Key Features of the Budget

         Strategy of Budget

          Begin process to restore fiscal health of nation by reducing revenue and fiscal deficits.

          Revitalise programmes for human resource development to empower the poor.

          Undertake major reform of Indirect taxes to boost productivity and employment.

          Deepen economic reforms to improve performance of all sectors.

          Safeguard economy from international economic turbulence, revive exports and domestic economy.

          Strengthen foundations for Science and Technology and realise full potential of knowledge-based industries.

Agriculture

          Watershed Development Fund, with Central Government’s matching assistance, with NABARD to cover 100 priority districts within 3 years.

          Enhanced Central contribution under the Accelerated Irrigation Benefit Programme to States, which rationalise water rates to cover at least Operations and Maintenance costs.

          One time management subsidy and recurring assistance over an initial period of 3 years to all registered Water Users Associations, linked to incremental water rate collection.

          A new credit-linked capital subsidy scheme for construction of cold storages and godowns to create additional cold storage capacity of 12 lakh tonnes and to rehabilitate and modernise 8 lakh tonnes of existing units. Also proposed to create 4.5 lakh tonnes of onion storage capacity.

          Tax holiday benefit for cold chain/storage facilities.

          Experimental scheme of incentive discount to farmers for lifting fertilizer from cooperative societies during April and May.

          Special assistance to States for consolidating fragmented land holdings.

Rural Credit

          Corpus of Rural Infrastructure Development Fund V enhanced from Rs. 3000 crore to Rs. 3500 crore. The repayment period is also being extended from five to seven years.

          Kisan Credit Card Scheme extended to cover two million farmers in 1999-2000. Six lakh cards already issued.

          Regional Rural Banks to be recapitalised to the tune of Rs. 168 crore.

          NABARD and SIDBI to redouble their efforts for flow of funds to micro enterprises and ensure coverage of at least 50,000 Self-Help Groups during the course of the year.

          Lending by banks for food and agro processing industries will be treated as priority sector lending.

         "ANNAPURNA’ scheme for indigent senior citizens to be provided 10 kg of foodgrain per month free of cost through the Gram Panchayats.

         The existing programmes for health care to be integrated and the existing programmes for health care, family welfare, rural development and related areas synergised. Funds will be provided to the Gram Panchayats.

Education

         Education Guarantee Scheme to provide an elementary school in every habitation, which does not have one within a radius of 1 km. At least 1.8 lakh such schools will become operational during the next three years of the Ninth Plan. Gram Panchayats will play lead role.

         Jawahar Rozgar Yojana to be modified as "Gram Samridhi Yojana" to ensure that all funds are placed at the disposal of Gram Panchayats for creation of rural infrastructure.

         "SWARAN JAYANTI GRAM SWAROZGAR YOJANA" with integrated self-employment programmes for the rural poor.

         Employment Assurance Scheme will give special priority to areas with endemic unemployment and greater role for Zila Parishads and other elected representatives.

         "Samagra Awas Yojana" – new scheme to ensure integrated provision of shelter, sanitation and drinking water, reflects Government’s priority to provide shelter to all shelterless poor households by the end of the Ninth Plan. This will embrace existing programmes including Indira Awas Yojana.

         A programme with a mission to set up 100 rural industrial clusters every year. SIDO and KVIC to play an important role in this.

         Golden Jubilee Rural Housing Finance Scheme of National Housing Bank (NHB) to target 1.25 lakh units in 1999-2000.

         Raising tax deduction on interest on house loans for Self-Occupied houses from Rs. 30,000 to Rs. 75,000.

         Strengthen housing finance companies through liberal tax treatment of income on non-performing assets.

         Increased depreciation allowed for businesses building houses for employees.

         Changes in foreclosure laws etc. to promote housing mortgages.

         Commercial banks to lend up to 3% of incremental deposits for housing.

         New NHB scheme for interest rate concessions for small borrowers.

Industry and Infrastructure

         Major overhaul of Excise with present 11 rates going to only 3, with central rate of 16%, merit rate of 8% and demerit rate of 24%.

         Restoration of 100% MODVAT availment.

         Major direct tax initiative to facilitate industry restructuring through mergers and amalgamations.

         Boost to Capital Goods Industry through removal of customs duty anomaly on Steel

         New Competition Law promised to replace Monopolies and Trade Restrictive Practices Act.

         Technology Upgradation Fund scheme for Textile industry extended to Spinning industry.

