Union Budget 1999-2000 Govt. of India Ministry of Finance

Key Features of the Budget

Divider       but.gif (597 bytes)   Strategy of Budget

       dancy2.gif (289 bytes)   Begin process to restore fiscal health of nation by reducing revenue and fiscal deficits.

       dancy2.gif (289 bytes)   Revitalise programmes for human resource development to empower the poor.

       dancy2.gif (289 bytes)   Undertake major reform of Indirect taxes to boost productivity and employment.

       dancy2.gif (289 bytes)   Deepen economic reforms to improve performance of all sectors.

       dancy2.gif (289 bytes)   Safeguard economy from international economic turbulence, revive exports and domestic economy.

       dancy2.gif (289 bytes)   Strengthen foundations for Science and Technology and realise full potential of knowledge-based industries.

wpe2.gif (2521 bytes)Agriculture

       dancy2.gif (289 bytes)   Watershed Development Fund, with Central Government’s matching assistance, with NABARD to cover 100 priority districts within 3 years.

       dancy2.gif (289 bytes)   Enhanced Central contribution under the Accelerated Irrigation Benefit Programme to States, which rationalise water rates to cover at least Operations and Maintenance costs.

       dancy2.gif (289 bytes)   One time management subsidy and recurring assistance over an initial period of 3 years to all registered Water Users Associations, linked to incremental water rate collection.

       dancy2.gif (289 bytes)   A new credit-linked capital subsidy scheme for construction of cold storages and godowns to create additional cold storage capacity of 12 lakh tonnes and to rehabilitate and modernise 8 lakh tonnes of existing units. Also proposed to create 4.5 lakh tonnes of onion storage capacity.

       dancy2.gif (289 bytes)   Tax holiday benefit for cold chain/storage facilities.

       dancy2.gif (289 bytes)   Experimental scheme of incentive discount to farmers for lifting fertilizer from cooperative societies during April and May.

       dancy2.gif (289 bytes)   Special assistance to States for consolidating fragmented land holdings.

wpe3.gif (1661 bytes)Rural Credit

       dancy2.gif (289 bytes)   Corpus of Rural Infrastructure Development Fund V enhanced from Rs. 3000 crore to Rs. 3500 crore. The repayment period is also being extended from five to seven years.

       dancy2.gif (289 bytes)   Kisan Credit Card Scheme extended to cover two million farmers in 1999-2000. Six lakh cards already issued.

       dancy2.gif (289 bytes)   Regional Rural Banks to be recapitalised to the tune of Rs. 168 crore.

       dancy2.gif (289 bytes)   NABARD and SIDBI to redouble their efforts for flow of funds to micro enterprises and ensure coverage of at least 50,000 Self-Help Groups during the course of the year.

       dancy2.gif (289 bytes)   Lending by banks for food and agro processing industries will be treated as priority sector lending.

National Human Development Initiative with focus on Rural Poor
(Year of GRAM SABHA)

Food Security

      dancy2.gif (289 bytes)   "ANNAPURNA’ scheme for indigent senior citizens to be provided 10 kg of foodgrain per month free of cost through the Gram Panchayats.

Health Care

      dancy2.gif (289 bytes)   The existing programmes for health care to be integrated and the existing programmes for health care, family welfare, rural development and related areas synergised. Funds will be provided to the Gram Panchayats.


      dancy2.gif (289 bytes)   Education Guarantee Scheme to provide an elementary school in every habitation, which does not have one within a radius of 1 km. At least 1.8 lakh such schools will become operational during the next three years of the Ninth Plan. Gram Panchayats will play lead role.


      dancy2.gif (289 bytes)   Jawahar Rozgar Yojana to be modified as "Gram Samridhi Yojana" to ensure that all funds are placed at the disposal of Gram Panchayats for creation of rural infrastructure.

      dancy2.gif (289 bytes)   "SWARAN JAYANTI GRAM SWAROZGAR YOJANA" with integrated self-employment programmes for the rural poor.

      dancy2.gif (289 bytes)   Employment Assurance Scheme will give special priority to areas with endemic unemployment and greater role for Zila Parishads and other elected representatives.



      dancy2.gif (289 bytes)   "Samagra Awas Yojana" – new scheme to ensure integrated provision of shelter, sanitation and drinking water, reflects Government’s priority to provide shelter to all shelterless poor households by the end of the Ninth Plan. This will embrace existing programmes including Indira Awas Yojana.

