rediff.com Budget 2000: The FM's Speech


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February 29, 2000

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Finance Minister Yashwant Sinha's Budget Speech

BUDGET
2000

Part III

The North-East Region Government is committed to the speedy economic development of the North-Eastern States and Sikkim. Priority is being given for development of infrastructure, specially airports, railways, power and national highways so as to remove the sense of isolation perceived in many parts of the North-East. To provide more facilities for vocational education, 50 more Industrial Training Institutes and 446 Computer Information Centres would be established in the North-Eastern States within the next two years.

For realizing the potential for agricultural and horticultural development in the North-East, schemes for minor irrigation and horticulture will be encouraged. A Technology Mission for horticultural development in the North-Eastern States will also be launched.

Scheduled Castes and Scheduled Tribes To promote literacy and to improve the education standards of persons belonging to Scheduled Castes, a new thrust will be given to the Post-Matric Scholarship Scheme. The budgetary provision for this Scheme is being increased from Rs.72 crore to Rs.130 crore. Emphasis under this Scheme will be on female literacy. Our Prime Minister has announced that it will be our national goal to liberate and rehabilitate around 6 lakh Scavengers in the country. A new strategy will be devised under which Scavengers will be organized into self-help cooperatives and provided assistance from the Government and the concerned Finance Development Corporations. To give a greater focus to the welfare of Scheduled Tribes, a new Ministry of Tribal Affairs has been set up. The plan allocation of Tribal welfare has been substantially stepped up from Rs.684 crore to Rs.810 crore.

Revised Estimates for 1999-2000 This has been a difficult year for the budget marked by expenditure over-runs and some deceleration in tax collection. The increase in budgeted expenditure has been 7% whereas shortfall in budgeted tax collection is estimated to be 4%. The non-plan expenditure has increased by Rs.17,461 crore (8.4% over budget estimate of Rs.2,06,882 crore) and the plan expenditure by Rs.2,395 crore (3.1% over budget estimate of Rs.77,000 crore). Major increases in non-plan expenditure are on account of pension payments (Rs.4,173 crore), interest payments (Rs.3,425 crore), Extended Ways and Means Advances to States (Rs.3,000 crore), Defence (Rs.2,810 crore), Interest subsidies (Rs.1,304 crore), food subsidy (Rs.1,000 crore), postal deficit (Rs.848 crore) and assistance to States from the National Calamity Relief Fund (Rs.1,064 crore). On the plan side, main increases are on account of National Highway Development (Rs.1,900 crore), State roads (Rs.1,000 crore), Railway safety ( Rs.200 crore), special assistance to Jammu and Kashmir and enhanced assistance to States for externally aided projects. About Rs.500 crore are expected to be released for projects/schemes in the North Eastern Region and Sikkim out of the savings from the budget of different Central Ministries.

Net tax revenues for the Centre are estimated at Rs.1,26,469 crore against Rs.1,32,365 crore budgeted, reflecting a shortfall of about Rs.5,900 crore. The shortfall is mainly due to lower customs revenue because of very low growth in the dollar value of non-oil imports and lower excise revenue resulting from low inflation in manufactured products for most of the year. Disinvestment receipts are expected to be Rs.2,600 crore against Rs.10,000 crore budgeted.

Budget Estimates for 2000-2001 In the budget estimates for 2000-2001, the total expenditure is estimated at Rs.3,38,487 crore, of which Rs.88,100 crore is for plan and Rs.2,50,387 crore for non-plan.

Plan Expenditure The budget support for Central, State and UT Plans has been placed at Rs.88,100 crore, marking an increase of Rs.8,705 crore over revised estimates 1999-2000. Gross budgetary support for the Central Plan is being enhanced from Rs.43,661 crore in the revised estimates 1999-2000 to Rs.51,276 crore. Total Central Plan outlay at Rs.1,17,334 crore will be more by Rs.21,024 crore from the last year's level of Rs.96,310 crore, a hefty 22% increase. The plan for 2000-2001 focuses on basic infrastructure with energy, transport and communications accounting for 60% of total Central Plan Outlay. The Outlay for Social Services marks an increase of 21.5% over 1999-2000 R.E. Central Plan assistance to States and Union Territories in 2000-2001 is placed at Rs.36,824 crore as compared to Rs.35,735 crore in the revised estimates 1999-2000.

Non Plan Expenditure Non-plan expenditure in 2000-2001 is estimated to be Rs.2,50,387 crore compared to Rs.2,24,343 crore in Revised estimates for 1999-2000, showing an increase of Rs.26,044 crore. The increase in non-plan expenditure is mainly in defence (Rs.10,083 crore), interest payments (Rs.9,841 crore) and in grants to States (Rs.9,392 crore). However, this increase is sought to be partially offset by reduction in outgo on account of food and fertiliser subsidies.

Major subsidies, on food and fertilizer, constitute a significant portion of our non-plan expenditure. The rate at which these subsidy payments are growing is not sustainable. We need to target the subsidies to those who are poor and needy, whereas others should pay for what they consume. Indeed, we want to expand the access to subsidised food by Below Poverty Line (BPL) families so that they can meet their basic nutritional needs. Accordingly, from next year, we are doubling the allocation of foodgrains to BPL families, under the targetted PDS, from 10 Kg. to 20 kg. This will result in an enormous gain in food security for our poorest families. The issue price of foodgrains of BPL families is being fixed at 50% of economic cost in line with the decision taken by Government in December, 1996. The net effect of these measures will be to improve the monetary food budget of BPL families and vastly enhance their food security. This achievement is possible only by simultaneously fixing the PDS issue price for APL families at the economic cost. In respect of sugar, no allocation will be made under PDS for income tax assessees. For others, keeping in view the increase in the levy price of sugar, the issue price under PDS is being fixed at Rs.13 per kg. As a result of these measures I expect to keep the expenditure on food and sugar subsidy at Rs.8,210 crore in 2000-2001.

In the case of Fertilizer Subsidy, Members are aware that our present Retention Price Scheme suffers from many shortcomings. Much of the subsidy goes to producers and not to farmers. To encourage greater efficiency of our fertilizer units, some rationalisation of the Retention Price Scheme, including capping of capital related charges, will be implemented from next year. The Ministry of Chemicals and Fertilizers will also bring out soon a road map for phasing out the Retention Price Scheme in the medium-term. Separately, to take into account the rising cost of inputs, the maximum retail price of Urea is being raised by 15%. The rate of concession in the case of decontrolled fertilizer is also being reduced. However, to moderate the impact on prices the MRP of DAP and MOP is being raised only by 7% and 15% respectively. I expect that, because of these changes and some rationalisation of Retention Price Scheme, the expenditure on fertilizer subsidy will be Rs.12,651 crore in 2000-2001.

The Eleventh Finance Commission has since submitted its interim report for making provisional arrangements of tax devolution and grants to States for 2000-2001. Government have accepted the devolution formula and quantum of grants to States, as recommended by the Commission in its interim report. I have made provisions in the budget accordingly.

Continued

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