BUDGET 1999-2000
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BUDGET 98-99
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Budget highlights

Following are the summarised highlights of the Union Budget for financial year 1999-2000:

Strategy:

• Major thrust to rural economy, more powers to village councils.

• Massive thrust on empowering the poor through the National Human Development Initiative.

• Restoring fiscal health of the nation by reducing revenue and fiscal deficit

• Major reform of indirect taxes.

• Increased flow of credit to the housing sector.

• Moving towards the second generation of economic reforms while deepening the reform process.

• Reviving exports, stimulating domestic growth, and safeguarding the economy from external shocks.

• New thrust on strengthening knowledge-based industry.

Multi-pronged programme to strengthen rural economy:

• Four-pronged strategy to streamline employment through greater involvement of panchayati raj (local self-government) institutions; all Jawahar Rozgar Yojana funds to be left at the disposal of village councils to create rural infrastructure.

• Convergence of self-employment schemes under a single Swarn Jayanti Gram Swa-Rozgar Yojana (Golden Jubilee Village Self-Employment Scheme).

• Samagra Awas Yojana (Integrated Housing Scheme) to be launched to ensure provision of shelter, sanitation and drinking water. The new scheme is to embrace all existing programmes, including the Indira Awas Yojana.

• National movement for watershed development to be launched to unify the multiplicity of watershed development programmes.

• Larger financial assistance to states for irrigation projects.

• Rural Infrastructure Development Fund to be raised to Rs35,000 million.

• Farmer's credit card scheme to be enlarged to cover two million farmers.

• Rs 1,680 million provided for recapitalisation of regional rural banks.

• NABARD and SIDBI to re-double efforts to provide funds to micro-enterprises by covering at least 50,000 self help groups

• Food and agro-processing industries to be treated as priority sector for lending by banks.

• New credit-linked capital subsidy scheme to construct cold storages and godowns to store 450,000 tonnes of onions.

• States to be given special financial assistance for land reforms.

• Discount schemes for farmers to lift fertilisers in lean months.

• National programme for rural industrialisation to be launched. 100 rural industrial clusters to be set up every year.

Industry and infrastructure:

• 74% equity under the automatic route permitted in pharmaceutical companies.

• Present drug policy to be reviewed to reduce price control.

• Technology Upgradation Fund Scheme to include spinning industry.

• Industries (Development and Regulation) Act to be reviewed and amended to shift focus to development of industry.

• Monopolies and Restrictive Trade Practices (Prevention) Act to be reviewed to give way to modern competition law.

• Setusamudram project to be given funds for techno-economic feasibility study.

National Human Development Initiative:

• Entire population to have food, health care, education, and shelter within a decade.

• 'Annapurna' scheme for poor senior citizens; targeted public distribution system to be strengthened.

• Integration of existing rural development and health and family welfare programmes.

• Funds for village councils to set up primary health-care facilities.

• Education Guarantee Scheme to be implemented at the national level; 180,000 new schools to be set up in the next three years.

• A new integrated handloom promotion scheme -- Deen Dayal Hathkarga Protsahan Yojana -- to be launched.

Small-Scale Industries:

• Limit of the composite loan scheme of SIDBI and commercial banks increased to Rs500,000 from the present Rs200,000.

• Annual turnover limit of SSI units for computation of working capital limit to be raised from Rs40 million to Rs50 million.

• Non-banking finance companies and other financial intermediaries to be treated as priority sector for bank lending to ensure greater credit flow to the tiny sector.

• New credit insurance scheme to be launched to help SSI units avail of investment credit.

External Sector:

• Existing scheme of export credit in foreign currency to be revamped.

• High-powered committee set up to reduce transaction costs of exporters.

• List of automatic approvals for foreign direct investment expanded.

• Foreign Investment Implementation Authority set up.

• Facility of automatic approval for cent per cent investment by NRIs/OCBs extended.

• Securities and Exchange Board of India to work out modalities for opening trading terminals abroad for NRIs.

• Existing RBI approval mechanism for NRI investment in mutual funds to be simplified.

The Capital Market:

• Stamp duty on transfer of debt instruments within the depository mode to be abolished.

• National award for excellence in corporate governance instituted.

• UTI's US-64 scheme to be restructured to restore the confidence of the capital markets.

• Tax concessions to strengthen mutual funds and bring small retail investors back to the market.

• Buyback of shares to attract capital gains tax.

• New gold deposit scheme announced to mobilise idle gold.

Housing:

• Far-reaching tax initiatives to promote housing.

• National Housing Bank Act to be amended.

• Changes proposed in tax treatment of income earned on non-performing assets by housing finance companies.

• Scheduled commercial banks to lend up to 3% of their incremental deposits for housing finance.

• Target for Golden Jubilee Rural Housing Finance Scheme of NHB raised from 100,000 to 125,000 dwelling units.

• NHB to reduce interest rates for small borrowers.

• Tax-free status for a limited amount of municipal bonds each year.

Science and Technology:

• Rs 200 million national foundation to help innovators.

• Technology mission on vaccines to be constituted.

• A National Bio-resources Board to be set up to protect bio-diversity.

Banking:

• 5 more debt recovery tribunals and 4 more debt recovery appellate tribunals to be set up.

• Bill to be introduced in Parliament soon to strengthen provisions for recovery of debts due to banks and financial institutions.

• Public-sector banks to be encouraged to set up settlement advisory committees to settle chronic overdue loan cases.

Expenditure management:

• Four secretary-level posts to be abolished from April 1, 1999.

• Expenditure Reforms Commission to be constituted.

• Zero-base budgeting to be initiated for the next Budget.

• Rs500 million Guarantee Redemption Fund created.

PSU Reform/Disinvestment:

• Rs100,000 million to be raised from PSU divestment programme.

• Public-sector units to issue bonds to workers opting for voluntary retirement schemes

• National Statistical Commission to examine deficiencies in the present statistical system.

Others:

• Defence expenditure increased to Rs456.34 billion from Rs412 billion

• GDP growth rises to 5.8% from 5%.

• Institutional credit to agriculture rises to Rs38 billion from Rs31.69 billion last year

• Inflation brought under 5%

• Watershed Development Fund to be created

Budget 1999-2000

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