Indian Budget 2003-2004

Seaports

54. It is proposed to facilitate the implementation of comprehensive modernisation projects for Jawaharlal Nehru Port Trust (JNPT), Navi Mumbai and Cochin Port, designed to bring them up to international standards. JNPT and Cochin ports need dredging and modernisation. These projects are expected to cost over Rs.7,500 crore. The user charges levied by the two port authorities, and the additional custom flowing in after dredging and modernisation is completed, are expected to cover the debt service obligations. Here, too, the Government will provide only the viability gap funding to bridge any possible shortfall.

55. To redress the lack of convention centres of international standards in the country, the Government will enable the establishment of two such centres through public-private partnership; with the Government covering the viability funding gaps only.

56. For the 48 road projects, National Rail Vikas Yojana, the two airports, the two sea-ports, and the two convention centres, a sum of Rs.2,000 crore is being provided as initial contribution from the Government. On a flow basis, the average annual commitment for all these projects, under the viability gap funding basis, is expected to be around Rs.2,000 crore per annum in the medium-term, to be met annually from the budgets of the Railways and the Government.

57. Encouraged by the success of the scheme of funding rural roads under the Pradhan Mantri Gram Sadak Yojana by earmarking 50 per cent of the cess on diesel, it is proposed that the resources for rural roads be augmented. Accordingly, apart from allocating the anticipated Rs.2,325 crore from the existing cess on diesel for 2003-04, additional funds will be made available for rural roads from the proposed additional cess on diesel of 50 paise.

58. As Hon’ble Members know, the Electricity Bill, 2001 was introduced in the Lok Sabha in August, 2001 and subsequently referred to the Standing Committee on Energy for examination. The report of this committee has been received. This Bill seeks to provide a legal framework for our reforms and restructuring of the power sector, also in simplification of administrative aspects. We should take up this Bill now for early consideration.

59. Simultaneous to the emphasis on improvement in power distribution, our attention on capacity addition remains. The Government had earlier, in 1999, notified 18 power projects as mega projects, conferring upon them various duty and licensing benefits. The Government now proposes to liberalise the mega power project policy further by extending all these benefits to any power project that fulfills the conditions already prescribed for mega power projects.

60. Given the importance of transmission in the power sector, it is proposed to reduce customs duty on specific equipment for high voltage transmission projects from 25 per cent to 5 per cent.

61. To further research in solar energy, wind turbines, and hydrogen fuel as alternatives to fossil fuels, the Government is especially allocating Rs.20 crore to the Council for Scientific and Industrial Research, for launching incentive-driven research in these three fields.

62. Supply of safe drinking water is an essential component of infrastructure development. Orders have been issued to grant depreciation at the rate of 100 per cent on plant and machinery, and buildings that house such plant and machinery, forming part of a water supply project or a water treatment system. Water supply projects are now totally exempt in regard to capital goods and machinery, both from customs and excise duties. In addition, pipes have been exempted from excise duty for bringing raw water from source to the treatment plant and for conveying treated water to the storage place. I do hope that this will provide further incentive to new water treatment and supply projects for augmenting the supply of safe drinking water in the country.

63. Mr. Speaker, Sir, I have already said that for our growth to be sustained fiscal consolidation is essential. The Government has nurtured macroeconomic stability – held inflation low, and maintained a strong balance of payments position – while promoting growth. It has done so not only in the face of an unprecedented drought, but also in a global economy where growth is ‘tepid’, uncertainty great, and oil prices high. We have carefully balanced the need for fiscal consolidation with the need for a contra-cyclical policy stance. Simultaneously, as I said, Government is committed to totally eliminating budgetary drags, be rid of the self-laid traps; and go forward with fiscal consolidation through revenue enhancement under a modern tax administration, and expenditure rationalisation.

64. Appropriate cash management is integral to expenditure management. There is, at present, no effective cash management in our system as cash is available to the Ministries up to the budget ceiling as soon as the Appropriation Bill is passed by Parliament. The Government, therefore, now proposes to initiate cash management, on a pilot basis, in some major spending ministries, releasing budgetary allocations in a time-sliced manner to permit convergence with available resources within the year. Monthly or quarterly cash limits, based on the actual requirements of the Ministries will be prescribed. This will avoid mis-matches between receipts and expenditure and avoid rush of expenditure and the associated possible waste of resources in the last quarter.

65. At the Central level, interest payments in 2002-03 are estimated at Rs.115,663 crore, equivalent to 48.8 per cent of the Government’s revenue receipts. The average interest rate on Government of India’s outstanding debt has come down from 11 per cent in 1999-2000 to 9.4 per cent in 2001-02. But, Mr. Speaker, because of the legacy of high cost debt from the past, this reduction in the interest cost is not enough; it does not keep pace with the decline in the market rates of interest. The Government has, therefore, already started to act on three fronts.

66. First, taking advantage of our comfortable foreign exchange reserves and lower domestic interest rates, the Government has effected premature repayment of ‘high-cost’ currency pool loans of the World Bank, and of the Asian Development Bank totalling around $ 3 billion. We intend to continue with this policy of prudently managing the external liabilities and of proactively liquidating relatively higher cost component of our external debt portfolio.