Jaswant's sop opera continues

Finance Minister Jaswant Singh has assured investors that the exemption on dividend distribution tax for income received from open-ended equity-oriented mutual funds would continue for the full year beyond March 1, 2004.

Winding up the discussion on the interim Budget in the Lok Sabha, Singh said he was convinced that such exemptions had helped to revive the equity culture in the stock market and should be applied retrospectively.

"What I had delineated were convictions of what the government ought to have done," he said and added the regime of exempting tax on long-term capital gains should continue for another three years beyond March 1.

The tax on dividends distributed by debt funds will, however, continue.

The minister doled out another round of sops in his speech today: a subsidy of Rs 8 per kg of tea to growers for four months, with immediate effect; a withdrawal of the 8 per cent excise duty on wood particles and fibre board; and an exemption from service tax of 90 per cent of the ticket earnings of tour operators.

Singh also announced the setting up of the Sidbi Growth Fund with a corpus of Rs 100 crore as venture capital support for technology start-ups.

The fund will provide equity support to small-scale units in the pharmaceuticals, biotechnology, software and other knowledge-based industries.

The fund will come into operation from April this year and the corpus will be progressively raised to Rs 500 crore.

Singh also said Prime Minister Atal Bihari Vajpayee had directed him to declare Nagpur an international airport with immediate effect.

The finance minister said the fiscal deficit was expected to shrink to 4.8 per cent of the GDP from the 5.6 per cent budget estimate for 2003-04 because of expenditure control, buoyancy in revenue and increased disinvestment proceeds.

He added that non-Plan expenditure growth was just 2 per cent, against 20 per cent last year, and the increase in interest payments was 5 per cent, against 6.5 per cent in the pervious year.

The minister said rationalisation of the subsidy on food and fertilisers had raised expenditure on the head by only 1 per cent, against 20 per cent in 2002-03.

Lok Sabha clears interim Budget

The Lok Sabha on Wednesday passed the interim Budget 2004 by voice vote along with the relevant appropriation Bills and the Finance Bill, 2004.

The House rejected all Opposition-sponsored cut motions. Dissatisfied with the reply of Finance Minister Jaswant Singh over revenue collection data and the fiscal deficit, the entire Opposition walked out.

Interim Budget Part II

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• Rs 8 a kg subsidy for tea growers
• 8% excise duty on wood particles and fibre board abolished
• Tour operators to be levied 8% service tax only on 10% of their charges
• Rs 100 crore Sidbi Growth Fund for small industries
• No dividend distribution tax on open-ended equity funds
• Nagpur to be international airport