Bhopal, Feb 25 (IANS) The Madhya Pradesh government Thursday announced reduction of interest rates on short term loans to farmers from the existing five to three percent and a rural road-building programme from the next financial year.

Presenting a Rs.128-crore deficit budget for 2010-11 in the assembly, Finance Minister Raghavji said that while a relief of two percentage points would be provided on short term farm loans, food grains, pulses, salt, sugar and flour will continue to be exempted from value added tax (VAT) in view of the rise in prices of these commodities.

On the other hand, electrical and electronic equipments will be a little costlier as the entry tax on these items has been raised from one percent to two percent. These items include colour televisions, electronic toys, entertainment equipment, photocopy machines and other office equipment.

The minister also announced the start of the 'Mukhayamantri Gram Sadak Yojna' (Chief Minister's rural road scheme) for villages having population up to 500 from the next fiscal.

The budget provides 49.6 percent more for rural development, 104 percent more for urban infrastructure, 22 percent more for agricultural sector, 9.5 percent more for education and 13.8 percent more provision for health services, compared to the budget estimates for the current financial year.

Raghavji said revenue losses, which were Rs.3,167 crore in 2001-02, were expected to show a surplus of Rs.1,698 crore in 2009-10 and that revenue receipts were expected to be Rs.43,443 crore in 2010-11.

'This includes Rs.18,670 crore from state taxes, Rs.11,047 crore as share of Madhya Pradesh in central taxes and an assistance of Rs.9,403 crore from the union government,' he said.