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Flogging reforms
While ushering in the new millennium, the BJP had pledged the emergence of a New India. Few years down the line, reality is now dawning on everybody that good intention does not always get translated into action
In a bid to hasten the demutualisation process in exchanges, Jaswant Singh has announced a one-time exemption of capital gains tax on corporatisation of bourses

Budget 2000-01

Industry

Foreign direct investment permitted through automatic route in all industries except for a small negative list.

Non-banking finance companies allowed to hold foreign equity up to 100 per cent if they are the holding companies; subsidiaries allowed to hold foreign equity up to 75 per cent

Domestic long distance telecom service opened up without any restriction on the number of operators.

Disinvestment proposed in Indian Airlines and Air-India.

Fiscal management

Fiscal Responsibility and Budget Management Bill introduced in the Lok Sabha in December 2000; move to eliminate revenue deficit, reduce fiscal deficit and stabilise debt.

Interest rate on general provident funds reduced by 1 per cent to 11 per cent with effect from April 1, 2000.

Financial sector

Legislation initiated to reduce minimum government shareholding in nationalised banks to 33 per cent.

Revised norms for entry of new banks in private sector.

Permission to banks and non-banking finance companies to undertake insurance business.

Trade policy

The five-year export-import policy unveils plan to set up special economic zones (SEZs) across the country.

Tax system

Minimum Alternate Tax imposed; zero-tax companies will henceforth pay tax at 7.5 per cent of their book profits.

One-by-six criteria (introduced in budget for 1998-99) to identify potential taxpayers extended to 79 more cities.

Peak customs tariff reduced from 40 per cent to 35 per cent ad valorem.

Central excise system overhauled with the introduction of single central value added tax (Cenvat) of 16 per cent ad valorem on all manufactured good with a few exceptions.

Budget 2001-02

Industry

Government equity divested in select undertakings like Videsh Sanchar Nigam Limited, IBP Ltd, CMC and Bharat Aluminium Company Limited.

Amendments proposed in the Industrial Disputes Act and the Contract Labour Act to remove the structural rigidities in the labour market.

New pharmaceutical policy announced reducing price control rigours on several bulk drugs and formulations.

Electricity Bill and Communications Convergence Bill 2001 introduced in Parliament.

nFiscal management

Austerity measures introduced including downsizing of some of the departments.

Interest rate on small savings reduced.

Voluntary retirement scheme (VRS) introduced for government staff.

Incentive fund created to provide a fillip to fiscal reforms in states.

Financial sector

Badla or carry forward trading banned and rolling settlements introduced in the capital market.

Corporatisation of stock exchanges proposed involving segregation of ownership, management and trading membership from each other.

nTrade policy

Medium-term export strategy formulated to achieve a quantum jump in exports over the next five years.

Quantitative restrictions removed on the remaining 715 items.

nTax system

Peak level of customs duty cut from 38.5 per cent to 35 per cent with the abolition of surcharge.

Three special rates for excise duty of 8 per cent, 16 per cent and 24 per cent replaced by a single rate of 16 per cent.

Budget 2002-03

Industry

Dividend income to be taxed in the hands of the recipients; 10 per cent distribution tax on companies and mutual funds on the dividends or income distributed by them abolished.

Service tax extended to 10 more areas including life insurance and beauty parlours.

Fifteen per cent depreciation benefit on investments in plant and machinery.

Fiscal management

Assistance to states linked to reforms; out of central plan assistance of Rs 46,629 crore, almost 25 per cent linked to conditionalities; these relate to financial assistance to power and agriculture sectors.

Fiscal Responsibility Bill to be passed to tone up central and state finances.

Fifty basis point cut in small savings rate.

Financial sector

Ceiling on FII portfolio investments in most sectors lifted.

Foreign banks can set up subsidiaries.

Indian companies and mutual funds allowed to invest abroad.

UTI Act to be amended.

Sebi to get more powers.

IDBI to be corporatised.

Tax system

Corporate tax for foreign companies cut from 48 per cent to 40 per cent.

Five per cent surcharge imposed on all taxpayers except individuals earning up to Rs 60,000 a year.

Customs duty peak rate reduced from 35 per cent to 30 per cent as part of the effort to have only two basic rates by 2004-05.

Customs duty for passengers returning from abroad reduced from 35 per cent to 30 per cent; overall limit of imported goods raised from Rs 1.5 lakh to Rs 5 lakh.

Budget 2003-04

Industry

Measures announced to encourage investment in equities.

Dividend to be free in the hands of the shareholders.

Tax holiday to research and development companies extended.

Package of measures announced for textile sectors.

Tax incentives enjoyed by infotech companies to stay.

The biotech sector, which is dubbed as today’s sunrise tomorrow’s showpiece industry, to get incentives.

SSI reservation withdrawn on 75 items.

Fiscal management

Cash management on a pilot basis to be introduced in major spending ministries.

The process of premature repayment of high-cost external debt that has been initiated will continue.

The government will buy back high-cost loans held by banks at a premium.

Debt swap scheme for states, which has been agreed upon, to continue.

Farm sector

Steps to be taken for gainful diversification of the agricultural sector.

A new central scheme on high-tech horticulture and precision farming to be introduced.

Private banks to be encouraged to extend their services to the rural sector.

Infrastructure

Major thrust on infrastructure development.

Rail and road projects to be hastened. 48 new road projects at a cost of Rs 40,000 crore to be taken up.

Two airports, Mumbai and Delhi, to be developed into international hubs.

Thrust on mega power projects, Electricity Bill expected to be passed soon.

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