Shimla, March 12 (IANS) Himachal Pradesh Friday exempted food grain and edible oil from a one per cent hike in value added tax (VAT) -- from 4 percent to five per cent -- as part of its budget proposals for 2010-11.

To provide relief to the common man from galloping food inflation, Chief Minister Prem Kumar Dhumal also announced that the subsidy scheme for three 'dals', two edible oils and salt distributed through the public distribution system would continue.

Presenting the budget in the assembly, Dhumal said the state would grow at 7.5 percent, compared to the estimated national Gross Domestic Product (GDP) growth rate of 7.2 percent this year.

'This is an indication of efficient management of the state's economy despite the severe fiscal constraints,' claimed Dhumal, who holds the finance portfolio.

The budget has an outlay of Rs.15,078.92 crore.

'The total revenue receipts are estimated at Rs.11.588.55 crore and the total revenue expenditure is estimated at Rs.12,093.42 crore,' he said.

Since apple is the main horticulture crop of the state, the budget has proposed an Rs.85-crore 'apple rejuvenation project'. Under the project, old and low-yielding variety of trees would be replaced with high-yielding varieties of root stocks in 12,500 acres in the next five years.

To tap additional sources of hydropower, the budget has proposed to harness more than 600 MW in the coming fiscal.

'The state has a power potential of about 23,000 MW. About 6,480 MW has been harnessed till now. In the coming fiscal, we expect to add more than 600 MW with the commissioning of Allain Duhangan, Malana II, Budhil, Chamera III and some other small projects. These projects will add more than 2,700 million units per year,' he said.

The government has also decided to develop Shimla and Hamirpur as solar cities.

Dhumal said the government would make efforts to encourage setting up of hotels by leading hospitality chains.