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REGISTERED No. D. (D.N.)-72

The Gazette of India

EXTRAORDINARY

PART I—Section 1

PUBLISHED BY AUTHORITY

No. 33] N EW DELHI, T H U R S D A Y, M A R CH 1, 1984/PHALGUNA 11, 1905

Separate paging is given to this Part in order that it may be filed as a separate

compilation

1513 GI/53

JJI3GT/83—3

MINISTRY OF FINANCE

(Department of Economic Affairs)

(Budget Division)

Budget 1984-85 Speech of Minister of Finance

On 29th Febi-uury, 1984

New Delhi, the 1st March, 1984

(PART A)

Sir,

I rise (o present the Budget for the year 1984-85.

2. The Bcdcct has, been formulated against the back- ground of strong recovery in national income and agricul- ture, and an equally impressive improvement in our balacane of payments. These and other developments in the economy have been covered in detail in the Economic Sur- veyt presented to the House a couple of days ago. I shall, therefore, be brief in reviewing the current economic situa- tion.

3- As Ihe House is aware, th^ country had to so throujh two years of sever© drought and one year of indifferent monsoon during the period 1979-80 to 1982-83. Food- grains production, which had reached 132 million tonnes in 1978-79, declined to 110 mflfion tonnes in the following year. It recovered lo 133 million tonnes in 19K1-82 but then declined again to 128 million tonnes in 1982-83 because of another severe drought. The current year has seen a major breakthrough in foodgrains production, and we are not only likely to recover lost ground, bur also improve substantially on the previous peak. Foodfirains production in 1983-84 is expected to exceed ihe target of 142 million tonnes. Agricultural production us a whole is likely to increase bv 9 per cent over the previous year. Hon'ble Members will a^ree that this Js convincing testimony to the soundness of our agricultural strategy and to the hard worTc of our farmers.

4. Industrial performance shows an improvement over ihe previous year, but the recovery in industrial produc- tion still seems weak. Industrial growth in the current year is likely to be- about 4.5 per cent, compared with. 3.9 per cent in 1982-83. For the four year period after 1979-80, industrial growth will av-'rane slightly more than 5 per cent¹. This is well below the potential of the industrial sector. We must' aim at a growth late of 7 to 8 per cent in industry if we are to maintain hfgh rate of growth of GDP and provide employment for our fjiowing labour force in the years ahead,

5. The national income growth in 1983-84 is likely to be" in the. range of 6 to 7 per cent, Tn the four years since the present Government took over, the oycrajje growth rate in national income has teen about 5.4 per cent which is liifiher than the rate of prowlh fn ih; first lour \ear 13

I his achievement is all the more noteworthy when wewed against the background of a highly adverse international economic environment, and u severe drought.

6. The yeais 1981-82 and 1VH2-83 \Vcre chau.ueiised bv exceptionally luw rates of inflation. I'lic annual laie oi inflation which had leached a high of 21.4 per cent in 1979-80 was brought down U> lfi.7 per cent in 1980-81 and further to only 2.4 per cent at the end oi l'JHJ-SJ. 1 he annual rate of inflation iu ihe end of 1982-S3 was 6.2 per cent, which is unusually low fur a drought year. Hut, there has been an acceleration in the annual r;;te of ^illa- tion in the current year despite an excellent crop. The initial delay in the arrival of the monsoon and the high liquidity m the economy exerted pressure on price, in the early part of the year. Tho favourable effects of a good crop led to a decline in cereal prices nfier haivesiing. However, this was largely offset by sharp inci cases in prices of a few commodities such as pulses, certain edible oils, rubber, tea and colltwi because of hoth domestic and international factors. As a result, the seasonal dip in firuei, v.bich nor- mally occurs towards the end of September has been weak,

7. Ai Ihe Hou-.e is uwaic, the Government has takeji several measures to minimise ihe impact of the droujjht and to contain the price ri e. Action was taken to. increase pro- curement, availability, and releases of sensitive commodities such as, wheat, sugar, and edible oils through the public distribution system. Steps were also taken to mop up c.\eesj liquidity with the banking system and to curtail Government expenditure, lixporh of cotton ,ind CTC teas were restrained in order to increase domestic availability. Further measures will be taken as required to ensure that there is DO repetition of the experience of J979-80, when prices were allowed to increase bv over 21 per cent.

8. Let me now turn .to the cxtgrn.tl payments situation facing the economy. In my budget speech last' year, I had informed the House of the improvement that had taken place in our balance of payment ri 1982-83. 1 am liagpv to sav that this improvement has gained strength in 1983-^4, The trade nap, which declined from Rs. 5SOU crores iu 19&1-82I to about Rs. 5500 crores in 19X2-83, i^ expected lo decline further in the current year. Receipts on invisibles account have remained buoyant' and the incentives for non-resident deposits have been highly successful. Our foreign exchange reserves, inclusive of IMF drawings, have increased Ti\ Rs. 662 crores in the current financial year upto 10th February.

9. Our stjatecy for bringing the balance of payments under control, after the sharp deterioration that occuned in 1979-80, has paid rich.^dividends. In view of the improve- ment in our payments position, the Government has volun- tarily decided not to avail of (he balance of 1.1 billion SDR under flic Extended Fund Facility of the IMF. While intervening in the debate on Ihe IMF loan in this House in December, 1981, the Prime Minister had this to ^av, and I quote :

"It does not force us to borrow, nor shall we-borrow unless it is in the national interest. There is absolutely no question of our accepting any pro- gramme which is incompatible with our policy, declared and accepted by Parliament. Jt is incon- ceivable that anybody should think- (hat wo would accept assistance fiom any external agency which dictates terms which are not in consonance with such policies."

This was true then, rind it i.i true now.

11 We hope that our decision to forgo the balance of Ihe amount available to us under the IMF loan would, in a small way, help the IMF to provide greater assistance to other developinK countries. I must ask take this opportunity to express our appreciation for the goodwill and .mutual understanding that has .narked our relationship with the I Ml' during the entire period of the EFF a.Tangemrnt.

12 However, there can be no room for complacency. We must persist wnn the policies that have brought about this favourable outcome. It h necessary to work even harder lo save imports in criiic.il areas and to increase export.:. Our exports, net of oil, in the first seven months of 19S3-84 increased bv 9.9 Per c n l. This is a reasonable performance considering that world uadc has been stagnant for quite some time. We would need to do even better in the inturc in order to meet the essential' import requiicmenls of a growing economy, and to keep the debt service raiio at a manageable level.

