The Centre will provide special assistance to the militancy-hit Jammu and Kashmir to have a reasonable Plan size apart from a grant of Rs 300 crore (Rs 3 billion) to help the state meet its "overdraft" situation.

It had also extended upto April 1 the tax exemption for the new industries in the state.

Presenting the Union budget for 2004-05 in the Lok Sabha on T, Finance Minister P Chidamabarm said the government would provide financial support for the long pending Baglihar project and has agreed to provide a grant of Rs 300 crore to the state to ensure smooth switch-over from the current overdraft arrangement with the Bank of Jammu and Kashmir to the Ways and Means scheme of the Reserve Bank of India.

It is proposed to extend the terminal date by one more year for setting up of industrial undertakings in the state. However, a negative list was also proposed to be provided to specify the commodities which should not be manufactured or produced by such undertakings.

These undertakings will take effect from April 1, 2005 and will, accordingly, apply in relation to the assessment year 2005-06 and subsequent years.

The finance minister has also proposed to provide a package of Rs 3,225 crore (Rs 32.25 billion) for development in Bihar.

The government will also invest Rs 5,823 crore (Rs 58.23 billion) in schemes in North-eastern states and Sikkim.