The details of the already announced Disinvestment Fund and Asset Management Company, to hold residual shares post disinvestment, will be finalised early in 2003-04.
Interest rate on PPF lowered
The rates of interest on public provident fund, and small savings schemes will be reduced by one percentage point with effect from March 1. Interest on relief and savings bonds will also be reset. This does not cover employee provident fund schemes
Restrictions on Capital account mobility eased
Corporates with proven track records will be allowed overseas investment under the automatic route. Also, the current restriction, limiting such investment to 50 per cent of the net worth of the Indian company, will now be raised to 100 per cent. Prepayment of ECB dues under the automatic route will be permitted by removing the current ceiling of US $100 million.
FIIs investment process to be streamlined
Sectoral limits for investment by Foreign Institutional Investors are under review. To facilitate FII entry into the stock markets, the process of their registration will be further streamlined. Steps have already been taken to ease flows of Capital.
External aid initiatives
The government plans to provide smaller assistance packages to some of its bilateral partners. Besides, debt relief packages will be offered to the Heavily Indebted Poor Countries (HIPCs) that owe substantial sums to India in terms of overdue payments. While the practice of extending loans or credit lines to fellow developing countries will be discontinued, the India Development Initiative will be used to provide grants or project assistance to developing countries in Africa, South Asia and other parts of the developing world.
Finance ministry to be reorganised
The department of economic affairs in the finance ministry will be restructured and have separate divisions dealing with economic policy, international and national analysis, capital markets, budget, banking, trade and aid concerns, and infrastructure and coordination. To advise the ministry on agricultural issues, an expert advisory council will be set up.
States to levy sales tax on sugar, tobacco,
The Additional Duties of Excise (Goods of Special Importance) Act, 1957 will be amended to allow the states to levy a four per cent sales tax on textiles, sugar and tobacco products. This will also enable the states to integrate these three important products in the VAT chain.
Constitutional amendment for service tax
To enable the levy of tax on services, an amendment to the Constitution has been proposed. The Constitutional amendment, and the consequent legislation will lend powers to the Central Government to levy the tax. It will also empower the Central and the State Governments to collect the proceeds.
Central Sales Tax (CST) reduction
With an eye on finally phasing out the CST, the ceiling rate of CST for inter-State sale between registered dealers will be reduced to 2 per cent during 2003-04. The government will compensate the states for loss of revenue from this reduction.
IT department to outsource non-core activities
Based on the recommendations of the Kelkar Committee, several tax administration reforms have been initiated. The Income Tax Department