13. The Government nas taken several steps in the last four years to mobilise resources for public sector invest- ment and to increase the rate of public savings for financing the Plan. Apart from adjustment of the tax rales, the fb.cul instiumcnt has been used

14. In considering the strategy for resource mobilisation we have to recognise that while our tax rates are iclativclv high, the lax base is narrow. The evils of black money and tax evasion also have lo be reckoned with. The Govern- ment is fully committed to come down heavily on tax eva- ders. At the same time, wo must ensure that as far as possible, the tax system itself does not become a source of. encouragement for evasion. Simplification and rationalisa- tion of the tax system must, therefore, remain important objectives of our fiscal policy.

15. The Central Public sector enterprises had shown a net profit of Rs. 618 crores in 19E2-83. Although a large number of public sector enterprises have continued to show profits in 198J-K4, their overall peiforman=o has been below expectations. The erosion of profitability "was largely due to tosses incurred; in a few sectors, such as steel antf coal. The Government has taken steps to improve (heir function- ing. We must ensure that capital is used more efficiently so that larger resources are available for future expansion.

16. In order to fulfil our social commitments and protect jobs, Government hud lo take over a largo number of sick units and sustain them through injection of fresh resources. While some of them have tinned the comer,~a large number of them continue to incur looses. The time has come to undertake a careful review of the performance of sick units in too public sector with a view to reducing the drain on our resources. This the- Government proposes to do Eco- nomic viability, must be the principal test for the survival of an enterprise.

17. The growth of deposits with the banking system in

XL* ?f TV hM ?.ubsta"t;n"V exceeded their require- ments of funds for credit expansion. This has ;n thc short

Lcrtificales of deposits with a maturity of four years can be

U1JW, two rifi'l onis \t:ic K-.-ptclively. In]ercsf from thr^

o r T ^ n ' l l* W f°r ^ exem^lon " P 2V MI liml •Li' ¹ n'n⁰⁰.u nd" Action SOT, of the Tucome-tax Act. The f (

i4

l i lt GAZBTTE OF INDIA : hXIKAORDlNARY [PART i - ^ C- lj

period uf time. I should clurify that this is it temporary scheme, and will be discontinued after this target is reached or curlier, il" monetary developments :.o warrant,

IK. Pursuant to the recommendations of the Hi"h. Level Committee on financial institutions set up by the Government lust yeur, il has bten decided to make certain changes in the •'convertibility clause"'. In view of the increases in capital costs of projects and ilie investment limit for the delicensed sector, the threshold lor exemption from convertibility clause is hcinj; raised from the existing level of Rs. 1 crore to Us, 5 crores.

I'J. 'Further, in I he case of non-MRTP companies, con- vertibility clause \ul! not be stipulated where the holding of equity by nil financial institutions in such a company exceeds It, per cent. In Ihc- case of NJRTF companies/large houses, however, the e\i:-.titiK limit of 40 per cent will continue. In order to encom-rif-'e investment in "No Industry" district there will be complete ev.emp1ion from convertibility clause in respect of. units proposed (o be located in these districts. The fun- ctioning i,f nominee directors of institutions on the boards of assisted companies is HISO being revamped. Detailed guide- lines on these and other related aspects are being issued sepiuutely.

20. I he Industrial Development Bunk ot India has been providing liberal I inane ing facilities for modernisation of industry- The IDHI's scheme for this purpose was recently extended H> all industrial units and assistance under this achcnie iiplo Rs. 4 crores is bcinjf provided at a concessional rate of interest of J 2.5 p^r cent. In order to reduce financing costs of modcrniitilion schemes, it has been decided that the rale of interest tinder the IDBI scheme for Joans upto Rs. 4 croics will be reduced to 11.5 per cent until further notice. Weak units "''!1 lie provided asslstnnce upto this amount at an even lower rale of interest of. 10 per cent.

21. As the House is avvaie. the Government has been giving consideration to the desirability oi a change in the linanciul yeur. As I informed the House last year. I invited the views of the State Governments on this proposal. The response has been generally favourable. In order to examine suggestions received from State Governments as well us trade and industry, and to work out the modalities for effecting a change in the linanciul year, I propose to set up an expert committee, which would include representatives of Central Government, State Governments, Reserve Bank of India, Comptroller and Auditor General and some non-official mem- bers, This committee will be requested to submit its report by the end of September, 1984.

22. 1 shall now turn to the Revised Estimates for 1983-84

and the Rudget Estimates for 1984-85.

Revised Estimates for 1983,84

23. The Howse win recall that the Central sector Plan outlay for 1983-84 was Iked at Rs. 13,870 crores. This was to be financed to the extend of Rs. 8,390 crores from the budget and Rs. 5,480 crores through the internal and cxdru- budgetary resources of the public sector enterprises. Despite erosion in tho internal resources of certain public sector enterprises, it has been inv endeavour to ensure that the total Plan outlay during the year is not adversely affected. The Central Plan outlav in 1983-84 is now estimated at Rs. 14,059 crores. This has been made possible by an increase in the budgetary support by Rs. 1,007 crores over the Budget Estimates.

24. Budgetary support for the Posts and Telegraphs Plan has been increased by Rs. 203 crores. The Railway Plan outlay has been stepped up by Rs, 100 crores with an addi- tional bttdKet'ary support of Rs. 54 crores. In the Transport and Communications sectors, I have provided additional funds for Space projects like INSAT. and extension of television roverace. To maintain the progress of the" Visakhapatnam Steel Pl.'.iii', ITJC luuiffel provision hoi betfn augmented by Ri. 250 crores. For Chemicals & Fertilizers, the enhanced allocation of Rs. 133 crores is larccly due to the fall in internal resources and change in the pattern o£ finnncinn. In the Energy sector, coal project's gel additional funds of Rs. 30 crores to expedite on-going projects. To improve the capital base of the Industrial Development Bank of India, a special provision of Rs, 130 crorcu has been mane. Rupees 110 crores nave been set apart tor the new rural landless employment' guarantee programme, launched during the current year. I have also increased tho provision for welfare of scheduled cartes /tribes and backward classes and important social sectors like health and family welfare.

,25. The Central assistance for States' and Union I'crrl- torrics' Plan has. been increased by Rs, 392 crores from Rs, 4,462 crores to Rs. 4,854 crores. This includes advance Plan assistance of Rs. 190 crores to States aitccted by failure of monsoon particularly in the first half on the current' ycar^ Additional Plan assistance of Rs, 82 crores has been provider to the Stalfc of Assam, a larjje part of which is for relief and rehabilitation of the riot vic(ims in that Slate.

