sector and Capital Markets


  • A great deal of progress has been made
    over the last few years in pursuing reforms in the financial sector and capital markets. I
    propose to continue reform in this sector.





Debt Market


  • The Indian equity market is the oldest
    in Asia. Since the creation of SEBI much greater transparency as well as automaticity has
    been introduced in the working of the equity market. The need now is to develop and deepen
    the debt market. This will be of great benefit to small investors and institutional
    investors alike. The infrastructure sector will be enabled to raise long term funds,
    particularly with the opening of the insurance sector.



  • In order to further develop a transparent
    and active debt market in general, and the Government securities market in particular, I
    propose to take the following measures:-







  • l A Clearing Corporation will be set up
    under the active encouragement of the RBI, with State Bank of India as the chief promoter,
    and is expected to be in place by June 2001. It will also enable settlement of forex
    transactions.



  • l Trading of Government Securities, through
    order driven screen-based system will be implemented.



  • l An electronic Negotiated Dealing System
    will be set up by the RBI by June 2001 to facilitate transparent electronic bidding in
    auctions and dealings in Government securities on a real time basis.



  • l In order to ensure smooth and quick
    movement of funds, the Electronic Fund Transfer (EFT) and Real Time Gross
    Settlement Systems (RTGS) are being put in place by the Reserve Bank of India within
    the next year.



  • l Clarifications are being issued by CBDT to
    promote the issuance of STRIPS, zero coupon bonds, deep discount bonds, and the like.



  • l The old Public Debt Act will be replaced
    by Government Securities Act.



  • l Comprehensive legislation will be
    introduced on securitization.







  • I propose to set up a small group
    comprising the Reserve Bank of India, SEBI, the stock exchanges and Ministry of Finance to
    monitor and implement these developments so that the debt market becomes active next year.






Banking Sector


  • Banking sector reforms have proceeded
    apace in a phased manner over the past decade. However, the problem of non-performing
    assets with banks has continued. Special attention is being paid to recovery of NPAs:-






l Public Sector Banks have recovered Rs
800 crore of NPAs from 2 lakh accounts in 2000-01.


l Net NPAs as percentage of net advances were
almost half at

7.4 per cent in 1999-2000 compared to 14.5 per cent in 1993-94.


l 22 Debt Recovery Tribunals (DRTs) and 5
Appellate Tribunals have been established.





l 7 more DRTs will be set up during 2001-02.





  • I also propose to bring in a legislation
    that will facilitate foreclosure and enforcement of securities in cases of default in
    order to enable the intitutions to realise their dues.



  • In the light of new competition in the
    banking industry it is necessary to strengthen the management of the public sector banks.
    I propose to provide greater autonomy to bank managements. It is also essential to provide
    greater independence to bank managements in forming their own recruitment strategy and in
    implementing it. I therefore propose to abolish the Banking Services Recruitment Boards.
    This will be done in association with the Reserve Bank of India by July 31, 2001 or
    earlier. All future recruitments will be done by banks themselves.





Capital Account Liberalisation


  • Until about 10 years ago, all foreign
    exchange transactions were tightly controlled by the government and by the RBI. We have
    progressively loosened these controls and made the current account completely convertible.
    We have also liberalised the capital account for certain purposes. I propose to take
    further measures for liberalising the capital account. These are:







  • l Indian companies wishing to invest abroad
    may now invest up to US $50 million on an annual basis through the automatic route without
    being subject to the three year profitability condition.



  • l Companies which have issued ADRs/GDRs may
    henceforth make foreign investments up to 100 per cent of these proceeds; up from the
    current ceiling of 50 per cent.



  • l Companies with proven track record wishing
    to invest larger amounts may now get a block allocation in advance from the RBI for
    investments overseas.



  • l Indian companies that have issued
    ADRs/GDRs may acquire shares of foreign companies up to an amount of US $100 million or an
    amount equivalent to ten times of their exports in a year, whichever is higher.



  • l ADRs/GDRs will be provided two-way
    fungibility. Converted local shares may be reconverted to ADRs/GDRs while being subject to
    sectoral caps, wherever applicable.



  • l Indian companies will now be permitted to
    list in foreign stock exchanges by sponsoring ADR/GDR issues against block share holding.
    This facility would have to be offered to all categories of shareholders.







  • The Reserve Bank of India will be issuing
    these guidelines separately.



  • Investments by Registered partnership
    firms and companies providing professional services have not, so far, been permitted to
    make overseas investments. This ban is now being removed. Similarly, Indian employees who
    have the benefit of ESOP schemes in foreign owned companies can now make investments
    abroad up to US $20,000 annually instead of in a block of 5 years.






