Government sees Budget as inflation-neutral
New Delhi: The Union government says its Budget for 2000-01 is inflation-neutral. It says the fiscal deficit would have been Rs 10,000 crore higher had it not taken some tough and unpopular decisions like phasing out of export exemptions, the reduction in food and fertiliser subsidy and enhancement of tax rates

The government will also reduce oil subsidy, streamline the buffer carrying cost of the Food Corporation of India, and further cap capacity utilisation of urea units. Also, the chemicals and fertiliser ministry is working on a plan to phase out the fertiliser retention price scheme and the subsidies involved.
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Softer treatment for software
New Delhi: Union finance minister Yashwant Sinha has made an important clarification for the software industry. He has clarified that software companies in export promotion zones and software technology parks will continue to benefit from the earlier tax exemptions, and their export profits will not be taxed.

This will, however, apply only to software firms formed before 1 April 2000. Those formed after that will be liable to the new tax on 20 per cent of export earnings.
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Mixed reactions in IT industry
New Delhi: The computer industry has given mixed reactions to the Union Budget 2000-01. The National Association of Software and Service Companies, or Nasscom, has protested the withdrawal of tax incentives to software exporters. But the Manufacturers Association of Information Technology, which represents the hardware segment, has called the Budget "practical and pragmatic".

Nasscom’s disappointment stems not only from the plan to withdraw tax incentives for exports but also from the government’s holding down the limit for overseas acquisitions by Indian infotech companies. On the export incentive, Nasscom accepts the need to eliminate export sops in order to make India WTO-compliant. But it says this action could have been postponed by a year. Nasscom has welcomed the finance ministry’s decisions on the venture capital industry, increased FII investment limits and withholding tax on software.

MAIT is happy because one of its demands -- the removal of import duty on critical components from its earlier 5 per cent to nil -- has been accepted. The Budget has eliminated duty on ICs, microprocessors, storage devices, hard disk drives, CD-ROM drives, and colour data graphic tubes. Only, MAIT wants clarification on whether the special additional duty of 4 per cent will still apply to these components.
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Pharma industry disappointed
Mumbai: The pharmaceuticals industry in the country is disappointed with the Union Budget 2000-01 proposals. Basically, the industry’s ire stems from the lack of positive action on price controls or incentives for research and development.

Also, the industry is not happy with the increase in excise duty to 16 per cent, from 8 per cent earlier, on generic drugs.

On the other hand, the finance minister’s announcement of MRP-based excise valuation has been received favourably. It is perceived that such a system will reduce the need for contract manufacturing and hence raise production quality standards.

The industry is happy that the withdrawal of tax incentives for exports are being withdrawn gradually over a five-year period. It acknowledges that such a withdrawal is required under the WTO regime.
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Petroleum companies happy
Mumbai: Public sector petroleum companies expect their margins to improve 5 to 6 per cent because of the Budget proposals. The main benefits accrue from the cut in import duties on crude oil and petroleum products. On the other hand, the cut in duties may be partly neutralised by the dividend tax and the removal of the special additional duty on imports.
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