Mr. Speaker, Sir, the Central Excise and Salt Act, 1944,
reminds us of the colonial era when excise duty was collected on
salt. There is no excise duty on salt and hence the reference to
salt is outdated. I propose to delete all references to salt.
The Modvat scheme which provides for duty credit on
inputs and capital goods has been liberalised considerably over
the past few years. Still, there are problems about the coverage
of certain inputs and capital goods. I propose to clarify the
scope of eligible capital goods by specifying the heading and
sub-headings of the tariff relating to capital goods in the
Modvat Rules. It is also a matter of concern that there is
misuse of the Modvat credit scheme. At present, Modvat
invoices can be issued by any dealer registered with the excise
department and this facility is reportedly being misused.
Therefore, I propose to restrict the issue of Modvatable
invoices by dealers upto two stages. Suitable provisions are also
being made in the Modvat Rules for charging of interest in the
case of wrong availment of Modvat credit and for mandatory
penalty for misuse of Modvat facility.
The tax on services has come to stay. With a view to
widening the tax base, I propose to bring in advertising
services, radio paging services and courier services under the
tax net. The tax on these services will be at the rate of 5%.
While this measure is expected to yield Rs.150 crore in a full
year, I am taking credit only of Rs.70 crore in the current year.
My proposals relating to reduction in customs duties are
estimated to result in a loss of Rs.650 crore in the remaining
part of the current financial year. However, by taking into
account receipts from the special customs duty estimated to be
Rs.1600 crore, there will be a net gain of Rs.950 crore in
In the case of excise duties, including additional
excise duties, a gain of Rs.760 crore is estimated. Of this,
the States are likely to get Rs.384 crore as their share of
I now have something to say on behalf of my colleague,
the Minister of Communications. Postal rates, some of which
were last revised in 1990, do not meet even the direct cost
of most of the services resulting in increasing budgetary
support. Notwithstanding this, no change in the rates of
ordinary postcard, letter, parcels and other postal services is
being proposed. A modest increase is proposed only in respect of
two services which are used for business and commercial purposes.
The rate of the printed post card is being increased from 60p. to
Re.1 and the registration fee is being increased from Rs. 6 to
Rs. 8. It has also been decided to introduce a new category of
postcard, called Competition Postcard, which alone may be used
for responding to any competition organised on or through
television, radio, newspapers or magazines. It is proposed to
remove the unintended subsidisation by fixing the tariff for this
category of postcard at Rs.2. The changes will take effect from
a date to be notified after the Finance Bill is passed. The
revisions proposed are estimated to yield a modest revenue of
Rs.38 crore in 1996-97, still leaving a large postal deficit.
Copies of notifications giving effect to the above
changes in customs and excise duties will be laid on the Table of
the House in due course.
My budget proposals have many implications both for
the expenditure side and the revenue side. However, Hon'ble
Members will be pleased to know that the end result is
satisfactory. The revenue deficit in 1996-97 is placed at
Rs.31,475 crore or 2.5% of GDP which is significantly lower than
Rs.33,331 crore in RE 1995-96 or 3% of GDP. The fiscal deficit
comes to Rs.62,266 crore in 1996-97, which is lower than the
figure of Rs.64,010 crore in RE 1995-96. As a percentage of GDP,
the fiscal deficit is 5% in 1996-97 compared to 5.9% in the
previous year. I hope to do better in my next budget and move
along the path of reducing the fiscal deficit to below 4%.