Foreign Investment


  • Progressive liberalization has taken
    place in the provisions relating to foreign investment. I propose to take the following
    further measures:




  • l Foreign Institutional Investors (FIIs) can
    invest in a company under the portfolio investment route up to 24 per cent of the paid up
    capital of the company. This can be increased to 40 per cent with the approval of the
    General Body of the shareholders by a special resolution. I propose to increase this limit
    to 49 per cent.





  • l Foreign Direct Investment (FDI) in
    Non-Banking Financial Companies (NBFCs) is permitted on a case by case basis upto 100 per
    cent but with a condition that a minimum of 25 per cent of their holding is divested in
    the domestic market. This condition is being removed, provided the foreign investors bring
    in a minimum of US $50 million. FDI in NBFCs will now be put on the automatic route
    subject to RBI guidelines.






Structural Reforms


  • In order to accelerate growth in the
    Indian economy, we have now to address some of the difficult areas of reform that have not
    been tackled so far.



  • There are four significant areas where a
    price and distribution control regime exists. These are the areas of petroleum,
    fertilizer, sugar and drugs.





Administered Pricing Mechanism (APM)



Petroleum


  • As Hon’ble Members are aware,
    Government had, in November 1997, notified the details of dismantling of the Administered
    Pricing Mechanism (APM) in the petroleum sector by March 2002. I propose to adhere to this
    deadline. A time bound action programme is being prepared for the deregulation of APM by
    March, 2002. My colleague the Minister of Petroleum and Natural Gas will be outlining the
    road map for this separately.





Fertilizer


  • Hon’ble Members will recall that I
    have in the past referred to the rationalisation of fertilizer pricing with the objective
    of phasing out the existing retention price scheme (RPS) in the medium-term. Government
    has now decided to implement the recommendations of the Expenditure Reforms Commission for
    a phased programme of complete decontrol of urea by April 1, 2006. The following steps
    would be taken in the first phase commencing from April 1, 2001:




  • l The unit specific RPS will be replaced by
    a Group Concession Scheme. The current MRP arrangement will be continued and the
    concession for each group calibrated to enable the units to sell urea at the stipulated
    MRP.





  • l The rate of concession for urea units based on
    naphtha/FO/LSHS will be linked to international prices of these feed stocks.







Sugar


  • Government is committed to complete
    decontrol of sugar. But this must be irreversible. Government has decided to introduce
    futures/forward trading in sugar within the coming year, a step that is necessary before
    full decontrol. Sugar under the Public Distribution System will continue to be supplied to
    ration cardholders in the special category states, hill states, island territories and to
    BPL families in other states and UTs. Such supplies can even continue after sugar is
    completely decontrolled. The retail issue price of sugar under the PDS is being revised to
    Rs 13.25 per kg. with effect from March 1, 2001.





Drug Price Control


  • The domestic drugs and pharmaceutical
    industry needs support in order to meet the challenges and to avail of the opportunities
    arising out of liberalisation of our economy and the impending advent of the product
    patent regime. Government has been considering measures to lessen the rigours of the
    present price control mechanism where they have become counter productive. Towards this
    end, we have decided that the span of price control will be reduced substantially.
    However, keeping in view the interest of the weaker sections of society, Government will
    retain the power to intervene comprehensively in cases where prices behave abnormally.
    Changes in the Pharmaceutical Policy are being made accordingly.





Industrial Restructuring


  • Government had constituted a high level
    committee on law relating to revival, reconstruction and/or winding up of companies. The
    Committee has submitted its report and Government has accepted its key recommendations. It
    is proposed to repeal the SICA and also to amend the Companies Act in order to set up a
    National Company Law Tribunal. These legislative proposals are proposed to be introduced
    during the current session by my colleague, the Minister for Law, Justice and Company
    Affairs.





Labour Market


  • Along with these changes, it is also
    necessary to address the contentious issue of rigidities in our labour legislations. Some
    existing provisions in the Industrial Disputes Act have made it almost impossible for
    industrial firms to exercise any labour flexibility. The Government is now convinced that
    some change is necessary in this legislation. Chapter VB of the ID Act stipulates that
    employers in specified industrial establishments must obtain prior approval of the
    appropriate government authority for effecting lay-off, retrenchment and closure, after
    following the prescribed procedure. It is proposed that these provisions may now apply to
    industrial establishments employing not less than 1000 workers instead of 100. The
    separation compensation will be increased from 15 days to 45 days for every completed year
    of service. The enhancement of compensation would act as a deterrent on employers to take
    recourse to lay-off, retrenchment and closure in a routine manner.