26. Utmost car© has be^n taken to contain tho non-Plan expenditure. There were, however, certain unavoidable com- mitment^, Additional provision of Rs. 400 crores has been rrjadc for ways and means advances to State Governments and Technical Credits under rupee-trade agreements. The short-torm loans to States for agricultural inputs have been stepped up by Rs. 110 crores. There is an increase of Rs. 300 crores in loans to State Governments, as iheir share of small savings will be higher on account of higher collections. The second half of the current year wTlnesjcd. Hoods, cyclones and hailstorm in us many as 15 States. An additional non-Plan grant * Rs. 150 crores has been provi- ded for the relief of distress on account of tuesj; calamities.

27. Further, I am providing additional non-Plan assistance amounting to Rs. 500 crores to States. I shall refer to this later while dealing with the State Plan outlay for nest year. Out of this loan of Rs. 300 crores, an amount of Rs. 400 crores would help tho States to clear part of their deficit's of 1987-83.

28. Tho provision for Defence has been increased from Rs. 5,971 crores to Rs. 6,350 crores in the Revised Estimates, The interim relief and bonus sanctioned to Government' em- ployees in the current year is estimated to cost about Rs, 280 crores in respect of all th© department's of the Government. Subsidy on imported and doireslic fertilisers wiD co'iTp by Rs. 255 crores to Ri'. ],048 crores as th# consumer price of fertilisers was reduced in June 1983. During the current year, because of financial difficulties, certain public sector undertakings, particularly Heavy Engineering Corporation, National Textile Corporation and Delhi Transport Corpora; lion, will be requiring larger non-P^an assistance than provided in the Budget Estimates. It has also been decided to extend the subsidy fcdicme for Calcutta Port and Haldia Channel dredging up to the end of next year.

29. Revised Estimales also include additional provision of Rs. 502 crores for subscription towards our higher quota in the IMF. This, however, wifl have- no net impact', on the budget as payments for quota subscriptions arc matched by corresponding receipts. Taking these and ot'her variations into account, the non-Plan expenditure in the Revised Estimates is placed at Rs. 34,773 crores against tie Budget Estimates of Rs. 21,984 crores.

30. Coming to receipts, the Budfiet' JBstlmates of receipts from income-tax and customs duties are likely to be achieved. Corporation tax receipts will be higher by Rs. 203 crores due to funier payments by oil companies, Union excise duties are also estimated to be Rs. 85 crores higher mainly due to larger collection of c"sscs on crude oil and coal. The Centre's tax revenue, after paying the States' shnre of taxes, is esti- mated at Rs. 15,700 crores as against the Budget Estimates of Rs. 15,460 crores.

31. Under non-tax revenue, the dividend fioni Railways is likelv to be Rs. 127 crores less than the Budget Estimates. This decrease will, however, be moro than odscl by increase* under other heads and total non-tax revenue in the current ysar is expected it, show an improvement of Rs HO crores over the Budffet Estlma^s

would have harshly affected their Plan sizes if these dclicifs were adjusted afiainst next year's Plan, as per normal practice. In considering tho ways of overcoming thjs problem, I have toiind myscell in a predicament. On thc one hand, no f-inance Minister of the country can remain unconcerned about the .size of a Slate's Plan. On the other h;ind, i£ assistance is extended to defaulting States, the well-manugcd Stales can legitimately complain that (hey havo not got their just' re- wards froir? the Centre for their belter performance.

32. Under capital receipts, I am happy to inform the [ouso that the net collections under small savings dnnnfi the jricnt \ear may amount to Rs. 2,200 crores against the udget Estimates of Rs. 1,700' crores. This is a welcome :sponsc lo tne incentives provided lor tmall savings in the urrent year's budget. The repayment of Technical Credits , expected to be K.s. 1,150 crores as against Rs. 800 crores ssumed in thc Budget. 'Ihe receipt, net of outgo, will be Ls. 350 crores againM' the Budget FMimates of Rs. 200 rare*.

33. The icceipts from special deposits, of nonrOov eminent irovidcnt Innds and the like nre cstinsiteJ lo h0 Rs. 1

41, In the past.' few weeks, discussions were a3"in held with the Chief Ministers of States whose overdrafts wijh the RBI were high. Several St. lie Governments Jwve agreed to take the necessary measutcs to impiove their financial posi- tion and to reduce tncir reliance on uveidraft. On mv putt, 1 have agreed to take further steps tu provide additional assistance to Slates in order to protect their 'Plans as far as possible. In doing ;,o, I 1IK\C been particulaily conscious o( the need to keep up thc momentum of anti-poverty program- mes. Central assistance Ls also bcijig furthei increased. With this, the aggregate assistance during the Plan period will amount to Rs. 17,790 crores as against Rs. 15,350 crores envisaged in the Plan document. Further, as ( mentioned earlier, I have made an additional provision, of Rs. 500 crores in tho Revised Estimates for 1983-84, This special assistance would enable these States to clear cart of their overdrafts with the RBi. States have also been informed that¹ ckbinit deficits, upto the permissible ways and means limit* from the RBI will not be adjusted from nuxt year's Han resources.

34. Total icccipts are !hus estimated to go up from Us. 33,250 crores to Rs. 36,929 crores. This- will leave a budgetary deficit of Rs. 1695 crores far thc current year as igain-t the Budget Estimates of Rs. 1,586 crores. This jxcludes the special loan assistance of Rs. 400 crores provided to States for clearing their overdrafts, at fhe end of the pre- vious year 1982-83. T urn, sure the House -will agree that despite unavoidable budgetary pressures, we have been aWe to keep the deficit within prudent limits.

Budget Estimates for 1984-85

42. For those State* who have manajBed their finances well. I am working out a suitable echeme to provide some addi- tional assistance to them in 1984-85, This is only just and appropriate.

35. Hon'ble. Members will recall that when our Govern- ment took office in Januaiy 1980, an important task before ra was to revitalise the planning process and to give a Jiew thrust to ihe programmes of development. I am happy to say that, in thc last four years, wo have been able to achieve an unprecedented incren'c in 'he fempo of public invest- ment.

43. Mr. Speaker. Sir, 1 am sure that Ihe House will afirqa with mo that, despite severe resource constraints of its own, the Central" Government has done the maximum that it can to solve the States' problems. Thc rest, however, is upto them.

36. For 1984-85, the approved Plan outlay of the Centre, States and Union territories vviir b,; Rs. 30,132 crores as compared to Rs. 25.4K0 crores in 1983-84. The Central Plan outlay for 1984-85 is Rs. 17.351 crores, which repiesenft a step up of 25 per cent Over the approved Plan outlay of Rs. 13,870 crores in 1983-84.

