It’s a common man's budget with sales tax relief on various commodities.

In the face of difficult financial situation, Gujarat Finance Minister Vajubhai Vala has managed to spare the common man, and made a feeble attempt to revive recession-hit industry and trade by proposing tax cuts on raw materials and many items of common use in the Budget for 1999-2000 presented today in State Legislature.

He however, hinted at taxes in future when he said that a revision of various service charges is on the cards. "There is a big gap in the cost of providing the services and the recovery of user charges. The government may have to rationalise user charges to maintain the quality and to augment the output in public services", he said.

Vala proposed reduction in sales tax, among others, on bulk drugs, vanaspati ghee, cement produced by mini plants, auto parts, footwear, ready-made garments, and ball bearings, while total exemption was proposed for one and two-band radios, winding clocks, hand-made biscuits, mosquito repellants, buckets, drums and trunks made of iron sheets, and blocks used for fabric printing.

• Reduction in stamp duty from one per cent to 0.20 per cent for instruments of pledge and hypothecation of movable properties.
• Items like kerosene for industrial use, light diesel oil, transformers, non-potable liquors are no more a prohibited goods item.
• Withdrawal of concessions in electricity duty, which were available to industries with captive power plants, as an unfair cost advantage vis-a-vis industries drawing power from the Gujarat Electricity Board. The rate of electricity duty for water parks, multiplex and amusement parks had now been reduced from 60 per cent of consumption charges to 20 per cent, as a measure to promote such activities.
• A one-time tax for auto-rickshaws and taxi-cabs. Also rebates based on the life of older vehicles, and a facility to deposit it in monthly installments.

These measures will fetch Rs 115 crore, while the concessions will involve a cut of Rs 21 crore. The proposals leave an uncovered deficit of Rs 395.42 in an outlay of Rs 19,568 crore.

He said the government had decided to abolish octroi, but was "contemplating how to work out a revenue-neutral package of alternative taxes."

Vala made necessary promises to reduce administrative expenditure, increase non-tax revenue, amend the laws to provide stringent punishment for tax evasion, and introduce mobile check posts. He expressed hope that the concessions would help revive industry and trade, which in turn, would generate incomes and employment.

The budget includes an annual plan of Rs 6,550 crore, which is 20.18 per cent more than last year’s Rs 5,450 crore. The Sardar Sarovar Project on the Narmada river gets the "highest priority", with an allocation of Rs 1,300 crore out of a total of Rs 1,832 crore earmarked for irrigation and flood control.

Among the sectoral allocations, the maximum amount of Rs 2,203 crore has been set apart for social and general services, Rs 817 crore for energy, and Rs 427 crore for transport and communications, which includes a provision for the purchase of 3,000 buses by the Gujarat State Road Transport Corporation.

The Finance Minister expressed concern over "the increasing revenue deficit" and underlined the need for restructuring the economy. In the current year, the deficit has increased to Rs 320.31 crore from the budgeted Rs 95.59 crore, thanks to subsidised rural power supply, which cost the exchequer Rs 1,401 crore, and pay revision for government employees, which cost more than Rs 1,500 crore.

The state’s fiscal deficit is expected to increase from 3.5 per cent in the current year to about 4 per cent of the net domestic product next year. Besides, a major chunk of its borrowings would go in repayments—to be precise, Rs 3,700 crore out of Rs 4,500 crore next year, as against Rs 3,300 crore out of Rs 5,182 crore in the current year.

However, in his post-budget briefing, Vala indicated that the government was in no hurry to take a fresh look at the subsidised rural power supply. ‘This would require a policy decision", he remarked. Additional Chief Secretary (Finance) K V Bhanujan said the government wouldn’t give GEB more than the budgeted Rs 1,100 crore. "They will have to manage", he said.

The budget proposals include reduction of sales tax from 4 per cent to 2 percent.

• from 6 per cent to 2 percent on vanaspati ghee and flexible packing material,
• from 6 per cent to 4 per cent on methyl alcohol, PVC stabiliser and starch,
• and from 12 per cent to 6 per cent on industrial gases, cement produced by mini plants, auto parts and footwear.
• 12 per cent to 4 per cent, on tools used for carpentry, ball bearings; printed paper, copier paper, art paper and stencil paper.
• 8 per cent to 4 per cent on ammonia paper, graph paper and tracing paper
• 15 per cent to 6 per cent on inflammable gases, mosaic cement tiles; marble, granite and Kota stone; plywood and decorative sheets
• 15 per cent to 8 per cent on Domestic flour mills

Total Exemption of Sales Tax on:

• 8 per cent tax on bamboo and printing blocks used by printing presses.
• 6 per cent tax on chalk lumps and powder.
• 4 per cent tax on buckets, drums and trunks made of iron, blocks used in fabric printing, one and two-band radios, mosquito repellants, winding clocks and processed, cut or dried chicory.
• 2 per cent tax on fishing pets. 

While shifting the incidence of profession tax on the partnership firm, the minister said the firm would now be required to pay at the rate of Rs one thousand per year. He said senior citizens who have completed 65 rpt 65 years of age, have been exempted from profession tax.

The budget also allocated a special discretionary fund of Rs 200 crore for the development of tribal people and their areas, giving top priority to this social group within the social service sector.

For the first time, Gujarat had allocated Rs 4.64 crore to start ayurved and homeopathy dispensaries in each Assembly constituency of the state. To the present 26,000 beds, additional 14,000 beds will be added this year to improve the condition of hospitals.

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