Core sector to get top priority

NEW DELHI, June 1: Infrastructure continues to be a top priority area for the Government as has been displayed in the Budget proposals annou...

NEW DELHI, June 1: Infrastructure continues to be a top priority area for the Government as has been displayed in the Budget proposals announced by the Finance Minister. The allocation for core sector areas has been increased by 35 per cent to Rs 61,146 crore. This includes the plan outlay of key areas like energy, transport and telecommunications. To provide more funds to core sector, Government has allowed upto 10 per cent of fresh accretion of provident funds to be invested in private sector securities which have good rating from at least two credit agencies.

For power sector the Government has simplified procedures for issuing counter guarantees so that faster financial closure can be achieved. The Finance Minister reiterated the Government8217;s resolve to set up the central and state electricity regulatory authorities for which an ordinance was issued in April. The authorities will take away the power of fixing tariffs from the Government and lead to economical tariffs being put in place. The total planoutlay for ministry of power has been increased to Rs 9,500 crore as against Rs 6,738 crore.

In an important step to reduce the losses of PSU arising out of non-payment of dues from, state electricity boards SEB, Sinha announced a securitisation scheme. PSUs such as NTPC and Coal India are owed about Rs 10,000 crore by SEBs. The government will evolve a guarantee scheme to cover such dues. These guarantees will enable the PSUs to raise resources either by securitising these debts or directly entering the market for tapping resources.

For the roads sector, Sinha has provided Rs 500 crore for the National Highways Authority of India to catalyse new road projects including four-laning of existing national highways. The Finance Minister has extended the concessions presently available to import of equipment for construction of National Highways to other road-constructing projects as well. The twelve major ports in the country have been allocated Rs 722 crore compared to Rs 624.64 crore of the last budget.The plan assistance to Port trusts mainly relates to development of infrastructure at the ports of match the type of vessels. Port sector has been allocated Rs 191.72 crore compared to Rs 158.61 crore in 97-98 budget. The shipping sector has been given Rs 147.60 crore as against Rs 119.55 crore in 97-98 budget.

To encourage the domestic telecom equipment manufacturing, the import duty on relevant parts has been reduced to 20 per cent from 25 per cent. But the services operators have not got any breaks. Duty on peripherals has been reduced from 15 to 12 per cent, excise duty cut on pagers from 18 to 13 per cent. However, the domestic manufacturers have been disappointed to the extent that the quot;deemed exportquot; status that they were looking out for has not been accorded to them.

The fact that the Finance minister has made a provision of Rs 2,800 crore as revenue receipts accruing on account of licence fees from cellular and basic operators clearly shows that the government has no intention of giving in to thedemands for a moratorium in the payment of these licence fees by the private operators. This is likely to have an adverse impact on financial closures of several companies in both the cellular and basic services which were relying heavily on these sops.