  • Similarly, rigidities inherent in the
    existing legislation regarding Contract Labour inhibit growth in employment in many
    service activities. Section 10 of the existing Act envisages prohibition of contract
    labour in work/process/operation if the conditions set therein like perennial nature of
    job etc. are fulfilled. Section 10 enables the contract labour engaged in prohibited jobs
    to become direct employees of the principal employer. To overcome this difficulty and at
    the same time ensure the protection of labour, it is proposed to bring an amendment to
    facilitate outsourcing of activities without any restrictions as well as to offer contract
    appointments. It would not differentiate between core and non-core activities, and provide
    protection to labour engaged in outsourced activities in terms of their health, safety,
    welfare, social security, etc. It would also provide for larger compensation based on last
    drawn wages as retrenchment compensation for every year of service.



  • These measures will promote industrial
    investment in labour intensive, and export oriented activities providing for renewed
    industrial growth, while, at the same time safeguarding the interest of workers. My
    colleague, the Minister for Labour will introduce appropriate legislation to amend the
    Industrial Disputes Act and Contract Labour Act within this session.





Ashraya Bima Yojana


  • I am conscious of the short-term impact
    on organized labour force of the on-going liberalization of the economy. I therefore
    propose to introduce a new scheme of group insurance viz. "Ashraya Bima Yojana"
    to extend security cover to such affected workers. The policy will provide compensation of
    up to 30 per cent of last drawn annual pay for a period of one year to workers who lose
    their jobs. It is proposed that the policy will initially cover all employees drawing a
    salary up to Rs 10,000 per month. The four Government owned general insurance companies
    will administer this policy on a "No Profit No Loss" basis and will announce
    full details including premium rates of the proposed policy by the end of June 2001.





Small Scale Industries


  • Government’s commitment to the
    Small Scale sector has been repeatedly demonstrated. A comprehensive policy package for
    this sector was announced by the Prime Minister on 30, August, 2000.



  • In order to encourage production and
    employment in this sector, the exemption limit has been doubled to Rs 1 crore from
    September 1, 2000.



  • The new Credit Guarantee Scheme of August
    2000 has been provided budgetary support of Rs 100 crore in the current year. The limit of
    loan without collateral which was earlier fixed at Rs 10 lakh has been raised to Rs 25
    lakh under this scheme. Already 7 banks have entered into an agreement with the Credit
    Guarantee Fund Trust that has been created to implement the scheme. A credit linked
    capital subsidy scheme for technology upgradation was launched in October 2000 envisaging
    12 per cent capital subsidy. It is expected that loans to the extent of Rs 5000 crore
    would be made available to the SSI sector over the next 5 years under the scheme.



  • Our small-scale entrepreneurs have proved their
    competitiveness in providing over 35 per cent of national exports. To enable further new
    investment and technology upgradation in some of the key export oriented sectors, it is
    now proposed to dereserve another 14 items related to leather goods, shoes and toys.



Textiles


  • The Government has recently announced a
    New Textile Policy aimed at preparing industry for the new challenges of global
    competition. I am happy to announce a textile package comprising the following schemes:




  • l A scheme for setting up Integrated
    Apparel Parks is being initiated. This will enable the dereserved readymade garment
    industry to set up modern units with the best infrastructure. A budget provision of Rs 10
    crore has been provided for the year 2001-02.


    l A strong and modern weaving sector is
    very critical for this purpose. At least 50,000 new shuttleless looms and the
    modernisation of 2.5 lakh plain looms to automatic looms is expected to take place by 2004
    through funding from the Technology Upgradation Fund Scheme (TUFS). The budget provision
    under TUFS is being raised from Rs 50 crore this year to Rs 200 crore in the next year.


    l The Cotton Technology Mission is being
    continued and strengthened. The budget provision is being increased from Rs 15 crore to Rs
    25 crore.


    l The budget allocation for Ministry of
    Textiles is being enhanced substantially from Rs 457 crore in 2000-01 to Rs 650 crore in
    2001-02.





  • l I shall provide the details of the proposed fiscal
    changes in Part B of my speech.






Human Development



Health and Family Welfare


  • Recognizing the need for increasing
    investments in social sectors, the Plan allocation for the Ministry of Health & Family
    Welfare has been stepped up from Rs 4920 crore to Rs 5780 crore. This includes an
    allocation of Rs 180 crore for HIV/Aids Control Programme.





