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Finance Minister's Budget Speech - Part 6

Part 5

Gujarat Earthquake

91. The earthquake in Gujarat has been a terrible and unprecedented tragedy in terms of loss of life and damage to property. Although I am confident that the inherent resilience and entrepreneurial spirit so characteristic of the people of Gujarat will result in quick restoration of economic activity, I would like to assure the House that we have the capacity to fully meet the challenges of such natural calamities without deflecting from our path of pursuing our economic goals.

92. To enable the State Government to deal with the situation, Government of India is extending the following assistance:

* Rs 500 crore was made available to the State immediately from the National Calamity Contingency Fund.

* The National Calamity Contingency Fund, set up with initial corpus of Rs 500 crore as a result of the Eleventh Finance Commission recommendations, is being augmented by the imposition of a 2 per cent surcharge on personal income tax and corporate tax.

* Assistance will be provided to the State Government under various Centrally Sponsored Schemes for reconstruction of roads, bridges, power installations, school buildings, public utilities and other public infrastructure.

* Arrangements have been tied up with the World Bank and Asian Development Bank for obtaining a line of credit of US $ 800 million. A joint team has already visited Gujarat and substantial additional funds are expected to be negotiated.

* RBI has instructed banks to make special arrangements for freezing of recoveries and extension of new loans on a liberal terms for borrowers in the affected areas.

* The National Housing Bank and HUDCO have set apart adequate funds for housing reconstruction. I also propose to allocate a special quota of tax free bonds of the order of Rs 2000 crore between the two institutions.

* As was done after the Orissa cyclone, cement and steel used for construction in the Indira Awas Yojana, by HUDCO and by agencies identified by the State Government, would be exempt from excise duty.

* The Government of Gujarat will be enabled to raise funds by floating tax free earthquake relief bonds which will be open to subscription in Rupees to individuals and others including Non-Resident Indians through the Reserve Bank of India.

* All goods intended for relief have been exempted from excise and customs duties; direct tax assessees have been given extension of time for filing their returns.

93. A natural calamity of this magnitude has also highlighted the need to set up permanent institutional arrangements for management of national disasters. The National Committee on Disaster Management under the Chairmanship of Prime Minister will be making recommendations for laying down effective long term strategy for this purpose.

BUDGET estimates

Revised Estimates for 2000-2001

94. We have been able to adhere to the Budget target of fiscal deficit despite pressures on public finances on account of deceleration in disinvestment programme, natural calamities and the relief to consumers of petroleum products. The revised estimates for the current fiscal year show a marginal decrease in expenditure of Rs 2,965 crore as compared to the Budget estimates.

95. Net tax revenues for the Centre are estimated to be Rs 1,44,403 crore compared to the Budget estimates of Rs 1,46,209 crore, thereby reflecting a shortfall of Rs 1806 crore. The shortfall is mainly due to lower collection of Customs and Union Excise duties which were reduced to provide relief to POL consumers. Non tax revenue is estimated at Rs 61,763 crore, Rs 4299 crore more than the estimated level of Rs 57,464 crore. However, disinvestment receipts are expected to be lower at Rs 2500 crore against the Budget target of Rs 10,000 crore.

96. The fiscal deficit as a percentage of the GDP is expected to be on target at 5.1 per cent.

Budget Estimates for 2001-2002

97. In the budget estimates for 2001-2002, the total expenditure is estimated at Rs 3,75,223 crore, of which Rs 100,100 crore is for plan and Rs 275,123 crore for non-plan.

Plan Expenditure

98. The budget support for Central, State and UT Plans has been placed at Rs 100,100 crore, an increase of Rs 13,862 crore over revised estimates 2000-2001. This amounts to an increase of 16 per cent. Gross budgetary support for the Central Plan is being enhanced from Rs 48,269 crore in the revised estimates 2000-2001 to Rs 59,456 crore in 2001-2002. Central Plan assistance to States and Union Territories in 2001-2002 is also proposed to be increased to Rs 40,644 crore from Rs 37,969 crore in the revised estimates 2000-2001.

Non Plan Expenditure

99. Non-plan expenditure in 2001-2002 is estimated to be Rs 2,75,123 crore compared to Rs 2,49,284 crore in Revised estimates for 2000-2001. The increase in non-plan expenditure is mainly in interest payments (Rs 11,633 crores), defence (Rs 7,539 crore) and Grants to State Governments (Rs 2,221 crore).

100. In order to practice greater accountability and transparency, I am attaching with the budget papers this year a new report on "Implementation of Budget Announcements, 1999-2000 and 2000-01."

Continued

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