Courtesy: Times of India

New Delhi, Feb 28 (12-30 pm): The Planning Commission will draw up a programme to reconstruct the damaged infrastructure in calamity-hit areas, Finance minister P Chidambaram said on Tuesday while presenting the budget 2006.

He also announced GDP growth will be 8.1 per cent this year with manufacturing growing at 9.4 per cent and agriculture bouncing back to 2.6 per cent with all sectors doing well.

With over 7.5 per cent growth in the last three years, it is possible that the average annual growth will be over seven per cent in the 10th plan.

Government's aim is to ensure montetary stability and managing external debt. Rs 11,700 crore to be spent on rural employment in the current year.

Several indicators point to buoyancy in capital formation in the current year. Highway construction speeded up, progressing at 4.48 kms per day as against 1.86 kms in 2004.

India set to push ahead with tax reform in budget

Reuters

New Delhi:  Indian Finance Minister Palaniappan Chidambaram is expected to announce fresh tax reforms on Tuesday in his budget for the fiscal year ending March 2007, along with measures to help the country's poor, analysts say.

Chidambaram's budget speech is due to start at 0530 GMT and is likely to last for more than two hours.

He is expected to slash the peak rate of customs duty to bring it more into line with India's Asian neighbours and may bring more services under the tax net to help the cash-strapped government find more funds.

Analysts say the finance minister will continue the government's drive to shore up tax compliance, remove exemptions and tighten revenue collection in order to step up spending on projects aimed at the country's 260 million poor.

But he may have to increase government debt or break a fiscal law that commits the government to deficit reduction.

In a report on the economy on Monday, the finance ministry said the country could ill afford to let up on fiscal reform if it wanted to put public finances in order and continue to enjoy rapid growth.

The report said the economy was expected to sustain its strong growth momentum in the years to come but high world oil prices and global macroeconomic imbalances remained a concern.

The Indian economy, Asia's third largest, is expected to grow more than 8.0 percent in the fiscal year to March 2006, boosted by rapid expansion of the service and manufacturing sectors and a rebound in the farm sector.

Tuesday will also see the publication of gross domestic product data for the October to December period, the third quarter of fiscal 2005/06.

The data is due at 0630 GMT. Economists polled by Reuters estimate the economy expanded 7.8 percent in the quarter compared with the same period of the previous year.

Analysts say Chidambaram could also announce measures in his budget to improve the country's creaky infrastructure, which is needed both to improve transport in rural areas and to support rapid growth in the economy in general.

Economists say India urgently needs to improve rural infrastructure to prevent the growing wealth gap from creating social unrest.

Failure to improve roads and ensure a steady electricity supply could also hurt demand for industrial goods since rural demand helps drive the economy.