44. Altofiether, in the Sixth Plan period, the public sector Plan at current prices will bo over Rs. 110.000 crores. This compares with Plan expenditure of Rs. 46,700 crores in the preceding five years, which, of course, include three years of "non-Plan" launched by the previous Government'. In real terms too. thc Sixth Plan will constitute a massive increa'.e over tho outlays provided for in any previous PJan. This. Mr, Speaker, is thc measure of achievement of this Govern- ment in accelerating the pace of development in tho current Plan period.

37. The Plan outlay for tho States and Union territories is placed at Rs, 12,781 crores as compared with the final approved outlay of Rs. 11,678 crores in 1983-84. Central assistance for the Plans of States and Union territories win be Rs. 5,050 crores as against Rs. 4,462 crores rn 1983-84 Budget Estimates, representing an increase of 13.2 per cent over the allocation made for the current year.

45. In the last four years, ihe present Government intro- duced a number of schemes for the benefit of the weaker sections of thc society, panicularly in the rural ureas. These include the Integrated Rural Development Program- me, the National Rural Employment Programme and two new programmes announced by the Prime Minister on 15th August, 1983. namely, the Rural Landless Employment Guarantee Programme and the scheme for providing se]f- ernrployment opportunities to thc educated unemployed. Each of these programmes is designed to crentp opportunities for employment and income ceneration for particular target croups, while also creating productive assets.

38. Within this aggregate, Plans of individual States show a varied picture. Some States have managed their finances well; they hay© been able to raise additional resources and effectively utilise these to implement adequately sized plans, providing development and growth to their people. Unfortu- nately, some States, for reasons of their own, have used their resources for various other purposes; they have npt invested their resources, including additional resources mobi- lised, for development and hnvo also resorted to large over- drafts on the RBI.

46. In formulating the next vcur's Pi*an we have provided thp maximum support to these and other programmes that benefit' the rural poor directly. The total allocation for various programmes Of the Ministry of Rural Development would be Rs. 932 crores, which is nearly doutle the amount of Rs. 480 crores provided in 1983-8J. For 1hc TRDP an ;dfocation of Rs. 216 crores is being provided, which is to be matched by th© States. The number of beneficiaries under the programme in 1984-R5 ;? estimated at over 3 million For the NREP. the outlay for 1984-85 is Rs. 230 crores which will ajjain be matched by the Slates.

39. With a view to assisting even such States, variou* facilities and opportunities were provided from time to time. At the beginning of the Sfxth Plan itself, recovery of outstand- ing advance assistance amounting to Rs, 1412 dores was postponed. This was done fc> enable States to start with a clean slate. However, State overdraft? again grew, and in June 1982, I decided to clear States' closing deficits of the previous year with a medium terra loan of Rs. 1743 crores RBT also doubled the ways ami means limits available ~fo the States. Again last year, while Dwentinir the budget T an- nounced an Increased level of Central assistance "AH these nvH'iiires were * alien primarily to assi-'f Sfcites r1-"iM their financial affairs ,ind to Jv nhfe to implement Sfafe'plars of adequate sire

40. Unfortunately, despite those measures srtnv Rftit"

47. 7T:e allocation for Rural Landless Employnient (iixirnn- tee Programme, which seeks to provide employment for 100 days in a year to at Toast one member of every rural landless family, is being stepped up to Rs. 400 cxor 16 THE GAZETTE OF INDIA : EXTRAORDINARY [PART- I - S E C. 1]

crores is being iniiLlc i'or' the proyiamme ioi pun k\wg sell- employment oppoitimitics 10 the educated unemployed. As the House is awaie, the budsetaiy provision under this profirammc will be used as capital subsidy ajjoinst loans to be given by banks. 1 mav adJ that for these two new programmes, dependine on the process of expenditure, mo;e funds will be provided during the coirrse of the year as necessary.

48. In the Plan for 1984-S5, Rs. 243 crores have been earmarked for I he accelerated rural water supply program- me. The States on their part are expected, to provide Rs. 364 crores for this purpose under the minimum needs programme. Over 50,000 problem villages are expected to be provided with diinkinc watt-T facilities during ?984-85.

49. The programme iov integrated chi'd devclbpnxnl services is an impoit'ant part of our efforts to help women and children in the backward areas, urban slums and tribal areas of our country. This programme is already in operation in 820 blocks. By Ihc end of 1984, the scheme will become fully operational in all 1000 identified block*. A provision of Rs. 36 crores has been mads for this scheme. A total allocation of Rs. 7K crores is beiriR nrovided fur various .schemes of the Department' of Social Welfare in l<*R4-85.

50. The provision in the Central Plan for_ the varici.•. programmes benefiting the scheduled castes arid scheduled tribes and other backward CTHSSES has been increased to Rs. 209 crores in 1984-85 compared to Rs. 176 crores only in 1983-84. Plan outlay for the programmes in education and culture has been substantially stepped UP to Rs. 204 crores in 1984-85 as against Rs. 155 crores in 1983-84. likewise, the Plan outlav for health and family welfare prograrrcnes has also been stepped rip by nearly 32 per cent from Rs. 460 crores in 1983-84 to Rs. 605 crores in 1984-85. The family welfare proRip.mme^ will cover an additional 20 million -persons,

10 million tonnes. A punibiwi u! Rs. 200 uorcs it "lwJ being made for a gas pipeline project for supply of Bassein gas to new fertilizer projects to be ^el up at Bijaipur, Jafidish- pur, Aonla, Babrala, Shahiahanpur and Sawai Madhopur.

55, Hifihcr allocutions have beitn provided for steel, non- ferrous metals, paper, cement and several¹ oilier sectors, which arc important, for LOiintrv's industrial development. 1 would also like to dra'.v tlic attention of the House to the porgrammes for the develop me in' of t.c(ence and technology conservation of natural resources, and improvement of the envinonment in the Plan for 1984-H5. The successful posi- tioning of INSAI-1B in a geocentric, orbit in August last testilies to the excellent woik done bv our scientists, engi- neers and technicians. It it also a matter o£ pride to vis that India has joined a s.lect firoup of countries- which have permanent scientific stations in the Antarctica. India has also achieved the distinction of bcipf; the only develop- ing country to be given the status of 'pioneer investor* by the Convention on the l aw of the Sea, Riving us the right to exploit the mineral resonices of the deep sea beds.

year which is an increase of nearly Rs. 500 crores. The net tax revenues of the Centre wil! thus, be Rs. 17,254 crores compared with Rs. 15,700 crores in the current year. The dividend from Railways and Posts and Telegraphs will' • be higher bv Rs. 106 crores- than the Revised' Fstimates tor 1983-84. Interest receipts and repayment of loans bv public sector undertakings and State Governments will also be higher.

