Reuters Posted online: Tuesday, July 06, 2004 at 1426 hours IST Updated: Tuesday, July 06, 2004 at 1622 hours IST
New Delhi, July 6: New government will present its first budget on Thursday, which is expected to be mildly expansionary and is likely to focus on the farm and social sectors.
Finance Minister P Chidambaram of the Congress-led government, elected in May, is expected to increase investment in irrigation projects and to emphasise new technology to protect farmers from the vagaries of monsoon rains.
It will also step up public spending on health and primary education while trying to rein in the deficit by collecting tax from more people and businesses.
Following are some of the measures and forecasts expected in the interim budget, to be unveiled on July 8 at 1100 hrs, IST:
-- An economic growth target of 7 to 8 per cent for the fiscal year ending in March 2005.
-- Fiscal deficit estimate likely to be lower than previous year's 4.6 per cent in line with a new law binding the government to control spending.
-- An inflation estimate of 5.5 per cent.
-- Increased spending on infrastructure projects, with the National Highways project expected to remain a focus area.
-- A new type of bond intended to finance development projects and to lure money away from the black economy, where it is sitting untaxed and unaccounted for in the form of currency notes and gold.
-- A likely cut in the import tariff on capital goods in some sectors.
-- Government likely to earmark 100 billion rupees to implement ruling coalition's policy blueprint which focuses on social sector reforms.
FARM SECTOR
-- Increased investment for irrigation projects and probably set deadlines for all ongoing projects.
-- Watershed and wasteland development programmes.
-- Possibly a $5 billion sovereign offshore bond issue to fund the farm sector.
SOCIAL SECTOR
-- Probably higher public spending on health sector in a bid to attain a target of allocating 2 to 3 per cent of gross domestic product (GDP) to the sector over the next few years.
-- Increased investment in education, in line with government promises to raise public spending in the area to 6 per cent of GDP.
-- The government is likely to impose a 2 per cent temporary tax surcharge to fund primary education.
EXPORTS
-- Possibly a complete exemption of corporate tax on export profits.