National Programme for Rural Industrialisation

      dancy2.gif (289 bytes)   A programme with a mission to set up 100 rural industrial clusters every year. SIDO and KVIC to play an important role in this.


      dancy2.gif (289 bytes)   Golden Jubilee Rural Housing Finance Scheme of National Housing Bank (NHB) to target 1.25 lakh units in 1999-2000.

      dancy2.gif (289 bytes)   Raising tax deduction on interest on house loans for Self-Occupied houses from Rs. 30,000 to Rs. 75,000.

      dancy2.gif (289 bytes)   Strengthen housing finance companies through liberal tax treatment of income on non-performing assets.

      dancy2.gif (289 bytes)   Increased depreciation allowed for businesses building houses for employees.

      dancy2.gif (289 bytes)   Changes in foreclosure laws etc. to promote housing mortgages.

      dancy2.gif (289 bytes)   Commercial banks to lend up to 3% of incremental deposits for housing.

      dancy2.gif (289 bytes)   New NHB scheme for interest rate concessions for small borrowers.

Industry and Infrastructure

      dancy2.gif (289 bytes)   Major overhaul of Excise with present 11 rates going to only 3, with central rate of 16%, merit rate of 8% and demerit rate of 24%.

      dancy2.gif (289 bytes)   Restoration of 100% MODVAT availment.

      dancy2.gif (289 bytes)   Major direct tax initiative to facilitate industry restructuring through mergers and amalgamations.

      dancy2.gif (289 bytes)   Boost to Capital Goods Industry through removal of customs duty anomaly on Steel

      dancy2.gif (289 bytes)   New Competition Law promised to replace Monopolies and Trade Restrictive Practices Act.

      dancy2.gif (289 bytes)   Technology Upgradation Fund scheme for Textile industry extended to Spinning industry.

      dancy2.gif (289 bytes)   To level playing field for domestic industry, minimum 5% customs duty introduced on some products and principle of countervailing duties extended in capital project sectors.

      dancy2.gif (289 bytes)   Infrastructure sector tax holiday extended to power transmission.

      dancy2.gif (289 bytes)   Massive thrust for road construction financed by diesel surcharge.

Small Scale Sector (SSI)

       dancy2.gif (289 bytes)   General SSI excise exemption scheme extended to cotton yarn.

       dancy2.gif (289 bytes)   SSI excise exemption schemes for manufacture of cosmetics and refrigeration liberalised.

       dancy2.gif (289 bytes)   Excise duty exemption to be allowed for goods made by SSI units in rural areas and sold under brand name of another person.

       dancy2.gif (289 bytes)   Eligibility limit for availing the exemption is being enhanced from Rs. 50 lakh to Rs. 100 lakh.

       dancy2.gif (289 bytes)   SSI units allowed facility to pay excise duty on monthly basis.

       dancy2.gif (289 bytes)   Limit for composite loans is being raised from Rs. 2 lakh to Rs. 5 lakh.

       dancy2.gif (289 bytes)   Annual turnover limit of SSI units raised from Rs. 4 crore to Rs. 5 crore for computation of working capital limits.

       dancy2.gif (289 bytes)   Lending by banks to non-banking finance companies or other financial intermediaries for purposes of on lending to the tiny sector to be part of priority sector lending.

       dancy2.gif (289 bytes)   New credit insurance scheme for Small-Scale units.

Science and Technology

       dancy2.gif (289 bytes)   Creation of a national foundation for helping innovators at grass roots level. This Fund will build a national register of innovations, mobilise intellectual property protection, set up incubators for converting innovations into viable business opportunities and, help in dissemination across the country.

       dancy2.gif (289 bytes)   Technology Mission on Vaccines to be set up.

       dancy2.gif (289 bytes)   A National Bio-resources Board (NBB) – to coordinate policies, research, documentation and legal protection of the country’s rights in genetic resources.

       dancy2.gif (289 bytes)   Weighted deduction scheme under income tax for Research and Development extended to 2005.

       dancy2.gif (289 bytes)   125% weighted deduction for a research project entrusted to a university/research institute.

