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June 12, 1998

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Special import duty slashed, urea price hike withdrawn

Under pressure from disparate political parties and farmers, Finance Minister Yashwant Sinha today announced in the Lok Sabha concessions worth Rs 23 billion rolling back the prices of urea to the pre-Budget level besides halving the countervailing duty on imports from eight per cent.

With this the concessions offered after the June 1 presentation of the Budget for 1998-99 has touched Rs 35 billion. The urea price rollback alone would cost the exchequer Rs 20 billion.

Sinha said he was taking this step to dispel any impression that the Budget was anti-farmer, a charge levelled by not only the Opposition but also some allies supporting the government.

Sensing the mood of the political parties, the government had already announced a cut of 50 paise a day after the Budget.

The Budget had proposed an increase of one rupee per kg of urea in an effort to reduce the subsidy on fertilisers.

The countervailing duty on imports, considered a swadeshi tint in the Budget proposals, has been watered down to four per cent, a revenue loss of Rs 13 billion.

Sinha said inputs on capital goods under the Export Promotion Capital Goods scheme would be exempt from the special duty of four per cent.

The government had reduced the excise duty on petrol from 35 to 32 per cent to adjust the hike in retail prices of petrol to around one rupee a litre. This concession has cost the government Rs 2 billion.

With Sinha's reply ended the first stage of the Union Budget for 1998-99.

The final phase along with the finance bill giving effect to the taxation proposals would be taken up when the House reassembles after a three-week recess.

The recess will enable a scrutiny of the Budget proposals subject-wise by the parliamentary standing committees.

The House also passed the demand for excess grants and the Appropriation Bill for the excess amount already spent from the Consolidated Fund.

The countervailing duty was described by the international community as a protectionist measure against the spirit of globalisation.

UNI

Budget '98

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