Rediff On The NeT Business News: Run-up to the Budget 2000-2001


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February 28, 2000

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Debate rages: 'It'll be tough'; 'Sinha can't afford to irk people'
Assembly results in four states have pointed to an erosion in the support base of the BJP. So the BJP-led NDA coalition government may not risk antagonising people by slapping new taxes or raising the existing ones. But the Economic Survey points to a hard budget, say analysts.

EXCLUSIVE: ANALYSIS BY DUN & BRADSTREET INDIA

Challenges before the Finance Minister
India's fiscal report card
How will the personal taxes change?

PRE-BUDGET SCENE, EXPECTATIONS:
Housing | Automobiles | Cement | Cigarettes | Fertilisers | Hotels |
Petrochemicals | Pharmaceuticals |

rediff.com: BUDGET 2000 -- The Run-up

Galloping revenue expenditure cause for high fiscal deficit: study
Defence expediture, debt service, high increase in salaries of government employees and ministers, expediture by the government, the natural calamities besides the last year's Kargil war are the causes.

Stock markets to see trades from 11 am to 5:30 pm on Feb 29
Schedules for the Budget Day special sessions have been drawn up by stock exchanges like the NSE and BSE.

'Budget is expected to create greater lending opportunities for banks'
"I expect a reduction in the surcharge on the corporate tax, tax on agricultural income and measures to induce increased savings and investments. All this would mean revitalisation of the corporate sector," says K P Padmakumar, chairman, Federal Bank and Private Sector Banks' Association.

Time to 'bite the bullet' nears for Sinha
2000 is not a crisis year like 1991. Yet, an impression that something cataclysmic is likely to happen, is being created. It could be part of an official strategy to make the public discount in advance possible unpalatable budgetary measures, says R C Murthy.

'India needs a crisis to reform. We cannot reform without a crisis'
"The economy is recovering and this in turn will itself mean more revenue for the government. So the government is not under pressure to raise taxes and I think raising taxes will be a big mistake," says Dr Subir Gokarn, chief economist, the National Council for Applied Economic Research.

Friendly tips for budget-happy FM
"The reservation of labour-intensive sectors to small-scale enterprises should be scrapped. This will give India a chance to provide stiff international competition in labour-intensive exports to countries such as China," say Harvard economists Nirupam Bajpai and Jeffrey D Sachs.

Deemed export units in private and public sectors may get same benefits
Deemed exports refer to transactions in which the goods supplied do not go out of the country. Some companies are involved in projects funded by multi-lateral financial agencies. The move will increase the number of such projects.

Auto industry expects excise relief in Budget
The government is considering reducing the excise duty on passenger cars and custom duty on auto components in a bid to make the industry globally competitive, officials hinted.

Top Secret!
Budget 2000 gets unusual hi-tech security cover. Not even the prime minister is given more than a glimpse of the details! Finance ministry officials' emails are being watched.

CII urges Budget Man Sinha to simplify income tax system
The CII emphasised the need to tax the income of rich farmers and commercial operations in agriculture.

Unkept promises litter Sinha's Budget 1999
The target for divestment was Rs 100 billion. But how much of the government stake in PSUs has Sinha divested? Less than Rs 20 billion!

With business confidence high, industry looks forward to a friendly budget
Industry is bullish that the industrial growth during the current fiscal year would be between 6 and 8 per cent. A higher fiscal deficit at 6 to 7 per cent of the GDP as against the budgeted target of just 4 per cent is also foreseen.

Budget may slash number of drugs under price control
The budget is expected to announce the creation of an autonomous Drug Development Promotion Foundation with a corpus of Rs 500 million. This could be financed by the proposed Pharma R&D Support Fund.

Go for the old economic guard's jugular, Mr FM
The annual budget presentation offers myriad opportunities to finance ministers to obfuscate core issues and to confuse the people. But by focussing upon core issues, citizens can judge whether the forthcoming budget is a truly millennium presentation," says Dilip Thakore.

Swadeshi budget will be counter-productive, says industry body
Any move to impose higher income tax surcharge, taxes on exports and withdraw incentives to trade and industry would give a serious blow to the Indian economy, the All India Association of Industries has said.

Biz chambers urge Sinha to grant industry status to housing
FICCI has suggested deemed export status for realtors who make concerted efforts for sale of property to Non Resident Indians and other persons abroad to mobilise foreign exchange.

Who's afraid of the big B?
A 'hard' Union Budget holds no terrors for the infotech industry.

Budget hopes, small investors, FIIs prepare Sensex for Point 6K
People are expecting various concessions for IT, telecom and pharma sectors in the forthcoming budget. This might have boosted the market sentiment, BSE vice-president Dina Mehta said.

Massive kerosene, LPG price-hike likely in budget
But prices of petrol and diesel may be spared. Cutting down subsidy on oil products from this year is inevitable as part of the administered pricing mechanism, said Ram Naik, minister for petroleum and natural gas.

Freeing Farming
Budget may make agri-sector market-friendly.

Sinha may talk tough but deliver a soft budget, says economist
The finance minister may not be able to take hard decisions as the BJP has to keep its allies who are strong in states happy.

Govt ready to bite the bullet, says Budget Man Sinha
Ruling out "soft options", the finance minister said that "fiscal profligacy indulged in by both Centre and states in the last several years" has depleted the government coffers.

'Govt can help the seafood sector to emerge as the biggest forex earner'
'For FIs and banks, the seafood industry is a taboo. Some states have imposed 1% cess on seafood exports. The Budget must throw up a solution,' says Elias Sait, president, the Seafood Exporters' Association of India.

Economists unhappy over weak reforms-employment equation
"Ever since liberalisation, budgets have brought nothing but inflation and unemployment and unless there is going to be a real shift in thinking, there will not be a much difference," economist Jay Dubashi said.

Sinha to present Budget at 14:00 hours on Feb 29
The Railway Budget will be presented on February 25 and the Economic Survey on 28.

Free tech imports, encourage R&D incubators, CII tells Sinha
India needs incubators which are funded by the private sector -- be these companies or funds, the CII said in its pre-budget proposals.

A case for foreign direct investment in agri sector
"The government must look at patents and gene technology more positively. Genetically modified organisms could not only raise yields further but help in reducing consumption of pesticides and other chemicals," says Gurnam Arora.

Fiscal deficit is the issue, aver economists
Experts fear that the budget could include price hikes that would hurt the common man. The price of liquified petroleum gas is likely to be raised by 33 per cent while kerosene prices might go up by 15-20 per cent.

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