62. Receipts from market loans are placed at Rs. 4100 crores against Rs. 4000 crores in the current year. Small savings collections, are estimated at Rs. 2400 crores a"ainSt Rs. 2200 crore-j in the current yea--. External assistance net of repayments is estimated at Rs. 2089 crores compared with Rs. 1902 crores. Next year's Budget also includes a receipt' of Rs. 200 crores from the National Deposit Scheme to which I have referred in the earlier part of my ^rK-ech. TakinK into account these and other variations in rcccin's. the total receipts in 1984-85 are estimated at Jls. 40,501 crores. These receipts include the effect of tha changes in fare and freight rates of the Railways. The total expenditure is placed Hi' Rs. 42,536 croroef. The overall budeetarv cap at c\isiinu rates of taxation win thus be Rs. 2035 crorocs.

63". 1 have taxed the patience of the Mouse enough. Let

me now turn to other tax" proposals.

(PART B)

64. In framing these proposals, I have tried to take into account the realities of i.'ie economic situation to, which T referred fit the beginning of my speech. While doing so, 1 hope I have not been entirely unmindful of a certain forth- coming event which is of importance to all of us in this Parliament.

65. Mr. Sptaker. Sir, my first propsal relates to the non-corporate income-tax sector. I propose to revise subs- tantially the entire rate structure relating to personal taxation. The present rate of' tax in the first slab of taxable inco'r.c ranging from Rs. 15,001 to Rs. 20,000 is 25 per cent. The House Will recall that this rate was brought down bat ycar from i.hc ilicn prevailing level of 30 per cent. I now propose to r.'ui'.ce this rale fvrlher to 20 per cent. Relief has been, allowed ai all income levels above Rs. 20,000 also, fhe ma\i- mnri marginal rate of tax on incomes over Rs. 1 lakh is beiiiK reduced from 60 per cent to 55 per cent. The new ruk-s m r.oTi: illustrative slabs will be as follow-,- ; in the in one slnb-'of Rs. 25 001 io Rs. 30,000, the new rate will be Ri. 30 per cent as against 35 per cent nt prccnt; in 1 lit income >.hib of Rs. 50,001 lo Rs. h0,000, Ihc new rate will be 45 per jent as against 50 per cent at present; and in the itico'-'ic slab of Rs. 70.001 to Rs. 80 000 ihc no-/ rate will •be 5i! per cent as r.gainst 55 per cent at prjienl.

66. The, above proposal "Will piovide relief at nil levels of .inj'ooit'j. Ta':-:n with the increase in the standard deduction infi'\lf!'_'™il lasl year, 1 expuci, th::, 'Measure will pii'.'d* fuibs- Janiii.il cel'cf in particular to (he fi\jd income ;junps. The revised lax schedule will provide a relief in lix of Rs 2S1 tii '. taxpayer wiih an income of Rs. 20,000, \vh' 'i is 20 per ecni of the tn\ payable by him earlier, lor an income level oi' Rs. .in C');,. the rcTef will he Rs. "44 or 16 •. 7 per cenc of the- t;i\ pir'.iblc nndei the old slnictmv, and ::< m;oni: level of '•:.. 50 000, this relief will be 10 per rait of the tax finable.

lav. structure has also been brought down to a lc\el which 1 regard as reulistie and entirely appropriate. I hope this measure will have a salutary effect on our tax culture and will induce the maximum number \A taxpayers tn come forward and voluntarily declare their true incomes.

69. At the same time, it is necessary to simplify la* administration and make it more responsive to the needs of the taxpayers. One essential feature would he the effort t<" complete assessments within the shortest possible time. As the Hon'hle Members are aware, the scope of the summary assessment scheme covers incomes upto Rs. I lakh. • Only a percentage of cases with incomes in this range is being scrutinised, the selection of such eases beirifi on random sampling basis. The target for 1983-84 is to complete 85 per cent of the summary assessments workload.¹- I have instructed the Income Tax Department to further .-.peed up the assessments.

70. for some year.-., the Income-tux "Act h.is contained jiroivsions empowering the Central Government to acquire immovable property having a fair market value exceeding Rs. 25 000. This power is excrcisable in situations where the declared consideration for transfer of the property is less than Ihc fair market value of the property. To eliminate unproductive work in handling a large number of relatively small value cases and also taking i'Mo account the rise in market prices 1 have modified the provision to say that this power will be exercised only in eases where the fair market value exceeds Rs. 50,000. As a further simplifica- tion if is being provided I hut the prescribed staleircnt will h.ivc to be filed before Ihe registering oflicer only in cases w ,?re ihe value of consideration for the transfer exceeds K-. 25.0OM a,s against Rs IiJ.iJiX) at present.

71. With the reduction in rates and expcdi/ious disposal of ersessments. 1 believe (here can now be DO excuse for snv leniency to be shown to those who abuse our laws. Su h cases will necessarily have to be deal with severely. In order lo discourage tax avoidance and tax evasion, I urn also intro- dnc'DR some further measures. In all cases where the annual turnover exceeds Rs. 20 lakhs or where the gross leceipts !' in a profession exceed Rs. 10 lakhs, T am providing for a compulsory audit of accounts. This is intcmie'd to ensure that the books 18 THE GAZETTE OF INDIA : EXTRAORDINARY [PART I—SFC. 1]

remuneration as contained in the Income-tax Act is low and should be raised. I am glad to inform the House that having regard to the changes in the managerial remuneration intro- duced by the Department of Company Affairs, I am also rais- ing the ceiling limits for managerial salaries from Rs. 5,000 to Rs. 7-500 per month. The ceiling in respect of perqui- • sities. will however remain unchanged.

75. Some relaxations are also being provided to those engaged in the business of growing arid manufacturing tea. The existing provisions provide exemption from tax only in respect of subsidy received for replantation or replacement of tea business. I am extending this tax exemption to cover subsidy received for other approved schemes relating to re- juvenation and consolidation of areas, I hope this measure will furlhe'r lend support to our scheme for increasing pro- duction of tea.

