ALL EYES ON آ‘BUDGET-99آ’
Yashwant Sinha, Minister of Finance, has much to prove.
On 27 February, at 11am (local time), Sinha will present the BJPs second budget since it came to power in March 1998. His first, in June last year, is generally accepted to have been an unmitigated disaster.
Much of what he announced was hastily withdrawn, following criticism from Indias protectionist lobbies. In the past few weeks, and in the days running up to the budget, lobbyists have again been working hard to convince Sinha to implement their agenda.
Upstream explorers will be looking to see if Sinha acts on Prime Minister Vajpayees wish to tempt international oil explorers to India with more financial sops under the New Exploration Licensing Policy (NELP), possibly by waiving the 5% royalty on deepwater discoveries. One report suggests Sinha might even bring forward the abolition of the Administered Pricing Mechanism (APM) from March 2002 to sometime next year.
Larsen & Toubro (L&T), a local engineering conglomerate, is calling for a reduction in the import duty of equipment components, which is higher than for finished products. L&T argues major equipment users like Reliance, Essar and TISCO, prefer to import, rather than buy locally.
Theres talk that Sinha is tempted to abolish the zero import duty for sectors which carry the prized infrastructure tag. If he does, this is bad news for the oil and power sectors, both of which depend on duty free imports of capital goods.
Vazhappady Ramamurthy, the oil minister and Rangarajan Kumaramangalam, the power minister, are both lobbying Sinha to maintain zero duty. All will be revealed on 27 February.