Tax revenues rein in fiscal deficit
New Delhi: With a 20.12 per cent growth in net tax revenues, the Centre has managed to rein in its fiscal, revenue and primary deficit numbers so far during the current fiscal.

During April-July 2004, the Centre's fiscal deficit — the gap between its total expenditure and current revenues plus non-debt capital receipts — stood at Rs.50,398 crore, which was lower than the Rs.52,518 crore for April-July 2003.

The revenue deficit (current expenditure minus current revenues from both tax and non-tax sources) and primary deficit (fiscal deficit minus interest payments) numbers, too, were correspondingly lower at Rs.58,076 crore (Rs.61,373 crore) and Rs.13,780 crore (Rs.17,658 crore), respectively.

On the revenue front, the Centre's revenue receipts during April-July 2004 were higher at Rs.46, 884 crore (Rs.40, 598 crore) due to improved performance on net tax revenues at Rs.35, 022 crore (Rs.29,156 crore) as well as non-tax revenue - Rs.11,862 crore ( Rs.11,442 crore) collections.

The total current and non-debt capital receipts during April-July amounted to Rs.72,898 crore, which was Rs.6,935 crore higher than the Rs.65,963 crore for the first four months of 2003-04.
As a result, even though the Centre's total expenditure was higher at Rs.1,23,296 crore (Rs 1,18,481 crore), it resulted in a lower fiscal deficit.

Within total expenditure, both non-Plan spending and Plan spending were higher at Rs.93,048 crore (Rs 89,558 crore) and Rs.30,248 crore (Rs 28,923 crore), respectively.
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Foreign Trade Policy to double India's share of global trade
New Delhi: The five-year (2004-09) Foreign Trade Policy announced by the Union Commerce and Industry Minister, Kamal Nath, aims at doubling India's percentage share of global merchandise trade to 1.5 per cent by 2009 from 0.7 per cent in 2003, besides serving as an effective tool to generate employment, especially in semi-urban and rural areas.

As part of a slew of measures, exporters of all goods and services, including those from domestic tariff area (DTA), have now been exempted from service tax. Also exporters with minimum turnover of Rs.5 crore and a sound track record have been exempted from furnishing bank guarantees in any of the export schemes so as to reduce their high transaction cost and tax burden.

Special focus initiatives for sectors such as handicrafts, handlooms, gems & jewellery and leather footwear were also announced, besides agriculture. The threshold limit of designated "Towns of Export Excellence" is reduced to Rs.250 crore from Rs.1,000 crore in these thrust sectors too.

A special package for agriculture "Vishesh Krishi Upaj Yojana" to boost exports of flowers, fruits, vegetables, minor forest produce and their value-added derivatives has been announced. Export of these products would qualify for duty-free credit entitlement equal to 5 per cent of the FOB value of exports and capital goods imported under Export Promotion Capital Goods for agriculture would be duty-free.

In another new scheme "Target Plus", exporters would be entitled to duty-free credit based on incremental exports substantially higher than the general annual export target. For incremental growth of over 20 per cent, 25 per cent and 100 per cent, the duty-free credits would be 5 per cent, 10 per cent and 15 per cent, respectively, of FOB value of incremental exports.

The duty-neutralisation scheme on imported inputs, Duty Entitlement Pass Book (DEPB) would be continued till it is replaced by a new scheme, to be drawn up in consultation with exporters. The Board of Trade would be revamped to ensure continued interaction between other wings of the Government and the Board of Trade to boost exports.

The Minister declared a new rationalised scheme of categorisation of status holder as "Star Export Houses", designating them from `One Star' to `Five Star' depending on their total exports during the current and previous three years. "The entry level for qualifying for status is now Rs.15 crore in three years. We are confident that this will bestow status on a large number of hitherto unrecognised small exporters," Kamal Nath said.

A new scheme to establish Free Trade and Warehousing Zones (FTWZs) to make India a global trading hub has been announced.
This is aimed at creating "trade-related infrastructure to facilitate the import and export of goods and services with freedom to carry out trade transactions in free currency," he said.
Foreign Trade Policy 2004-09

• Big push to exports to garner 1.5 per cent of the world share by 2009.
• FDI permitted up to 100 per cent to establish and develop free trade and warehousing zones.
• New scheme to boost exports of fruits, vegetables, flowers and minor forest produce.
• Duty-free import of capital goods under EPCG scheme for agriculture sector.
• Import of seeds, bulbs and tubers liberalised.
• "Target Plus" scheme to accelerate growth of exports
• EOUs exempted from service tax.
• EOUs permitted to retain 100 per cent export earnings.
• DEPB scheme retained till replaced by a new one.
• Restrictions on importing second hand capital goods lifted.
• Validity of licences of various schemes increased to uniform 24 months.
• Import of gold of 18 carat and above allowed under replenishment scheme.
• Duty-free import of specified items for leather sector raised to 5 per cent of f.o.b. value of exports.
• "Served from India" scheme to accelerate growth in export of services.
• An exclusive service export promotion council to be set up.

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IT spending by corporates low: Nasscom
New Delhi: Even as the domestic software market has touched an estimated $3.4 billion during 2003-04, the IT spending still accounts for less than one per cent of the annual turnover of companies, according to the software association, Nasscom.

"IT spending as a percentage of annual turnover of user organisations is still low in the country... About 16 per cent of user organisations are spending more than 1 per cent of the annual turnover on IT while approximately 50 per cent still spend less than one per cent of their annual turnover on IT," Nasscom said releasing the findings of its IT user survey.

The domestic software market is estimated to reach $4.2 billion by 2004-05. Banking, financial services and insurance segment, with a share of 24 per cent, was the single largest contributor to the overall IT spending in India followed by telecom (17 per cent), and Government (13 per cent) respectively.

The survey, which has been conducted in association with IMRB, covered verticals such as BFSI, healthcare, NGO, manufacturing, energy & utilities, automotive, consumer goods, ICT and education and assessed IT usage among key business verticals in India. The parameters on which the businesses were assessed include IT preparedness, policy, IT infrastructure, people, processes and IT implementation benefits.

Indian IT vendors are increasingly turning their attention to the domestic market, Nasscom said adding that Indian user industries are outsourcing parts or entire IT infrastructure to specialised vendors.

The survey revealed that user organisations in the country employed around 2,80,000 IT professionals in 2003-04 as against 2,60,000 in the previous year, reflecting a growth of seven per cent.
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