ECONOMIC SCENE

Amendments to the Union Budget for 2001-2002

Certain amendments to the Union Budget 2001-02 carried out by the Finance Minister, Shri Yashwant Sinha before the budget was passed on 25.04.2001 are as under:- 
  • Percentage of export profits to be taxed cut from 40% to 30%. 
  • Standard deduction on income upto Rs.3 lakh hiked by Rs.5,000/-. 
  • Customs Duty on new cars and two-wheelers up from 35% to 60%. 
  • 16% cenvat on branded garments extended to all readymade garments. 
  • Stock exchanges exempted from capital gains tax on transfer of assets. 
  • Limit of deduction on interest income hiked to Rs.12,000 from Rs.9,000. 
  • TDS on interest payments raised from Rs.2,500 to Rs.5,000. 
  • 5% customs duty on ships abolished. 
  • Customs duty on specified telecom parts slashed to 5%. 
  • Charitable trusts with income up to Rs.1 crore need not publish accounts. 
Exports maintain 20 pc growth 
 
Exports showed a 20.03 percent surge in dollar terms in the first 11 months of the 2000-01 fiscal by crossing $ 39.54 billion mark during the period, as per the latest monthly trade data released on April 01, 2001. 
 
There was a marked improvement in the trade deficit which was recorded at $ 5.83 billion during the period under review as against $ 9.60 billion during the same period of the previous fiscal. 
 
Oil imports during the first 11 months of 2000-01 stood at $ 15 billion which is 66.17 percent higher than the imports in the corresponding period in 1999-2000. 
 
Exports double in past decade 
 
The country's exports have more than doubled during the past decade from $ 17.9 billion in 1991-92 to $ 37.5 billion in 1999-2000 according to the commerce ministry's annual report released on 29.03.2001. 
 
The exports during the first 10 months of the current fiscal are valued at 35.6 billion, which is 20.70 percent higher than those valued at $ 29.5 billion in the same period last year. 
 
The trade policy reforms initiated in the past few years have aimed at creating an environment for achieving a rapid increase in exports and making them an engine for achieving higher economic growth, the report said. 
 
The reform process has been carried further, while simultaneously ensuring that the transition towards globalisation is made without causing undue hardship to the domestic players. 
 
During April-November 2000, the principal commodities whose exports increased significantly over the previous corresponding period included pulses, seasame and niger seeds, oil meals, sugar and molasses, processed food. The other items were marine products, iron ore, processed minerals, other ores and minerals, leather and manufactures, gems and jewellery, chemicals and related products, engineering goods, electronic hardware items etc.  
 
The exports of commodities which declined in the above period, included, tea, tobacco, castor oil, sports goods etc. The US continues to be India's largest trading partner accounting for nearly 22.3 percent of this country's exports and 5.6 percent of its imports. As a trading bloc, the European Union is India's largest partner and accounts for about a quarter of its exports and a third of its imports. 
 
Trade with Latin American region has witnessed a high growth of 47 percent during the current year. 

Steel output up 7.8% in 11 months 
 
Finished steel production has witnessed a growth of 7.8 percent (estimated) at 26.4 million tonne during April-February period of the current financial year as against 24.48 million tonne in the corresponding period last year.  

Steel output in pvt. sector up 44%
 
Showing a regular growth for the last five years, steel production in the private sector rose by 44.29 percent to 18.18 million tonnes in 1999-2000 from 12.6 million tonnes in 1995-96. Steel output in 1996-97, 1997-98 and 1998-99 stood at 14.2, 14.83 and 16.18 million tonnes respectively. 

Production in the public sector has been more or less constant over the last five years and contributed 8.53 million tonnes of the National production of 26.71 million tonnes in 1999-2000. The production in the public sector in the previous four years was 7.54, 8.54, 8.5 and 8.8 million tonnes respectively.  

ADB approves $ 500 million aid for Gujarat
 
Asian Development Bank has approved a $ 500 million aid for quake-affected Gujarat. This is the largest-ever loan for a single project in the country. 

It is meant to reconstruct and restore the damaged essential infrastructure in the quake-affected districts. ADB has also set up an extended office in Gandhi Nagar to ensure prompt implementation of the rehabilitation project.  

16% duty threatens survival of Gujarat ball bearings sector 
 
Withdrawal of exemption applicable to small and tiny industries engaged in the manufacture of ball/roller bearings and imposition of a 16 percent central excise duty in the 2001-02 Budget will spell doom for over 1,800 units in Gujarat, says Federation of Saurashtra Kutch Industries and Trade. 

The ball/roller bearings industry was reeling under heavy competition from China, Japan and other countries since 1988. 

The burden of 16 percent central excise duty cannot be absorbed by the sector as it would lead to a hefty increase in the production cost and is enough to upset the units' viability.  

Persisting budget deficits will mar robust growth in India : WB
 
The World Bank global development finance report has said that the persistence of large budget deficits will restrain the robust growth of India. 

The report released today pointed out that the budget deficit inclusive of capital expenditure currently stood at some 10 percent of gross domestic product. The rapidly rising states' deficits had touched 4.5 percent of GDP with the consolidated public deficit pegged at around 11.2 percent in 1999-2000. 

The already high debt servicing prevents regional governments from expanding key public services and investment in infrastructure and it also tends to raise interest rates, thereby, reducing private investment opportunities. The New Millennium Deposit scheme for non-resident Indians, which mopped upto $ 5.5 billion, helped finance the rising current account deficit in India due to the high oil import bill which had touched $ 8 billion.