Indian System of Medicine




  • There is now a great interest worldwide
    in herbal products as people look for gentler forms of treatment devoid of side effects.
    We are establishing a Traditional Knowledge Digital Liberary to bring the knowledge
    already in the public domain in international languages to prevent the grant of patents.
    We are also introducing a new scheme for strengthening the State Drug Testing Laboratories
    and pharmacies. We propose to provide Indian Systems of Medicine and Homeopathy benefits
    similar to the pharmaceutical industry.






Education


  • An integrated National Education Programme
    – the Sarva Siksha Abhiyan has been launched for universalising elementary education
    and a National Mission constituted with the Prime Minister as Chairman. The programme aims
    to provide eight years of quality elementary education for all children upto the age of 14
    years in a Mission mode with a thrust on community ownership, disadvantaged group and
    girls’ quality education and alternative modes of education. All existing schemes on
    elementary education will converge with this scheme after the Ninth Plan and it will cover
    all districts in the country by March, next year.



  • We are determined to maintain and strengthen
    our competitiveness in the field of technology education. A task force set up for this
    purpose under the HRD Minister has made wide ranging recommendations to upgrade and expand
    this area of education, The Roorkee Engineering College will be upgraded in to an IIT and
    funding for IIT, Guwahati has been stepped up to ensure its early completion. The base of
    IITs is to be expanded, regional engineering colleges are to be strengthened and new
    institutes will be set up with public private partnership. The role of the private sector
    will be encouraged. A new Centrally Sponsored Scheme for computer literacy and studies in
    schools is being launched and other initiatives planned for encouraging IT education from
    school to college levels.



  • Last year, I announced the availability of
    100 per cent deduction from income tax of payments made to institutions for vocational
    education and training by the private sector set up in rural areas and small towns. I
    propose to make the same deduction available for payments to engineering institutions
    also.






Educational Loans for Students




  • Mr Speaker Sir, I have personally
    experienced poverty and faced problems in pursuing higher studies. I, therefore, feel that
    no deserving student in the country should be deprived of higher and technical education
    for want of finances. I am glad that the Indian Banks Association (IBA) has formulated a
    new comprehensive Educational Loan Scheme, which will cover all courses in schools and
    colleges in India and abroad. Loans will be available under this scheme up to Rs 7.5 lakh
    for studies in India, and Rs 15 lakh for studies abroad. No collateral or margin will be
    stipulated for loans up to Rs 4 lakh, the interest of which will not exceed the prime
    lending rate (PLR). The interest rate will not exceed PLR plus 1 per cent for loans above
    Rs 4 lakh. The loans would be repaid over a period of 5 to 7 years with provision of a
    grace period. I hope that this scheme will enable needy children to pursue higher and
    technical studies both inside and outside India.





Women


  • The year 2001 is being observed as
    Women’s Empowerment Year. My colleague, the Deputy Chairman of the Planning
    Commission is heading a Task Force to review the programmes for women. Meanwhile I propose
    to:




  • l Strengthen the Rashtriya Mahila Kosh for
    providing micro credit to poor assetless women through NGOs.


    l Launch an integrated scheme for women’s
    empowerment in 650 blocks through women’s self help groups.





  • l Start a new scheme for women in difficult
    circumstances like widows of Vrindavan, Kashi and other places, destitute women and other
    disadvantaged women groups.






Scheduled Castes and Scheduled Tribes


  • In keeping with Government’s
    commitment to improve the Welfare of the scheduled tribes, a separate National Scheduled
    Tribes Finance & Development Corporation with an authorised share capital of Rs 500
    crore has been set up. The allocation for the schemes for welfare of scheduled tribes in
    the Ministry of Tribal Affairs has been enhanced from Rs 786 crore this year to Rs 986
    crore in the coming year.




  • Similarly, the allocation for the schemes
    for welfare and upliftment of scheduled castes in the Ministry of Social Justice &
    Empowerment has been enhanced from Rs 709 crore this year to Rs 790 crore in the coming
    year.





Social Security


  • Hon’ble Members may recall my
    announcement in the last budget, of a new Group Insurance Scheme, the "Janashree Bima
    Yojana" to extend Social Security cover to the poorest sections of society. The said
    scheme was launched by the Prime Minister on 10, August, 2000 and has been well received.
    332 schemes have been approved so far covering 99,750 people in the BPL segment.



