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India
- Annual Budget 2002 - 2003
Highlights
Of Proposals Introduced By The Finance Minister
Finance
Bill 2002
The Annual Budget for 2002-2003 was presented by
the Finance Minister on 28th February 2002
The budget
takes into account the performance of the Indian economy
in 2001-2002 as under :-
- GDP growth rate
of 5.4%;
- Foreign Exchange
Reserves at USD 50 billion (last year USD 41 billion);
- Lowest Rate of Inflation
at 1.1%;
- Industrial growth
at 2.3%;
- Shortfall in tax
revenues due to industrial slowdown.
- Higher fiscal deficit
at 5.7% as against the budgeted level of 4.7 %;
With the above
background, proposals have been made in the budget to
increase revenue collection, reduce fiscal deficit,
provide incentives for investment to boost industrial
sector.
Major thrust
in the budget is to Agriculture Sector aimed at decontrol,
deregulation and diversification of this sector with
a view to create a new climate that encourages research
and investment in both public and private sector. The
improvement in the Rural Economy, it is expected shall
give boost to the economy in general.
As in previous years, special focus is continued to
be made on development of infrastructure, especially
Power Sector, Roads, Ports, Airports etc.
In the Power
Sector, focus shall be in the areas of generation and
distribution.
In the Port
Sector, greater emphasizes has been placed on corporatisation
of existing ports and setting up of new ports in the
private sector.
In respect
of Airports, pending formalities for long term leasing
of systems for up-gradation of existing airports at
Delhi, Mumbai, Chennai and Kolkatta are proposed to
be completed.
To improve
fiscal deficit certain measures have been proposed to
reduce, withdraw the subsidies in certain areas.
Many changes
have been proposed in other areas, including regulations
relating to foreign investment, introducing capital
account convertibility, amendment of tax laws etc.
The budget
proposals have generally been appreciated by the Indian
industry, economists, keeping in view the constraints,
which the Finance Minister had, due to decline in revenue
collection because of slowdown in the Indian industry
etc.
Major
proposals as contained in the Budget on various important
aspects, are as under :-
Foreign
Investment
Further relaxations
have been made in regulations relating to portfolio
investment, permitted to be made by Foreign Institutional
Investors (FII). The investment by FII will henceforth
be not subject to sectoral limits as applicable to foreign
direct investment except in specified sectors for which
guidelines are being issued.
Foreign banks
shall now have an option to either operate as branches
of their foreign parent or setup subsidiaries. Such
subsidiaries will have to adhere to banking regulations
as applicable to domestic banks.
Capital
Account Convertibility
The Government
continues to follow the practice of taking steps, in
a phased manner, for making the Rupee convertible on
capital account. Major relaxations have been made in
regulations in respect of deposits made by Non-resident
Indians. The investments made by Non-resident Indians
on non-convertible basis, will now be entitled to full
benefits of repatriation.
The Indian
companies wishing to invest abroad will now be able
to invest upto USD 100 million on an annual basis, thus
raising the existing limit of USD 50 million. They are
also now allowed to make overseas investments in joint
ventures abroad by market purchases, without prior approval,
up to 50% of their net worth.
Indian mutual
funds will now be allowed to invest in rated securities
in countries with fully convertible currencies within
the existing limits.
Separate
guidelines will be issued in respect of the above as
well as few other relaxations as announced by the Finance
Minister.
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