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Economic Situation
Key Objectives
Small Scale Industry
Investment in Industry
Information Technology
Financial Sector
Capital Market
Expenditure Restructuring
Develop North East
Estimates for 1998
Assistance to States
New Schemes
Non Plan Expenditure
Revenue Receipts
Tax Proposals
Tax Revenues



The finance minister pledges a "Swadeshi" budget

Insurance sector opened to competition from private Indian companies

Petrol price hiked by Re 1

Fiscal deficit pegged at 5.6 per cent of the GDP; Revenue deficit at 3 per cent of GDP

No change in individual or corporate tax rates

Tax exemption raised from Rs 40000 to Rs 50000

Ceiling of standard deduction raised from Rs 20,000 to Rs 25,000 for people with salary less than Rs. 100,000

No standard deduction for salary earners over Rs 500,000

Taxfree medical reimbursement limit raised to Rs 15,000 from Rs 10,000

Non-MODVAT-able 8 per cent duty on imports. "This should not be viewed as a protectionist measure," says the finance minister

Excise duty of 8 per cent on branded butter, branded spices, meat, fish under branded names, spectacle lenses and frames

Maximum Retail Price excise extended to chocolates, laser blades, pan masala

Service tax on transporation abolished

Service tax on services provided by management consultants, credit rating agencies, chartered and cost accountants, underwriting agencies, architects

Excise duty on medical equipments from 5 per cent to 8 per cent

Excise on multi-utility vehicles from 25 to 30 per cent

Gold import duty from Rs 220 per 10 gms to Rs 250 per 10 gms

Steel: Customs increased on Cold Rolled Coils from 25 to 30 per cent. Customs on stainless steel brought down from 10 per cent to 5 per cent. Refractories duty down from 40 to 30%. DMT/MEG caprolactuim duty pegged at 25 per cent. Paraxylene duty brought down from 15 to 5 per cent

Customs duty on crude oil decreased from 27 per cent to 22 per cent

Provident funds allowed investement in private infrastructure bonds subject to limit of 10%

Capital adequacy norms to be raised from 8 per cent to 9 per cent in 2000, and to 10 per cent later

Stock lending to be exempted from capital gains

Gift Tax to be withdrawn after September 30, 1998; To be taxed under Income Tax Act itself

Disinvestment of government stake in Indian Oil Corporation, Gas Authority of India Limited and Videsh Sanchar Nigam Limited; Phased disinvestment over three years Indian Airlines to bring government stake to 49 per cent; Disinvestment target pegged at Rs 50 billion

Capital markets: Stock index futures to be allowed. Enable derivatives. FIIs (foreign institutional investors) to be allowed to be traded in unlisted domestic debt securities -- risk to be borne by FIIs. Stock brokers' corporatisation

Defence outlay increased from Rs 360.99 billion to Rs 412 billion

In non-strategic state-owned corporations, government stake will be brought down to 26 per cent

Modified formula for centre-state revenue sharing

FERA (Foreign Exchange Regulation Act) to be replaced by Foreign Exchange Management Act

An NRI is allowed to invest upto 5 per cent in a company and aggregate limit doubled from 5 to 10 per cent

Coal, lignite and petroleum products delicensed

Plan allocation for welfare increased by 91 per cent to Rs 150-billion

Foreign Direct Investment exceeding Rs 1 billion to be assisted by a monitoring officer to clear a project in 3 months

Employees of software companies will be eligible for stock option for both ADR and GDR issues

Outstanding dues from state electricity boards to state-owned corporations to be guaranteed by the central government and securitised

Plan outlay for energy and road infrastructure increased by 35 per cent to Rs 610 billion

Urea price increased by Re 1 per kg (subsequently revised to Rs 0.50 per kg).

Allocation to water programme increased from Rs 5.17 billion in 1997-98 to Rs 6.77 billion in 1998-99

SIDBI (Small Scale Industries Development Bank of India) delinked from IDBI (Industrial Development Bank of India) and IDBI will transfer his holdings in state finance corporations to SIDBI


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