  • I believe that the Social Security cover
    needs to be widened to minimize the miseries of our people below the poverty line.
    Accordingly, I propose to introduce two more schemes during the next financial year:







(i) A special scheme for landless
agricultural labourers, the Khetihar Mazdoor Bima Yojana, which will provide benefits of
insurance cover as available under Janashree Bima Yojana and a pension of Rs 100 per
month, to the beneficiary on attaining the age of 60 years. In the case of beneficiaries
who join the scheme at a young age, some periodical payments at the end of every ten years
are also envisaged. The beneficiaries will be required to make a small contribution
towards the premium.


(ii) A Shiksha Sahyog Yojana, to provide an
education allowance of Rs 100 per month to the children of parents living below the
poverty line, to meet the expenses of education during their studies from 9th to 12th
standard, so that a needy student is not deprived of the opportunity to continue his/her
education for want of funds. This will be available to subscribers of the Janashree Bima
Yojana.




These schemes will be managed by LIC.


  • Meanwhile, I have some good news for
    workers. The wage ceiling for coverage under the EPF and MP Act, 1952 has been enhanced
    from Rs 5000 to Rs 6500. To promote the welfare of employees I propose to enhance the
    ceiling for Government contribution of 1.16 per cent of monthly wage of employees to the
    Pension Fund from Rs 5000 to Rs 6000 per month. The extra expenditure on this account is
    estimated to be Rs 77 crore per annum.



  • Whereas the organised sector is at present
    covered by various pension, provident fund and gratuity schemes, the unorganised sector
    does not have adequate social security coverage. I am asking the Insurance Regulatory
    Development Authority to look into all these issues and provide a road map for pension
    reforms by October 1, 2001.






Journalists Welfare Fund


  • Journalists have to increasingly take
    greater risks in covering terrorist and other violence prone incidents. As an
    acknowledgement of their services and sacrifices, and with the expectation of a better
    treatment at their hands, I propose to set up a Journalists Welfare Fund with a
    contribution of Rs 1 crore under the grants of Ministry of I&B. My colleague the
    I&B Minister will announce the details of the scheme.





Entertainment


  • Our entertainment industry, particularly
    the film industry not only provides the much needed fantasy to millions of our people who
    live in an otherwise harsh and cruel world, it has also emerged as an important segment of
    our economy and holds great promise for the future. Two years ago, I provided for this
    industry the same tax exemption that was available for merchandise exports. A few months
    ago, the Government issued a notification under the IDBI Act whereby entertainment
    industry including films has been declared as an industrial concern. Banks are in the
    process of finalising guidelines for financing such projects that are bankable. I hope
    that the film industry will take full advantage of these measures to bring about a greater
    degree of professionalism and transparency in its operations, and will not do things
    chupke chupke and certainly not chori chori.



  • As promised in my earlier Budget Speeches, I
    appointed the Expenditure Reforms Commission last year and introduced the Fiscal
    Responsibility Bill in this House in the last session. The bill seeks to reduce the fiscal
    deficit to 2 per cent and completely eliminate the revenue deficit over the next five
    years.






Fiscal Consolidation


  • As I have already stated the most
    serious problem confronting the economy is the poor state of the fiscal health of both the
    Central and State Governments. The combined fiscal deficit of the two together is in the
    region of 10 per cent of GDP. I have often been described as a fiscal fundamentalist. Some
    have gone to the extent of calling me a fiscal terrorist. Why am I so concerned about the
    fiscal deficit? Let me try to explain. The total receipts of the Central Government in the
    current year according to BE are about Rs 281,000 crore. Of this amount, Rs 72,000 crore
    is States’ share of the Central taxes and grants. The Central Government is,
    therefore, left with Rs 209,000 crore. On the expenditure side, about Rs 101,000 crore was
    to be spent on interest,

    Rs 59,000 crore on defence, Rs 23,000 crore on major subsidies and Rs 16,000 crore on
    pensions. The net amount left for meeting all other Government expenditure totalling Rs
    123,000 crore was, therefore, only Rs 12,000 crore. I have, therefore, to borrow Rs
    111,000 crore in the current year to make both ends meet. The most worrisome aspect is
    that over 70 per cent of my borrowing, i.e., Rs 77,000 crore was for financing
    unproductive revenue expenditure. This will add to my interest burden next year forcing me
    to borrow more and ultimately fall into a debt trap. I am deeply conscious of the burden
    which is being placed on future generations, by our extravagance. I cannot allow this
    situation to continue.



  • A number of initiatives have already been
    taken to contain, in particular, the growth of non-plan expenditure. I have not allowed
    any increase in non-plan expenditure this year. Consequently, for the first time in many
    years, the fiscal deficit target fixed in the budget has indeed been achieved, and remains
    at 5.1 per cent in the RE of the current year. The target of 3.6 per cent revenue deficit
    has also been achieved.





