| Singh: The more the merrier
New Delhi, Feb. 4: Surprising those who thought Union finance minister Jaswant Singh had finished with his ballot bait overture with the interim budget announced on Tuesday, the government today announced a fresh round of sops for small investors, businesses, travel trade and tea gardens.
In his traditional reply to the debate on the interim budget, Singh promised to extend the tax exemption on dividend distribution to open-ended equity oriented schemes run by mutual funds for the coming fiscal.
The minister made it clear that he would exempt long-term capital gains on equity for another three years. As both moves need a change in the law, Singh took the unusual step of making an electoral promise on the floor of the House: to bring legislation to make good his promise with retrospective effect if his party was voted back to power.
The move, if and when effected, can be expected to yield higher returns to small investors and help make the stock markets, which have been experiencing an bumpy ride, more buoyant.
Punters are likely to peg the announcement for yet another bull run on stocks tomorrow.
Singh also announced a bonanza of Rs 8 a kg subsidy for tea gardens for four months from today. The move, aimed at struggling tea gardens in the Northeast and the Nilgiris, will also benefit those in Bengal and north Bihar.
In a major relief to tour operators who have long been demanding respite from service tax levied on their earnings, Singh clarified that tax would be levied only on 10 per cent of their earnings and the remaining would be exempt.
In a bid to help the 3.5 million small factories all over the country, Singh announced a Rs 100-crore growth fund to provide venture capital to small businesses involved in pharmaceuticals, biotech, software and other knowledge-based industries. The fund would be kickstarted from April 2004 and would ultimately have a corpus of Rs 500 crore.
Small businesses have traditionally supported the BJP and been upset for long at having been ignored in the various rounds of economic policy making the government had undertaken since coming to power some five years back.
BJP-linked associations of small businesses had launched a campaign to influence decision making in their favour after a report by a committee headed by plan panel member . K. Singh recommended ending small business monopoly on a large number of manufactures and opening up trade in these to transnationals.
Bowing to their pressure, Singh has already announced lower interest rates for small businesses and a Rs 10,000 crore fund for lending to them to be set up by a consortium of banks led by the Small Industries Development Bank.
Singh also announced withdrawal of 8 per cent excise duty on wood particles and fibre board following representation from the industry. Under pressure from the Shiv Sena, Singh today declared Nagpur too would be upgraded to an international airport. On Tuesday, he had gifted Jaipur, the capital of his home state, with an international airport.