Information Technology

       dancy2.gif (289 bytes)   Customs duty on number of items used in IT sector reduced.

       dancy2.gif (289 bytes)   Special tax deduction for capital expenditures to make computer system Y2K compliant.

External Sector

       dancy2.gif (289 bytes)   Export credit scheme in foreign currency revamped to provide credit at competitive rates.

       dancy2.gif (289 bytes)   New Foreign Investment Implementation Authority (FIIA) for expediting foreign direct Investment (FDI) approvals into projects.

       dancy2.gif (289 bytes)   List of industries for automatic approval of FDI being expanded.

       dancy2.gif (289 bytes)   New Gold Deposit Scheme supported by tax incentives to mobilise idle gold and thus reduce gold imports.

Non-Resident Indians (NRIs)

       dancy2.gif (289 bytes)   Facility of automatic approval for 100% investment by NRIs/OCBs for all items, with some exceptions.

       dancy2.gif (289 bytes)   Major Stock Exchanges to open screen-based automated trading terminals abroad to facilitate the participation of NRIs.

Capital Market and Finance

       dancy2.gif (289 bytes)   Income from UTI and other Mutual Funds to be exempted in hands of unit holder; instead 10% tax to be paid by mutual funds on income distributed.

       dancy2.gif (289 bytes)   To strengthen UTI income distributed under US 64 scheme and other equity oriented schemes will be exempt from the above 10% levy for 3 years.

       dancy2.gif (289 bytes)   US 64 being restructured with Government assistance to remove uncertainty and boost market confidence.

       dancy2.gif (289 bytes)   Joint mechanism set up between SEBI and Department of Company Affairs for stringent action against unscrupulous promoters.

       dancy2.gif (289 bytes)   National award for Excellence in Corporate Governance.

       dancy2.gif (289 bytes)   Stamp duty on transfer of debt instruments within the depository mode to be abolished.

       dancy2.gif (289 bytes)   Major programme to strengthen banks by reducing non-performing assets.

Expenditure Management

       dancy2.gif (289 bytes)   Fiscal deficit and Revenue deficit targeted to be decreased by 0.5% and 0.7% of GDP respectively.

       dancy2.gif (289 bytes)   Priority allocation for Agriculture (Plan outlay 35% up) and Social Services (Plan outlay 22% up).

       dancy2.gif (289 bytes)   The process of downsizing of Government being initiated by abolishing four Secretary-level posts, w.e.f. April 1, 1999 through a process of merger and rationalisation of Central Government departments.

       dancy2.gif (289 bytes)   An Expenditure Reforms Commission to be constituted to reduce the role and the administrative structure of the Government.

       dancy2.gif (289 bytes)   System of Zero Base Budgeting to be initiated for preparation for the next Budget.

       dancy2.gif (289 bytes)   Guarantee Redemption Fund created.

PSU Reform/Disinvestment

       dancy2.gif (289 bytes)   Government support through interest subsidy/guarantees to profit earning PSUs to encourage them to raise bank loans for VRS.

       dancy2.gif (289 bytes)   Disinvestment target for 1999-2000 at Rs. 10,000 crore.

Other Major Tax Initiatives

       dancy2.gif (289 bytes)   Special customs duty of 5% abolished.

       dancy2.gif (289 bytes)   Customs duty structure rationalised into only 5 rates.

       dancy2.gif (289 bytes)   Peak protective customs duty rate down from 45% to 40%.

       dancy2.gif (289 bytes)   Surcharge at rate of 10% on basic customs duties imposed for revenue.

       dancy2.gif (289 bytes)   Petroleum products exempted from this new surcharge.

       dancy2.gif (289 bytes)   10% surcharge on individuals, HUFs etc. for those with income above        Rs. 60,000. This means individual in 20% slab will now pay 22% and person at the top 30% slab will now pay 33% 10% surcharge on companies to meet revenue needs.

Tax Welfare Measures

       dancy2.gif (289 bytes)   Deduction for health insurance premium for senior citizens raised from Rs. 10,000 to Rs. 15,000.
       dancy2.gif (289 bytes)   Deduction for medical treatment of serious diseases raised from Rs. 15,000 to Rs. 40,000.
       dancy2.gif (289 bytes)   Pension and Family Pension of Gallantry Award Winners exempted from income tax.





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