Expenditure Management


  • I intend to carry forward the process of
    bringing about structural changes in the composition of Central Government expenditure and
    effect economy in non-plan revenue expenditure with greater vigour while improving the
    quality of plan expenditure. For this, I propose to take the following initiatives:




  • l User charges for services provided by
    government and its agencies will be revised keeping in view the increased cost of these
    services. A portion of this increase will be provided to enhance the maintenance and
    quality of these services.


    l Similarly, postal rates will be revised
    moderately to contain the rising postal deficit.


    l All requirements of recruitment will be
    scrutinized to ensure that fresh recruitment is limited to 1 per cent of total civilian
    staff strength. As about 3 per cent of staff retire every year, this will reduce the
    manpower by 2 per cent per annum, achieving a reduction of10 per cent in five years as
    announced by the Prime Minister.


    l The Surplus Pool under the Department of
    Personnel will be streamlined and equipped to redeploy and retrain surplus staff.
    Employees in the Surplus Pool will also be offered an attractive VRS package.


    l Standard licence fee (rent) on government
    accommodation will be enhanced by 50 per cent for Group A, 25 per cent for Group B and 15
    per cent for other categories of staff with effect from April 1, 2001.


    l Facility of LTC to Central Government
    employees will be suspended for 2 years for the remaining part of the four-year block
    period except for employees who are entitled to last LTC before retirement.





  • l Use of Information Technology in government
    activities with large public interface will be maximized to promote efficiency. For this
    purpose, operations like GPF, pension, pay and accounts offices, passports, income tax,
    customs, central excise, will be fully computerized by March 31, 2002. Public sector banks
    and insurance companies are also being asked to complete computerization of their
    operations within this period.




  • The Expenditure Reforms Commission,
    which was set up last year, has presented reports concerning downsizing in 6 Ministries
    and Departments. These include Department of Economic Affairs, Ministry of Information
    & Broadcasting, Ministry of Coal, Department of Heavy Industry, Department of Public
    Enterprises and Ministry of Small Scale Industries. Reports of the Commission concerning
    other Departments will also be received within the next six months. These recommendations
    will be implemented by July 31, 2001 and identified surplus staff transferred to the
    Surplus Pool.



  • Charity, it is said, must begin at home. I
    believe austerity, too, must begin at home. To lead by example, based on the
    recommendations of the Expenditure Reforms Commission, I propose to abolish three
    secretary/special secretary level and two joint secretary level posts in the Department of
    Economic Affairs. This will be done in stages by 31, July. In addition, another 44 posts
    of directors and below will be abolished, as against 31 recommended by the ERC. 1675 posts
    are being abolished in the Currency and Coinage Division which will be restructured and
    corporatised. The National Savings Organisation is to be downsized from a level of 1191
    staff to about 25. I have asked ERC to provide their recommendations in respect of the
    Departments of Revenue and Expenditure also. I am confident that this will expedite the
    process of right sizing the establishments in all the Ministries/Departments of
    Government.



  • The Planning Commission has commenced the
    task of preparing the Tenth Plan. Given the severity of resource constraints, improvement
    in the quality of government spending is of the essence. It has therefore been decided to
    subject all existing schemes, both at the Central and State levels, to zero based
    budgeting and to retain only those that are demonstrably efficient and essential.
    Furthermore, all schemes that are similar in nature will be converged to eliminate
    duplication. Centrally sponsored schemes that can be transferred to States will be
    identified. Resource flows will be linked to performance. Necessary procedural changes
    will also be made to speed up the decision making process for approval of schemes. Utmost
    importance will be given to decentralized planning.






Pension Reforms


  • The Central Government pension liability
    has reached unsustainable proportions: as a percentage of GDP, it has risen from about 0.5
    per cent in 1993-94 to 1 per cent in 2000-2001. As such it is envisaged that those who
    enter central government services after October 1, 2001 would receive pension through a
    new pension programme based on defined contributions. In order to review the existing
    pension system and to provide a roadmap for the next steps to be taken by the Government,
    I propose to constitute a High Level Expert Group, which would give its recommendations
    within 3 months.