76. My next proposal, I believe, will be welcomed by a large mimhcr of people. Investors presently can receive dividends and interest on debentures without deduction of tax at source, if they furnish an exemption certificate from the Income-tax Officer or alternative file a declaration to the effect that their income for the year is below the exemp- tion limit. To reduce paper work and avoid inconvenience to small investors, I propose to provide that widely-held com- panies may. henceforth, pay interest on debentures and divi- dend income upto Rs. 1,000 without deduction of tax at source provided that the payment is made by nn account payee cheque or a bank draft.

77. Mr. Speaker, Sii. I notice fhnt certain provisons of tax lawN arc being misused by a section of ihe taxpayers. I hud occasion last year to dc;'l at some length with taxation of charitable and religious trusts and institutions. 1 find thn:. some of these trusts and institutions are trying to circumvent Oie investment pattern for trust funds laid down by the Finance Act, 1983. It is necessary to ensure that all such trusts anJ institutions strictly conform to the prescribed invest- ment pattern and thai such income or property is not used for providing benefit to the settlors, trustees, etc. I, there- fore propose to provide for taxation of the income of default- ing trusts and institutions at ihe maximum marginal rate of income-tax.

78. While on this subject, I would like to refer to a ten- dency noticed to create private trusts which carry on busi- ness. To curb such practice, I propose to provide that where such trusts have profits and gains of business, the entire income of the trust will be charged to tax at the maximum marginal rate, an exception being made only in the cases where the trust is created by will For dependant relatives.

79. Anotker undesirable practice noticed is the tendency of some corporate bodies to make large contributions to the so-called welfare funds. I further understand that utilisation of these funds is discretionary and subject to no discipline. I am, therefore, providing that deduction will be available only in respect of contributions to such funds as are established under statute or an approved provident fund, superannuation fund or gratuity fund. I am making this change with retro- spective effect to avoid unnecessary litigation.

KO. Last year, T liberalised the scheme related to export turnover. I propose to continue it and watch Its operation for a longer period of time.

81, Last year, I had also referred to a large vtuieiv of exemptions and dedtwtions that had been built into our tax system oter time. While each deduction by itself may have its own merits, the aggregate effect was to complicate the lax administration and to provide loopholes for tax avoidance or lav evasion, as also for litigation, I had, therefore, initia- ted a process of review and, where iiecvisuvv. doinsj away with concessions which had outlived their utility. I intend to carry this pro ess further.

82. Our experience lias shown that an expenditure related concession leads to a tendency to inflate expenditure and hence it should have no place in our \a\ system. Therefore, I propose to withdraw all weighted deductions as are available under the dllferent provisions. The expenditure actually in- curred will of course, cont'nuc to quinlifv for deduct inn. Only the benefit of wcighlnge will no longer be ;i\ailab1e.

83. I am also withdrawing th? exemptions available under sections 33B, 35C, 80CC, SOD and 80E of the income-tax Act, These deductons. notwithstanding their apparent laudable objectives have either be^n open to misu,e or have tcnefitted only n few. The revenue involved is margin-id. I am also reducing the quantum of exemption available under Sections SOM, SON and 80-O.

84. Now, I intend to announce a few concessions in res- pect of the Wealth-tax Act, Hon'ble Members, I am sure, will be happy to hear that the monetary ceiling of exemption in respect of one house owned by a taxpayer is, heinn in- creased from the present level of Rs, 1 lakh to Rs. 2 lakhs. This is being done to take into ac:ounl the increase in market value. I am also proposing to raise the exemption limit in respect of specified financial assets from the nresent level of Rs. 1,65.000 to Rs. 2,65,000. Together with separate exemption of Rs. 35,000 available in respect of units of the Unit Trust of India and proposed to be extended to deposits under the National Deposit Scheme, the aggregate exemption in respect of the value of specified financial asse'ts will rise to Rs. 3 lakhs as against the present ceiling of Rs. 2 lakhs. Hon blc Members would recall that in the earlier part of my speech, I had referred to the success in mobilising savings- in the form of financial assets; ] hope thnf this change will give further impetus to it.

85. The other changes proposed by me in respect of direct taxes are of relatively minor nature and I would no like to lake the valuable time of this House by elaborating them.

86. After adjustment of the gain to revenue on account of withdrawal or modification of certain concession, my pro- posal in regard to income-tax will lead to a net loss of Rs. 75 crores, of which the loss to the Centre would be Rs. 16,22 crores and the loss of the States would be Rs, 38.68 crores.

87. Mr. Speaker, Sir, I shall now deal with my proposals in the area of indirect taxes. Hert imy main objective has been to provide further impetus to the growth of Indian industry through tariff adjustments and substaniol relief in excise duties in carefully selected areas. I ht.ve also kept in view the need to reduce prices of certain items for consu- mers and contain the rate of inflation in the economy. I am sure the Hon'ble Mtembers will not grudge, if In doing so, I have also taken a little care of Government revenues.

88. My principal proposal relating to customs duties is with regard to auxiliary duty of customs. The levy imposed on an annual basis s'nie the 1973 Budget is proposed to be continued upto the 31st of March, 1985. I also propose to raise, with certain exceptions, the present effective rates by 5 percentage points. I am excluding from the proposed increase essential items like fertilizers, bulk netroleum pro- ducts such as kerosene and high speed diesel oil. and also newsprint. Fuller details of these proposals are available la the Budget papers. This proposal is expected to yield Ml additional revenue of Rs, 241.73 crores in a full year.

8y. The present eustomi duty on crude petroleum of Rs. 9.50 per metric tonne (which is being collected by way of auxiliary duty) was fixed in 1973. Without affecting the domestic prices of petroleum products. I propose to raise the duty on- crude to Rs. 100 per metric tontie. The revenue gain from this measure will he Rs. 132.76 crores. This duty increase is to be absorbed by the oil companies without their hnvinc to raise consumer prices on this account.

yU. The current iate.s of import duties on iron and steel items were fixed a few years back and they are no* out of line with the requirements of indigenous industry. I propose to raise the basic customs duty on different items of hon and steel (other than stainless steel) by 5 percentage points or 1!) pei'-entagt points, depending upon the existing rates of duties. F also propose to levy a total curnstoms duty of 20 percent ad valorem on stainless steel melting sciap, which is presently exempt from customs duty. Thcs; measures are expected to yield an additional revenue of Rs. 84.20 crores.

f'I. 1 ako propose to increase the import on duty zip fttstcne.s and parts thereof, ^magnetic tape and petroleum specialities, namely petroleum jelly, sodium petroleum sulfo- nale and liquid parafTin. Details of the proposals are available

in the Budgcl papess. The revenue gain in these proposals would be of the order of Rs. 5.32 crores.

