NEW DELHI, May 7: Despite the pressure mounted by various political parties including those within the United Front, Finance Minister P Chidambaram made only minor concessions while moving the Finance Bill in the Lok Sabha today.

In a move which would give comfort to the salaried classes, he refused to make any changes in the tax proposals for personal taxation. Nor did he give in to pressure from the industry lobby to increase import duties. He however, bowed to pressures of the truckers, and opted to keep the controversial service tax proposal in abeyance until further discussions were held.

The highlight of the changes in the Bill relate to the voluntary disclosure scheme (VDS) which is likely to be notified on July 1, and further allocations to the power sector. A countervailing duty (CVD) was also imposed on imports of capital goods to protect the local industry -- no CVD, however, will be levied on imports of capital goods for fertiliser, power, refinery and telecom sectors.

The VDS has been made a lot more attractive by a change in the norms for levy of wealth tax. With the modification, wealth tax on income disclosed will not be levied from the date in which the income was made -- in other words, it will not be retrospective. Wealth tax will be levied on this income only from the date on which the income is disclosed. Further, the valuation of jewellery that is disclosed under this scheme will not be made at current prices -- instead, it will be made at values obtaining ten years ago.

Given the dismal power scenario and the paucity of investment, the budget allocation for the power sector has been stepped up by Rs 900 crore. Of this, Rs 700 crore will be given for projects of the National Hydroelectric Corporation, the Tehri Power Corporation and the Damodar Valley Corporation.

Another Rs 200 crore will be provided as budgetary support for the Power Finance Corporation for funding the modernisation and renovation needs of power plants run by state electricity boards.

In order to give a fillip to investment in other infrastructure sectors like telecom, concessions have been backdated. Amortisation of expenditure on licence fee has been backdated to April 1, 1996 rather than April 1, 1998 as originally proposed. Similarly, tax holidays for mineral producers in the North-East have been backdated to April 1, 1997 from April 1, 1998. Bonds issued by public financial institutions will also be eligible for tax concessions under Section 88 of the Income Tax Act.

Excise and import duty concessions amounting to Rs 110 crore were also announced. The concessions have reduced levies on a number of items, including electrical switches and plugs and matches, while completely exempting umbrellas and roofing tiles from excise duty.

The Finance Minister also called upon the industry to borrow and invest. ``This is the time to borrow and invest,'' he said. He also strongly justified his Budget proposals and said there was an imperative need for such a pro-growth and pro-investment budget.

Customs duty cuts have been made in items like ferro nickel (for the steel industry), carbon black feedstock and inputs for manufacture of medical syringes and needles. Duties on glass shells and parts for the colour picture tube industry have also been reduced. Duties on CNC systems have also been reduced from 30 per cent to 20 per cent in response to a plea from domestic manufacturers of machine tools.

While attacking the budget, BJP leader Dr Murli Manohar Joshi questioned the Finance Minister's claim on reducing last year's budgetary deficit to 4.5 per cent, Dr Joshi said the deficit in real term was around six per cent when unutilised funds of the previous year of various departments were taken into account. He said out of the Rs 87,000 crore allocations of last year, Rs 10,000 crore remained unutilised.

The member said inflation rate next year would be ten to 12 per cent as there would be total deficit of Rs 40,000 crore at the end of the financial year.

Of this, Rs 16,000 crore would be monetised deficit and Rs 20,000 crore on account of oil pool subsidy, he said.

HIGHLIGHTS OF CHIDAMBARAM'S PROPOSALS

Excise and custom duty relief of Rs 111 crore. Excise reliefs include those on common-man goods such as fruit juices, electric switches, matches, and sanitary articles.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.