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Budget Impact on Other Sectors
Banking -- Overall Impact: Positive
- Greater autonomy provided to bank management
- Banking Services Recruitment Boards abolished.
All future recruitments will be done by banks themselves.
- Lowering of interest rates on account of reduction
in Small Savings Rates by 100-150 basis points will create a better appetite
for credit
- Basic customs duty on Automated Teller Machines
(ATMs) and printed circuit assemblies of ATMs has been reduced from 20% to
15%. This augurs well for banking industry
- Limits for TDS on deposits reduced from Rs 10,000
to Rs 2,500. This may induce malpractices of splitting of deposits by individuals
to avoid TDS.
Petrochemicals -- Overall Impact: Negative
Excise duty
No change
Customs duty
- Duty on key intermediaries reduced
- Customs duty on polyester chips and nylon chips
has been reduced from 35% to 25% while on DMT, PTA, MEG and caprolactum duties
has been reduced from 25 to 20%. As against the expectations, import duties
on key catalysts not manufactured in India remain unchanged
- The reduction in customs duty on fibre intermediaries
and removal of customs surcharge may hit the domestic manufacturers
- Manufacturers of downstream products could see
a squeeze on their realizations due to decline in import prices. However,
lowering of customs duty will help fibre and yarn manufacturers. Also, reduction
in customs duty on polyester chips will benefit PET manufacturers
Sugar -- Overall Impact: Neutral
- As a forerunner to complete decontrol of sugar
sector, the Finance Minister has introduced futures/forward trading in sugar
industry.
- In spite of complete decontrol, sugar will continue
to be supplied under the Public Distribution System in special category states,
hill states, island territories and to Below Poverty Line families in other
states and Union Territories. This will be in the interest of lower income
group.
- With effect from 01/03/01, the retail price
of sugar has been fixed at Rs13.25 per kg.
Shipping -- Overall Impact: Positive
- The rate of depreciation available in respect
of ships and inland water vessels increased to 25%
- Policy initiatives designed to increase private
sector participation in ports have been successfully implemented
- Capacity in major Indian ports is expected to
go up to 314 mn tons this year and further to 376 mn tons by the end of 2001-2002
- Exemption from basic customs duty on ships,
launches, boats, and tankers withdrawn. Basic customs duty of 5% to be charged
on them. However, these goods will be exempt from Special Additional Duty
of customs
- Special Excise Duty on yachts and other vessels
for pleasure or sports, rowing boats and canoes has been raised from 8% to
16%. They will now attract a total duty of 32% (16% CENVAT + 16% SED)
Paper -- Overall Impact: Neutral
- Effective basic customs duty on grape guard
paper used for packing grapes has been raised to 5%. This, however, will be
exempt from Special Additional Duty
- The basic central excise duties on corrugated
boxes etc is increased to 16%. The exemption on corrugated paper or paperboard
intended for the manufacture of corrugated boxes is withdrawn
Oil and gas -- Overall Impact: Neutral
- A time bound action programme is being prepared
for deregulation of Administered Price Mechanism (APM) in petroleum sector
by Mar 02
- Few items that currently attract CENVAT at half
the rate i.e., 8%, will henceforth be charged to the normal rate of 16%. LPG
and kerosene will continue to be charged at the present rate of 8% CENVAT.
- Excise duty on High Speed Diesel restored to
normal CENVAT rate of 16% from the 12%
- Special Excise Duty on motor spirit restored
to the previous rate of 16%, resulting in increase of effective duty from
16% to 32%
- Excise duty on LPG to remain at 8%
- Compressed Natural Gas, at present exempt from
excise duty will now be charged at 8%
- LPG conversion kits and their parts to attract
lower custom duty at 5% + 16% (CVD) as applicable to CNG or propane conversion
kits
- LNG, which is not produced in India, to be exempt
from CVD (current 16%)
Rediff-Dun & Bradstreet Budget Impact Analysis
Budget 2001
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