92. In order to promote exports in the important sector of gems and jewellery, customs duties le\iable on a number of gcir" and jewelleii' pimc.Mn-j and manufacturing machines arc proposed to be reduced from the respective existing rates to 40 per cent ad valorem, t he gem processine machines would enable significant reduction in processing losses and also improve overall quality and productivity. Similarly^ i ulsp propose to reduce customs duties on specified machines used in pa kngmg oi food articles as well as by meHt find food processing industries from the respective existing rates to 40 per ccnL ad vuloiein. "I hi*, measure is expected to eiwouviiRe expoit of food items m value-ad(fcd form and also in consumer packs instead of \n hulk. The revenue sacrifice involved in the ubovu r>iopo-,jk i*. ft ihe oruei o( Rs. 5.24 crores,

93. With the advancement in machine tool technology, CNC miuhiues tire progressively replacing conventional ni;u;hine tools due to thc-.r hichcr productivity and accuracy. To crmhle the indigenous machine lool manufacturers lo oflcr CNC machine tools on competitive terms. I piopose to reduce the customs duty on CNC systems 1o 35 per cent. The revenue sacrifice is of the order of Rs. 0.82 crure.

94. To enable the paper industry to obtain its raw male- mils at reasonable prices and lo relieve the pressure on our ioresl resources. I propose lo totally exempt fiom customs duties wood chips for making pulp for the manufacture of. ' pnp.r or paper board. On similar considerations. I propose to reduce the duly on wood pulp imported for manufacture of paper from the existing levels to 30 per cent. 'I hesc measures involve icvcnuc sacrifice of the order of Rs. 1.10 crores.

95. Certain changes in the provisions of the Customs Act, 1962, relating to warehousing, etc. and in the Customs Tariff Act, 1975 arc also proposed, The details of these pro- posals have been given in the Budget papers.

9ft. S T. coming row to n."v pipo.sals in respect ol c\~isc duties, my main objectives are to minimise the effects of inflation, lessen scope for tax avoidance and evasion, give a boost to selected industries sulTcinc from demand recession, und ensure better utilisation of 1he capacity and investment already created.

97. I propose to continue upto J 1st March, 1985 the levy of special excise duties at the existing rates and with the existing exemptions.

9K. My first proposal for relief is in lespeel of khandsari sugar, 1 propose to fully exempt khnndtavi sugar from the tevy of excise duty. I am taking this measure in view of the labour-intensive character of this industry, and to provide further opportunity for growth of employment in this indus- try. The abolition of excise duty will also help this industry to pay better price to cane growers, and, will give relief to 8 large number of khandsari units located in fur-flung rural areas. The revenue sacrifice involved in this proposal is Rs. 16 42 crores. Khandsari, I am told, is also better for health. If as a result of this measure, the health of the na- tion improves, I hope the credit will flow to me and not to my distinguished colleague, the Health Minister!

99. Hon'blc Members would recall that excise duty was levied on electricity as a revenue measure in the 197S Budget The net proceeds from the duty collected on cbctrii-iiy arc wholly distributed to Ihe States. It is proposed lo abolish the excise duty on electricity leaving it to the Stnle Govern- ments to tap this source, to whatever extent und in what- c.cr manner they like. This will give to the Stales one more area for resource mobilisation. Jo give the States some time to take appropriate act it.n, this abolition ivtll he effective from 1st October, 1984.

10'), 1 also propose to provide substantial relief lo ihe textile industry with a view fo making cloth cheaper. Ilon'blo Members mav recall that in the 1482 and 19.H3 Budgets. excise duty was reduced to. encourage the production of blends with the desirable proportions of polyester. Such fabrics aie becoming increasingly popular with the people.

As a further measure of relief in this area and with the overall objective of making such fabrics available at lower prices. I propose to reduce the total excise duty on polyester- cotton blended yarn containing more than 40 per cent but less than 70 per cent polyester to Rs. 5 per kg, The existing rates of duty on such yarn vary generally from Rs. 7.5 per k". to Rs. 22.5 per kg. depending on the extent of polyester- cotton mix". Under my proposal all blends over 40 per cent but below 70 per cent of polyester will pay the same reduced rate of duty. I-or similar blends of polyester and viscose, the excise duty will get reduced to Rs. 10 per kg. from the present rates which generally vary from Rs. 11.25 per kg. to Rs, 22,50 per kg. The revenue sacrifice on these accounts is estimated at Rs. 33.25 crores in a full \ear.

101. Blended fabrics have also received my attention. "Ihe excise duty on polyester-cotton blended fabrics contain- ing mote than 40 per cent but less than 70 per cent polyester will he reduced to 2 per cent ad valorem. The incidence of duty on such fabrics at present varies from 7.5 per cent to 17.8 per cent ad valorem. This concession would cost the exchequer Rs. 26.50 crores in a full year. [ also propose that (his duty at 2 per cent ad valorem be collected as addi- 'ionul e\ci'.e duty in lieu of sales tax. As Hon'ble M'embers urc no doubt aware, proceeds of additional excise duties on textiles so to the States.

102. These changes in the duty structure on polyester- cotton blended yarn arjd polyester-cotton blended fabrics will for a ti7 ; 33 blend, reduce the duty incidence by about Rs. 3.30 per sqvmre metre on a fabric carrying a wholesalo price of about Rs. 25 per square metre, and a retail price of Rs. 15 to 40 per square metre. This duty leduction will- ennhle the industry to sell such fabrics at reduced prices.

103. I also propose lo provide relief on cotton fabrics which still constitute n major shaic of the total production of cloth in the country. I propose In reduce ctcise duty on cotton fabrics of less than 51 counts and of assessable value not exceedim; Rs. 5 per square metre. Such fabrics at present pay duty of excise at rates varying from 2.38 per cent to 1.5b per cent ad valorem in the case of composite mills, .Concessional rates 6f duty are allowed for independent pro- cessors processing powerloom and handloom fabrics. I pro- pose io fully exempt handloom and powerloatn fabrics of the above varieties processed by independent processors. Th* rate of duty for composite mill fabrics is also being reduced to 1 per cent ad valorem retaining more or less the present differential between the independent processors und the com- posite mills. This diity would be in the nature of additional excise duty in lieu of sales tax and will entirely go to the States. Such fabrics arc mostly consumed by the weaker sections of society. The benefits of the reduction should be- come available to them in the form of lower prices. This proposal on cotton fabrics would entail a revenue sacrifice of Rs. 28.40 crores,

104. I hope, my pioposals would also help the tcKtile in- dustry. The industry should benefit through increased de- mand that lower prices would generate.