Interest Rates


  • I have drawn your attention to the
    increasing share of debt service burden in the expenditure budget caused by rising
    government debt and exacerbated by the prevalence of high real interest rates. Most
    interest rates in the economy are now market determined. But, their movement downward is
    constrained by the rigidities inherent in the administered interest rates governing the
    contractual saving sphere i.e. Provident Fund and Small Savings Schemes. I have examined
    this issue very carefully. I find that the interest rates provided in all these schemes
    seldom exceeded consumer price inflation by more than 3 per cent between 1980 and 1998.
    Since then, this difference has risen to 6 to 8 per cent. Not only are such high real
    interest rates putting an unsustainable burden on both Central and State Governments but
    the resulting high cost of capital is also inhibiting economic growth all round. I am
    therefore reducing most administered rates by 1.5 per cent as of March 1, 2001. Government
    guarantee and tax incentives for these schemes will continue. For the future, I propose to
    explore a better system for the determination of these rates. I propose to appoint an
    Expert Committee to provide recommendations on this issue.



  • The benefit of reduction in interest rates
    on Small Savings Deposits will be fully passed on to the States. This will reduce their
    borrowing cost from Small Savings by 100 to 150 basis points. In addition, I am also
    reducing the interest rate on loans portion of Central assistance to State Plans by 50
    basis points. Alignment of interest rates on GPF by the State Governments along with the
    reduced provident funds interest rates at the Centre will further reduce the interest
    burden of State Governments. Moreover, because of the anticipated increase in gross tax
    collection of the Centre, devolution of central taxes to States is expected to increase by
    over Rs 9000 crore in 2001-02 over the current year. All these measures will help in
    reducing the debt burden of the States and improve their fiscal position.





State Fiscal Reforms


  • 86. Along with fiscal consolidation at
    the Centre, it will be our endeavour to work jointly with the States to reform their
    finances. Pursuant to the recommendations of the Eleventh Finance Commission, an Incentive
    Fund of Rs 10,607 crore has been earmarked for the next 5 years to encourage States to
    implement monitorable fiscal reforms. These reforms will essentially be the States’
    own programmes and considerable flexibility has been provided for individual States to
    design their programmes. In the fiscal year 2001-02, I have provided an amount of Rs 4243
    crore towards this Incentive Fund.



  • Public Sector Restructuring and Privatization






  • Our public sector has expanded in almost
    every area of economic activity. In many ways, it has served the nation well; capability
    has been developed all round and a strong industrial base built up. These enterprises must
    now be strengthened to compete and prosper in the new environment. Last year I had defined
    government’s policy in this regard clearly.



  • Financial and business restructuring plans
    of a number of PSUs including SAIL and HMT have been approved. Since 1998 financial
    restructuring support to viable and potentially viable PSUs amounting to more than Rs
    13,000 crore has been provided to 23 PSUs. Government has also decided to close down 8
    non-viable PSUs during the current year. A package of measures for revival and closure of
    the various mills of National Textiles Corporation has also been approved.



  • The procedure for privatization of public
    sector enterprises has now been considerably streamlined. The Department of Disinvestment
    has been set up to accelerate the privatization process. To maximise returns to
    government, our approach has shifted from the disinvestment of small lots of shares to
    strategic sales of blocks of shares to strategic investors. The Government has already
    approved privatization of 27 companies in which the process of disinvestment is expected
    to be completed during the course of the year. These companies include among others VSNL,
    Air India, and Maruti Udyog Limited.



  • Given the advanced stage of the process of
    disinvestment in many of these companies, I am emboldened to take credit for a receipt of
    Rs 12000 crore from disinvestment during the next year. An amount of Rs 7000 crore out of
    this will be used for providing restructuring assistance to PSUs, safety net to workers
    and reduction of debt burden. A sum of Rs 5000 crore will be used to provide additional
    budgetary support for the Plan primarily in the social and infrastructure sectors. This
    additional allocation for the plan will be contingent upon realization of the anticipated
    receipts. In consultation with Planning Commission I shall come up with sectoral
    allocation proposals during the course of the year.






Gujarat Earthquake


  • The earthquake in Gujarat has been a
    terrible and unprecedented tragedy in terms of loss of life and damage to property.
    Although I am confident that the inherent resilience and entrepreneurial spirit so
    characteristic of the people of Gujarat will result in quick restoration of economic
    activity, I would like to assure the House that we have the capacity to fully meet the
    challenges of such natural calamities without deflecting from our path of pursuing our
    economic goals.




