Minister vets VAT regime for state
Finance minister Vaju Vala presented a Rs 377.97 crores deficit budget for the year 2003-04 with an annual outlay of Rs 7,860 crores in the House on Thursday paving the way for introduction of the Value Added Tax regime and eliminating sales tax in the state from April 2003.

Speaking at a press conference, Mr Vala told reporters here that the state has suffered losses to the tune of Rs 500 crores in terms of sales tax collections in 2002-03 as compared to 2001-02. "We have recovered Rs 5,600 crores to 5,700 crores against Rs 6,200 crores collected in the earlier year." Mr Vala was responding to a question on the sales tax losses caused due to communal violence in the state. He, however, said less recovery was due to reduction of purchasing power, recession and the reducing value of the rupee.

Significantly, with introduction of VAT, the surcharge of 10 per cent on the tax levied to meet drought and earthquake related work has been discontinued and the state will incur an estimated transitional loss of Rs 596 crores. However, the Centre has assured the states of compensating the losses caused due to the switchover from sales tax to the VAT system on a declining scale. However, taxes on value additions on re-sales that were not applicable under the sales tax system will be levied under the new system. Moreover, the total picture of the service taxes that the state can recover and implications of the introduction of VAT will only be clear after the Union budget on Friday.

Mr Vala has proposed Rs 55 crores worth of taxes on motor vehicles, conversion tax for change of purpose of use of land and court fees to bring the overall deficit down to Rs 377.97 crores. The budget put the estimated total revenue at Rs 30,338 crores against an estimated expenditure of Rs 30,771.27 crores.

The estimated revenue includes revenue receipts at Rs 18.744 crores whereas the capital receipts are Rs 10,744.35 crores. The capital receipts include loans from the World Bank and Asian Development Bank. The estimated expenditure includes revenue expenditure of Rs 24,062.24 crores and capital expenditure of Rs 6,709.03 crores.

The state government has also planned to issue Rs 500 crores tax-free bonds to meet the earthquake expenditure. A provision of Rs 1,407.26 crores under plan and Rs 669.83 crores under non-plan has been made for the Gujarat Disaster Management Authority keeping in view the assistance given by the World Bank and the Asian Development Bank.

Moreover, a total provision of Rs 900 crores has been made for the Sardar Sarovar Project which constitutes 11.45 per cent of the total outlay. The state expects to reach 110 mts dam height by June 2003 and 138 mts by June 2005. Mr Vala has provided 42.21 per cent (Rs 3,315.55 crores) of the total outlay for social services like providing drinking water, primary health care, primary education and housing and nutrition. While giving priority to energy, agriculture, rural development and transport, Mr Vala has made a provision of Rs 797 crores for roads and buildings sector, Rs 73.44 crores for rural and small scale industries schemes and Rs 188.85 crores for decentralised district planning. The state has already accorded an administrative approval of Rs 84 crores for the Kalpasar project.

The finance minister have levied a tax of Rs 31 crores on motor vehicles, Rs 4 crores on conversion of the purpose of use of land and Rs 20 crores for court fees.

Of the total plan of Rs 7, 860 crores, Mr Vala has allocated Rs 563.43 crores for agriculture and allied services, Rs 1,465.83 crores for irrigation and flood control, Rs 307.10 crores for industries and minerals, Rs 311.31 crores for rural development, Rs 772.51 crores for energy, Rs 823.21 crores for transport, Rs 9.60 crores for communication, Rs 77.28 crores for science, technology and environment, Rs 211.31 crores for general economic services, Rs 3,315.55 crores for social services and Rs 2.87 crores for general services.

A provision of Rs 782 crores has been proposed for providing potable water to 8,215 villages and 135 cities of Saurashtra, Kutch and North Gujarat.

An amount of Rs 631.84 crores has been provided for relief work in case of a natural calamity. In the education sector, Mr Vala has made a provision of Rs 101 crores for construction of class rooms in primary schools and Rs 40 crores to provide computer education in primary schools. The Net State Domestic Product for 2002-03 is estimated at Rs 1,09,724 crores against the Rs 1,05,023 crores, showing an increase of 4.5 per cent over the previous year.

It was for the sixth time that Mr Vala presented the budget in the Gujarat Legislative Assembly.

Republished from The Asian Age