         To level playing field for domestic industry, minimum 5% customs duty introduced on some products and principle of countervailing duties extended in capital project sectors.

         Infrastructure sector tax holiday extended to power transmission.

         Massive thrust for road construction financed by diesel surcharge.

          General SSI excise exemption scheme extended to cotton yarn.

          SSI excise exemption schemes for manufacture of cosmetics and refrigeration liberalised.

          Excise duty exemption to be allowed for goods made by SSI units in rural areas and sold under brand name of another person.

          Eligibility limit for availing the exemption is being enhanced from Rs. 50 lakh to Rs. 100 lakh.

          SSI units allowed facility to pay excise duty on monthly basis.

          Limit for composite loans is being raised from Rs. 2 lakh to Rs. 5 lakh.

          Annual turnover limit of SSI units raised from Rs. 4 crore to Rs. 5 crore for computation of working capital limits.

          Lending by banks to non-banking finance companies or other financial intermediaries for purposes of on lending to the tiny sector to be part of priority sector lending.

          New credit insurance scheme for Small-Scale units.

          Creation of a national foundation for helping innovators at grass roots level. This Fund will build a national register of innovations, mobilise intellectual property protection, set up incubators for converting innovations into viable business opportunities and, help in dissemination across the country.

          Technology Mission on Vaccines to be set up.

          A National Bio-resources Board (NBB) – to coordinate policies, research, documentation and legal protection of the country’s rights in genetic resources.

          Weighted deduction scheme under income tax for Research and Development extended to 2005.

          125% weighted deduction for a research project entrusted to a university/research institute.

Information Technology

          Customs duty on number of items used in IT sector reduced.

          Special tax deduction for capital expenditures to make computer system Y2K compliant.

          Export credit scheme in foreign currency revamped to provide credit at competitive rates.

          New Foreign Investment Implementation Authority (FIIA) for expediting foreign direct Investment (FDI) approvals into projects.

          List of industries for automatic approval of FDI being expanded.

          New Gold Deposit Scheme supported by tax incentives to mobilise idle gold and thus reduce gold imports.

          Facility of automatic approval for 100% investment by NRIs/OCBs for all items, with some exceptions.

          Major Stock Exchanges to open screen-based automated trading terminals abroad to facilitate the participation of NRIs.

          Income from UTI and other Mutual Funds to be exempted in hands of unit holder; instead 10% tax to be paid by mutual funds on income distributed.

          To strengthen UTI income distributed under US 64 scheme and other equity oriented schemes will be exempt from the above 10% levy for 3 years.

          US 64 being restructured with Government assistance to remove uncertainty and boost market confidence.

          Joint mechanism set up between SEBI and Department of Company Affairs for stringent action against unscrupulous promoters.

          National award for Excellence in Corporate Governance.

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

          Major programme to strengthen banks by reducing non-performing assets.

          Fiscal deficit and Revenue deficit targeted to be decreased by 0.5% and 0.7% of GDP respectively.

          Priority allocation for Agriculture (Plan outlay 35% up) and Social Services (Plan outlay 22% up).

          The process of downsizing of Government being initiated by abolishing four Secretary-level posts, w.e.f. April 1, 1999 through a process of merger and rationalisation of Central Government departments.

          An Expenditure Reforms Commission to be constituted to reduce the role and the administrative structure of the Government.

          System of Zero Base Budgeting to be initiated for preparation for the next Budget.

          Guarantee Redemption Fund created.

          Government support through interest subsidy/guarantees to profit earning PSUs to encourage them to raise bank loans for VRS.

          Disinvestment target for 1999-2000 at Rs. 10,000 crore.

          Special customs duty of 5% abolished.

          Customs duty structure rationalised into only 5 rates.

          Peak protective customs duty rate down from 45% to 40%.

          Surcharge at rate of 10% on basic customs duties imposed for revenue.

          Petroleum products exempted from this new surcharge.

          10% surcharge on individuals, HUFs etc. for those with income above        Rs. 60,000. This means individual in 20% slab will now pay 22% and person at the top 30% slab will now pay 33% 10% surcharge on companies to meet revenue needs.

Tax Welfare Measures

          Deduction for health insurance premium for senior citizens raised from Rs. 10,000 to Rs. 15,000.
          Deduction for medical treatment of serious diseases raised from Rs. 15,000 to Rs. 40,000.
          Pension and Family Pension of Gallantry Award Winners exempted from income tax.

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