  • To enable the State Government to deal with
    the situation, Government of India is extending the following assistance:




  • l Rs 500 crore was made available to the State
    immediately from the National Calamity Contingency Fund.


    l The National Calamity Contingency Fund, set
    up with initial corpus of Rs 500 crore as a result of the Eleventh Finance Commission
    recommendations, is being augmented by the imposition of a 2 per cent surcharge on
    personal income tax and corporate tax.


    l Assistance will be provided to the State
    Government under various Centrally Sponsored Schemes for reconstruction of roads, bridges,
    power installations, school buildings, public utilities and other public infrastructure.


    l Arrangements have been tied up with the
    World Bank and Asian Development Bank for obtaining a line of credit of US $ 800 million.
    A joint team has already visited Gujarat and substantial additional funds are expected to
    be negotiated.


    l RBI has instructed banks to make special
    arrangements for freezing of recoveries and extension of new loans on a liberal terms for
    borrowers in the affected areas.


    l The National Housing Bank and HUDCO have set
    apart adequate funds for housing reconstruction. I also propose to allocate a special
    quota of tax free bonds of the order of Rs 2000 crore between the two institutions.


    l As was done after the Orissa cyclone, cement
    and steel used for construction in the Indira Awas Yojana, by HUDCO and by agencies
    identified by the State Government, would be exempt from excise duty.


    l The Government of Gujarat will be enabled to
    raise funds by floating tax free earthquake relief bonds which will be open to
    subscription in Rupees to individuals and others including Non-Resident Indians through
    the Reserve Bank of India.





  • l All goods intended for relief have been
    exempted from excise and customs duties; direct tax assessees have been given extension of
    time for filing their returns.




  • A natural calamity of this magnitude
    has also highlighted the need to set up permanent institutional arrangements for
    management of national disasters. The National Committee on Disaster Management under the
    Chairmanship of Prime Minister will be making recommendations for laying down effective
    long term strategy for this purpose.





Continued



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Traffic drive gets lukewarm response from students Thursday, March 1, 2001

VADODARA: A Traffic Week, intense checking by traffic policemen and talks on safe driving have all failed to curb the menace of youngsters driving without licences in the city. Schools here complain of a rising trend in driving without licences, putting the lives of young students in danger.

School principals feel that the traffic drives have failed to have any impact on students and they continue to ride two-wheelers. "Children know that traffic policemen would crack down on them only when traffic week is observed. Parents too do not object to their wards driving without licences," say principals.

"Students know that traffic safety drives are for a short time. Due to fear of punishment or apprehension they carry a licence with them or drive safely for a short time. Some come on cycles during the traffic week. But after sometime it's the same old situation," says Convent of Jesus and Mary School principal Sister Delfin. She adds that if traffic police really want to curb the number of students driving without a licence, then they need to be strict throughout the year and ensure that no student drives without a licence.

During a recent Traffic Week, held by the traffic department of the city police, an official from the traffic department visited the city schools to spread awareness among students. They advise students to take licence. Traffic policemen also distributed pamphlets to the students, which emphasised that school student, should follow traffic rules for their own safety. "The students were asked to get learner's licence. Those who drive without a licence were caught and their vehicle was detained and sent to the RTO," says an official in traffic police.

But principals feel that such steps won't be of much help in the long run as such drives are carried out for a short time. "The traffic drive has not made a difference. Students who used to drive vehicles continue to do so even now," says Baroda High School (Alkapuri) Promila Zalpuri.

"The number of students who come on vehicles have reduced. But its not due the traffic week, its because the standard X and XII students have stopped coming to the school. But standard VIII, IX and XI standard students still continue to come on two-wheelers," says Navrachna School principal Manju Gupta.

Meanwhile, the students are least impressed by such drives. " We have a busy schedule. I go for tuition in three subjects. If I go by cycle it would be time consuming and I would be exhausted by the time I return home. It is very easy for others to preach, but they don't understand the strain and pressure we undergo," says a student of Tejas Vidhyalay on condition of anonymity.

"I have a learners licence and I have been driving Kinetic Honda since a long time. The agent from whom I took licence said that I can drive a kinetic," says 17-year-old Shreya Patel of Convent of Jesus and Mary School. But then there are many who have not cared to take licence and are confident that they will escape scot-free if caught by the traffic policemen.

"When the drive started, for some days I drove a cycle. Now again I have started to drive Kinetic Honda. I don't mind driving Kinetic Honda without a licence because I know I am a good rider and the traffic policemen are not really serious about their duties," says a standard IX student of Navrachna School, on condition of anonymity. While his friend Ashutosh Kashyap says, " Why should anyone object to me driving a bike. I know the traffic rules. Even my parents don't have any objection. Moreover, I have been driving since long but never have I been caught by the traffic police."

"We carry out these drives for the security of children. But some parents and children don't co-operate with us as they feel that it would be difficult for their wards to manage studies, tuition and school if they don't have a vehicle," says ACP (Traffic) Siddharth Khatri.

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