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Rediff.com  » Business » Budget biased towards farm, manufacturing: FM

Budget biased towards farm, manufacturing: FM

March 20, 2006 18:37 IST

Pointing out that gross tax collections would register a 20 per cent growth for the third year in a row, the government on Monday said the Budget 2006-07 allocated resources within fiscal deficit targets to boost agriculture and manufacturing.

"The bias, if any, in this budget is in favour of agriculture and manufacturing within industry," Finance Minister P Chidamaram said at a CII function in New Delhi.

He said the target of reducing fiscal deficit to 3.8 per cent of GDP worked as a bottomline for making of the budget.

However, gross tax revenue is also expected to increase by 20 per cent for three years in a row next fiscal, which has never happened before, he said.

The budget has taken an unprecedented step of crediting two percentage points of interest liability of all farmers for the current year and in the next year agriculturists would be given short term credit at 7 per cent, he said.

"It will impose a burden on the Budget. But I think we will find ways to carry that burden," Chidambaram said.

Budget provision on Accelerated Irrigation Development Programme, and the government proposal to approach the World Bank with a Rs 4,500 crore (Rs 45 billion) programme in April to restore water bodies are aimed at bringing cultivable land under assured irrigation, he said.

The other sector, which got encouragement in the Budget, is manufacturing, Chidambaram said, adding that the country has a capacity to become leader in manufacturing.

Citing 8 per cent excise duty reduction on small cars, Chidambaram said, "We will become, mark my word, we will become the world leaders in small car industry."

On effects of fiscal concessions on man-made fibre, Chidambaram said, "I am confident that man-made textile industry would show sharp spurt in this year and the year after."

Pointing out that the budget also reduced excise duty on leather, he said if any other sector is identified where the country could become world leader, necessary steps would be taken to give a fillip to it.

"We are among top nations in many sectors -- steel, petroleum products, textiles, and we have the capacity to acquire leadership in many other sectors. Can we not make kind of toys that China make, can we not make kinds of footwear that China makes, surely we can," he said.

The finance minister said there is no point in moaning about infrastructure, as this is an opportunity to invest. "Who is going to build infrastructure -- CPWD? Infrastructure must be built by Indian industry," he said.

Chidambaram also justified the budget move to remove the tax exemption for infrastructure companies under section 10 (23G), saying the concession was revisited in the light of moderate interest rates.

On five super critical power projects of 4,000 mw each, he said, "We will give contracts by December 31, 2006."

He said after Knowledge Commission's report, a long-term policy would be considered to support science and technology.

Chidambaram said he was also waiting for the Knowledge Commission's report on supporting higher education.

"Meanwhile, what I am doing is, looking at select institutes. Last year, we chose IIC, Bangalore, this year we have chosen Punjab Agriculture University. We also made special grants for three oldest universities -- Kolkata, Chennai and Mumbai."

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