The Centre's pre-Budget exercise seems to enter a decisive phase as the Prime Minister Manmohan Singh has been involved and consulted on several aspects by the Finance Minister P Chidambaram, Planning Commission Deputy Chairman Montek Singh Ahluwalia and other Ministry officials, sources said.
While presenting the budget of 2006-07 by Finance Ministry is likely to emphasis on managing expenditure, dilute provisions of fringe benefit tax (FBT) and flag off reforms through cut-back in peak customs duty to 10 percent, it is learnt.
Singh was instrumental in raising the gross budgetary support to Rs 1,71,000 crore, which is much closer to the proposed amount of Rs 1,83,000 crore by the FM during recent deliberations.
Officials reckon that the Prime Minister prefers budget to stick to the path of fiscal rectitude and not go for taxes like FBT.
Scheme to unearth black money in any form has been ruled out for the present, it appears.
Proposal for a 5 to 10 percent cut in peak customs duty would lower average tariff on non-agricultural products from the present 17 percent to about 13 percent, thereby aligning import tariffs at Asean level.
But additional customs duty will remain in order to nullify the impact of VAT and local levies, they said.
Raw materials and capital goods used by food processing, gems and jewellery, auto, leather and textile industries which are labour-intensive, would become cheaper due to tariff cuts.
Budget might not set any stiff targets even as the estimated 8.1 percent GDP growth rate would help reduce fiscal deficit to GDP ratio.
Expenditure on better infrastructure and on schemes like Bharat Nirman during the next fiscal would keep up growth momentum, and help lower fiscal deficit as a percentage of GDP, officials added.
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