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Budget
bytes
A
host of positive announcements in the interim Budget have resulted in
a countrywide euphoria. The Machinist attempts to study the impact on
the industry
In
an effort to boost growth and investments, the Centre
on January 8, 2004 announced sweeping changes in customs and excise
duty, which left everyone openmouthed.
Six weeks ahead of the Budget day, 12 weeks before a possible general
election and to the surprise of all, the Finance Minister announced
a slew of important measures amounting to a interim Budget. This article
does not attempt to analyse its impact on the electoral prospects of
the NDA Government but their relevance to sustaining the GDP growth
rate at 8 per cent.
With the GDP growth rate touching 8.4 per cent in the second quarter
of 2003-04, foreign exchange reserves crossing $100 billion mark (currently
$109 billion), the stock market booming, ‘India Shining’ campaign
gathering momentum, and the ‘Feel Good’ factor all pervasive,
there is optimism all around.
The elation is heightened when we see the contribution of the industry
in the high GDP growth rate. The Index of Industrial Production (IIP)
picked up at 7.4 per cent last year. A growth rate of over 5 per cent
for over a year now proves its sustainability. The slew of measures
announced both inside the mini-Budget and outside, would ensure that
the IIP would continue to grow at a healthy clip over the next year
as well. The reducion in customs and excise duties will lower costs
of production and offer producers lower prices. More people can afford
to buy, so demand will pick up resulting in a higher economic growth.....................
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KEY PROVISIONS
EXCISE DUTY
Change in Duty Structure Impact
Excise duty on aviation turbine fuel reduced from 16% to 8%.
With excise duty cut coupled with exemption of inland air travel
tax, domestic air travel will become cheaper.
Excise duty reduced from 16% to nil on VCDs and DVDs. Excise duty
has been brought at par with CDs.
Excise duty reduced from 16% to 8% on medical, surgical, dental
Earlier 8% excise duty was applicable only to dental chairs. Now
it is furniture. extended to a number of items.
Excise duty reduced from 10% to nil on mosquito nets As most of
the mosquito nets are not impregnated with insecticides, impregnated
with insecticide. there will be a limited impact of excise duty
reduction.
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