105. Cotton yarn and cellulosic spun yarn in the form of cross reel hanks are finding increasing use in the handloom sector. In ihe Handloom Year. I propose to reduce the duty incidence on such yarn supplied to registered Handloom Cooperative Societies or to organisations set iip or approved for the development of bandlooms by nbout 50 per cent. This v.nulj involve n loss of Rs. 3 crores to the exchequer in a H'll year.

106. In order lo recoup some of the revenue loss flovtinc from the above package of measures in respect of the textile industry, T nronose to increase the incidence of additional excise duty in lieu of sales tax from 7.5 per cent to 10 per cent on man-made fabric-- of assessable value exceeding Rs. 25 per square melic. This increase will not apply to those blended fabrics in respect of v\hich duly is bcinj: re- duced. The impfiot Mill be <>n coslli.;r fabrics which arc con- sumed mainly by the- mine sifTlucn, sections of society. Thev should not mind this. On this account, the exchequer will gain by Rs 27 Crores in a full jear and tin's, too would accrue entirely to the Sinks.

107. I also propose to reduce the duty on shoddy blan- kets and other similar blankets imadt from shoddy yam pro- cessed by composite mills by about 7 per cent. Such shoddy blankets if processed by independent processors will be wholly exempt. The revenue loss on this account would be Rs, 1 crofe in a full year.

108. Another industry needing urgent attention is the paper industry. This industry has been passing through a difficult phase troubled by rising cost of raw materials and other inputs. My proposals aim at encouraging the produc- tion of paper and paper board and preserving scarce natural forest resources. I have already referred lo the proposed exemption from customs duty on'import of wood chips and wood pulp for paper making. As a further measure of re- lief J propose to leduce the basic ex.isc duty on printing and writing p;iprr and also kraft paper produced by large paper mills by Rs. 425 per metric tonne, and corresponding concessions arc being given on the duty leviable on such paper when unconventional raw materials are used in their (manufacture. Simultaneously, the range of permissible uncon- ventional raw material is beinjj expanded.

. 109. No concession lor use of unconventional raw mate- rial is presently available in the case of paper boards. 1 propose to reduce the basic excise duty payable on paper boards manufactured from at least 50 per cent unconventio- nal raw materials from the present general level of 10 per cent ad valorem -f- Rs. 1430 per metric tonne to Rs. 560, Rs. 900 or Rs. 1120 per metric tonne depending on whether the clearances of paper and paper board from such paper mills in the preceding financial year did not ex eed 3,00U tonnes, 7,500 tonnes or lfi.5U0> tonnes respectively. For larger paper mills using unconventional raw materials, the rate of basic excise duty on paper boards is being reduced to 7 per cent ad vnlorem + Rs. 925 per metric tonne.

110. My proposals relating to the paper industry would entail a loss i of. Rs. 33 crores in excise duties in a full year. Along with the customs duty exemptions on import of wood chip® and wood pulp, this package i; expected to provide substantial fiscal support to the devdooment of indigenous paper industry and improve the availability of paper ut rea- sonable prices.

116 With summer not very far away, 1 would like to help the yon'ble Members in keeping their tempers cool. I propose to reduce basic excise duty on table fans from 10 per cent to 5 per cent and on ceiline fans of a diameter not exceeding 107 cms friwn 15 per cent to 7.5 per cent. I also propose to reduce the basic excise duty on evaporative type of coolers, including desert coolers, from 40 per cent to 30 per cent ad valorem. These proposals would involve a revenue sacrifice of Rs. 5.10 crores.

117. As a rationalisation measure, I propose to reduce the basic duty on winding wires from 10 per cent to 5 per cent and increase the basic duty on copper wire rods by Rs. 1300 per metric tonne. On an overall basis, these changes will neither result in a loss nor gain in revenue.

I'8. As Hon'blc Members will remember, many reputed artistes fiad published, an appeal inviting our attention to pimcy, As I "just can't write these names off" I propose to exempt sound-recorded cassettes wholly fiom excise duty. In view of the upward revision of customs duty on magnetic tapes, the revenue loss on this acount is expected, by and large, to be made-up.

119. As a general measure of relief 1 propose to fully exempt laundry soap manufactured by KVIC units and # to reduce bnsic excise duty from 10 n;-r cent to 5 per cent on certain mass consumption items such as imitation jewellery, siainless steel utensils, glass chimneys for lanterns, high efficient wood burning stoves, umbrellas and saccharine. The revenue sacrifice involved in Ihesc concessipns is R". 1 13 crores.

121). Hon'blc Members may recall that an excis'¹ duty relief scheme lo rnfonviige higher production is in operation for tbe past (wo years. 1 propose to continue the scheme for one r.nore year.

reliefs aggregate Rs. 7.26 crores on the customs side and Rs, 222.43 crores on the excise side. The net yield from customs duties is Rs. 458.15 crores, The net loss from excise duties comes to Rs. 189.33 crores out of which Centre's share would be Rs. 148,95 crores and States' share would be Rs. 40.38 crores. This takes into account the States' share from additional excise duties in lieu of sales ta* to the extent of Rs. 52.31 crores. The accrual to the central ex- chequer for the additional tax effort in a full year would be Rs. 309.20 crores.

127, Copies of notifications giving effect to the changes in cusionii anU i-ii-i^ Lk.i.!^.i c.Tc^iivi from the 1st March, 1984 will be laid on the Table of the House in due course.

128. I had earJier stated that the budgetary deficit at tho existing rates of taxation would be Rs. 2035 crores. The tax measures proposed now, taken together with reliefs and con- cessions, are estimated to yield net additional revenue of R". 272.88 crores to the Centre. This leaves an uncovered deficit of Rs. 1762 crores. It has been my endeavour to keep the budgetary deficit to a relatively low figure and T am sure

1513 GI/83—4

the Hon'ble IVfembers would agree that this order of deficit is appropriate to our circumstances. I hope that tho low de- ficit, combined with my proposals for boosting production and lowering prices, will have a salutary effect on the in- flationary psychology in the economy.

If I may, at this point, quote from Kautilya's Arthar

shastra :—

129. Four years ago, my distinguished predecessor, while presenting the first Budget of the present Government, had expressed our firm resolve to repair the damage and res- tore the country's economy to the path of stability, growth and social justice. Mr. Speaker, we have kept that promise.

130, I commend this Budget to the House.

A. RANGACHARI, Jt. Socy.

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