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Highlights of Indian Budget for
software Industry... |
We believe the underlying objective of BUDGET 2001-02 is to:
Spur Growth
Enhance fiscal consolidation
Improve social welfare |
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Growth
catalysts: |
Interest rates on small savings is reduced by 1 - 1.5 % which is expected to
bring down the real cost of capital spurring manufacturing and service activity.
All corporate direct tax surchages have been abolished which will have a direct
impact on corporate bottom lines.
Cut in dividend surcharge by 10 % is expected to have a positive impact on market
sentiments.
Disinvestment target of Rs. 12000 crores set for the year from 27 companies looks
realistic and attainable.
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Fiscal
consolidation moves: |
For the first time the fiscal
deficit targets (5.1 %) and revenue deficit targets (3.6 %) have been more or less met as
the expenditure were closer to projections. As the disinvestment process gains momentum,
attainability of the fiscal deficit target of 4.7 % of GDP for the new fiscal, looks
highly within reach.
Right sizing of governmental
workforce has been stressed upon with the finance minister taking the initiative in the
ministry of economic affairs. Fresh recruitment limited to 1 % of civilian staff strength
against the retirement level of 3 % and a freeze on leave travel concession for govt.
employees for 2 years.
Reduction of special excise duty
to a common slab of 16 % against 8%, 16 % and 24 % slabs is a step further towards
rationalizing indirect tax structure, a good move to demystify the complex tax system.
Service sector falling under the
tax bracket has been widened and will now include banking finance, broadcasting, telex
/telegram /fax, online information distribution, etc.
Stress on widening the tax
assessee base and bringing fringe benefits such as perquisites, etc., under the tax
bracket.
Improve the quality of government
expenditure and rationalises subsidies.
Over the next three years, the
custom duty slabs will be reduced to East Asian levels with the peak rate at 20 % .
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