NEW DELHI, Feb 28 — Union Finance Minister Jaswant Singh today repeated what Mamata Banerjee did to the North-east in her 2000 Railway Budget, unveiling a lacklustre Union Budget as far as the region is concerned. Benefits of excise duty exemptions on products manufactured by Assam’s four refineries were withdrawn with retrospective effect along with cigarettes and pan masala. Of the four refineries in NE, only the Numaligarh Refinery Ltd will get a 100 per cent Excise duty exemption while the three other refineries including BRPL, Guwahati Refinery and Digboi Refinery facing partial withdrawal of Excise duty exemption with retrospective effect from February, 2002, will continue to enjoy a 50 per cent Excise duty exemption under another notification.
This apart, the benefit of Excise duty exemption on cigarettes, pan masala containing tobacco, which were withdrawn earlier, was given a restrospective effect from July 1999. In effect it would mean that the four oil refineries and the cigarette and pan masala manufacturers have to refund the exempted amount to the Central government. Cigarette and pan masala manufacturers alone would have to shell out anything between Rs 300 to Rs 400 crore, according to an insider in the trade.
The move, experts feel, would send a wrong signal to investors in the North-east as the sanctity of the special industrial package for the North-east has been lost. Under the special policy, a list of items manufactured in the North-east were granted 100 per cent Excise duty exemption, besides other incentives. Later, following complaints of misuse of the provisions and loss of revenue by the Centre, the exemptions granted to cigarette manufacturers and pan masala producers were withdrawn. The Union Finance Minister has, however, decided to come to the rescue of the plantation sector particularly tea. “Our plantation sector, a hundred-and-fifty-year-old agro-industry, is passing through a rough patch because of price instability in international markets,” he said.
“I propose to abolish the Excise duty of Re 1 per kg on tea and replace it by a cess of Re 1 per kg for creating a separate fund for development, modernisation and rehabilitation of the tea plantation sector. This measure will not impose any additional burden on the tea industry, but it will redesign the duty to help the industry. The Finance Minister in a bid to provide stability in terms of income for small growers from 2003-2004 onwards, has already announced a price stabilisation fund of Rs 500 crore for the benefit of tea, coffee and natural rubber growers. The fund will become operational in 2003-2004.
Meanwhile, the possibility of Assam Government recovering the compensation for the discrepancy in allocation by Eleventh Finance Commission, appears remote. The Finance Minister announced that 12th Finance Commission will be making an assessment of the debt position of the States and suggested corrective measures as are necessary. The Finance Minister advocated the debt-swap scheme as the way out for the debt-ridden States.
The debts swap scheme introduced by the Government of India will enable State to pre-pay high cost debt and substitute them by current, low coupon bearing small saving and open market loans. Twenty-six of the twenty-eight States have consented to participate in the schemes from the current year itself, while the remaining two States will join from 2003-2004, Sri Singh said. The Budgetary allocation for the North-east, including the Department for Development of North Eastern Region (DONER) has also hiked marginally. The allocation for DONER for the next financial year (2003-2004) has been increased to Rs 1070.72 crore marking an increase from Rs 1020.72 allocated during the current financial year. The allocation for North Eastern Council has been fixed at Rs 430.30 crore an nominal increase from Rs 355.01 crore.
The Budget further proposed that to increase intra-connectivity within the North Eastern States, NEC would supplement the efforts taken by Ministry of Civil Aviation for introducing 50-seater aircraft. The ongoing improvements of existing airports in the North-east would be completed and made operational with the help of the Airport Authority of India.