| BUDGET
2001 |
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The budget this year was expected to be harsh as the government
tried to cut spending and raise revenue.
On the expenditure side, the government cut the fertilizer subsidy a
little. Part of the funds from disinvestment would be used to retire
debt and signalled cuts in interest rates by slashing the general
provident fund rate to 11%. The government's expenditure however
isn't likely to be checked too much next year. Interest payments
alone will rise by Rs. 10,000 crore and defence spending is up by Rs.
13,000 crore.
The Finance Minister's thrust was clearly to try and raise as much
revenue as possible. Though income and corporate tax rates remain
more or less unchanged, the surcharge for rich individuals has been
raised by 5% and the 1 by 6 scheme has been extended to 79 new
cities. Also, exporters will now start paying some taxes.
One of the aims of the budget seemed to be a restructuring of excise
rates. This means that computers, computer peripherals, cell phones,
optical fibres, cinematography equipment and some medical equipment
will cost less. At the same time, cigarettes will cost more.
The budget also tried to provide some sops to knowledge based
industries. The limit for FII investment in Indian companies has
been hiked to 40%. Acquisition norms have also been eased and there
are incentives for venture capital funds.
The fiscal deficit for the next year still appears fairly large at
5.1 % of GDP.
BUDGET 2001
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