River-interlinking |
Despite major
developments in the water resource sector since Independence, the country has not really
come out of the flood-drought-flood syndrome. This is principally on account of, among
other reasons, three major factors: faulty water management practices, unbalanced
development of irrigation sources in the country, and a highly uneven distribution of
water resources.
To expedite the
proposal for inter-linking of rivers, the Prime Minister has appointed a Task Force, which
will suggest modalities for arriving at a consensus amongst the States on transfer of
water to deficit areas and for identifying the priority links which could be implemented
early, as well as a mechanism for their clearance and funding. Adequate outlay is being
provided to support this Task Force.
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Desert pasturage
development |
A special
programme, Maru Gochar Yojana, is proposed to be taken up for the desert districts of
Rajasthan. This programme will provide for rehabilitation of traditional pastures –
‘Oran’ or ‘Gauchar’ – by developing at least one large pasturage
nursery in each of the identified districts, as a Central scheme, for restoration of
traditional water courses, and other measures so as to provide effective drought proofing.
A Task Force will be established for working out modalities for its implementation. Rupees
100 crore will be provided for this purpose, over a period of three years, with only a
quarter of the contribution coming from the State Government. Provision for 2003-04 for
this purpose will be Rs.50 crore.
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VIII. INDUSTRY |
As Hon’ble
Members know, in the current year so far, industry has stimulated overall growth, despite
a decline in agriculture. We must, therefore, consolidate these gains and build on the
robust industrial growth demonstrated in the last few quarters.
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Promoting investment: tax
treatment of dividends and capital gains |
For this, we need
to promote investment in the industrial sector, and improve the debt and equity markets.
Mr. Speaker, I am also committed to bringing the small investors back to the equity
markets by restoring their confidence.
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Dividend distribution tax |
From April 1,
2003, it is proposed that dividends be tax free in the hands of the shareholders.
Correspondingly, there will be a 12.5 per cent dividend distribution tax on domestic
companies. While mutual funds, including UTI-II, renamed UTI Mutual Fund, will also pay
dividend distribution tax, it is proposed to exempt equity oriented schemes from the
purview of the tax for one year. UTI-I, however, will be exempt from the dividend
distribution tax.
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Long-term capital gains
tax |
In order to give
a further fillip to the capital markets, it is now proposed to exempt all listed equities
that are acquired on or after March 1, 2003, and sold after the lapse of a year, or more,
from the incidence of capital gains tax. Long term capital gains tax will, therefore, not
hereafter apply to such transactions. This proposal should facilitate investment in
equities. I will, however, reexamine the effects of this exemption in the next Budget, and
the Scheme will be in force until then.
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Stock markets |
My predecessor
had already announced that stock exchanges will have a corporate structure. To enable
this, necessary amendments to the Securities Control and Regulation Act will be proposed
in the current session. With a view to enhancing investor confidence, it is necessary to
separate the ownership of these stock exchanges from their management; resulting in
demutualisation. In the process of corporatisation or demutualisation, it is possible that
capital gains accrue. Therefore, as a one time measure, at the time of corporatisation or
demutualisation of the stock exchanges, in accordance with a scheme approved by the SEBI,
should gains arise, then the consequential transactions shall be fully exempt from capital
gains tax.
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Research and development |
Hon’ble
members, as I have already said, knowledge is industry; and this is particularly so when
our imperative is to be the best, in all aspects in general, but particularly in product
design and quality. To encourage R&D, it is proposed to extend the tax holiday to
R&D companies established up to March 31, 2004.
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Textiles |
In industry,
textiles is the largest employment provider in the country. It also contributes
substantially to our exports. The main thrust of my proposals for the textile sector,
therefore, is to have a moderate rate structure; to complete the CENVAT chain to promote
compliance; to encourage modernisation; and, to eliminate evasion. Keeping these
objectives in view, as a package of incentives, the following measures are proposed:
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