Tuesday, March 27, 2012

India not a tax haven says Pranab Mukherjee

New Delhi: Finance Minister Pranab Mukherjee in his reply to the debate on Budget said he did not want score debatingpoints or brownie points, and that he wanted to explain things to the best of his ability.

He said that the external situation has relevance to the Indian economy. What happens in Libya and Syria affects fertiliser prices in the country. He reminded the members that India's 36 per cent exports will be affected if there is an economic crisis in the Eurozone countries.

He said India imports about 100 million tonnes of oil and produces 39 million tonnes. “One of the important ingredients in the inflation basket is oil (3/8th). We are not living in isolation.” And he said that the external factor should not be trivialised. He also said that the government has not increased oil prices since June 2011.

Mukherjee said that the expectation that “this old man has a magic wand. I am flattered and the confidence they have in me. I have to keep the ground reality in mind. I have a limited mandate and we have to carry the others with us,” he said referring to the compulsions of coalition politics. He said since 1989 no party had a majority of its own and that it was either a BJP-led coalition of the NDA or the UPA1 and UPA2.

He explained that there were three aims in the budget. The first was how to achieve a domestic demand-driven growth. The second was fiscal consolidation and the third was moderation of inflation.

He said that the outlay for the rural sector has been increased to stimulate growth. He said that he had allocated Rs 20,000 crore for the Rural Infrastructure Development Fund and he hoped that he hoped to insulate the Indian ecnomy from the external environment.

He announced that rice production has crosses 100 million tonnes, seven million tonnes from the eastern states. He sid it is for this reason that he increased the outlay for agricultural extension work, which is the lever behind the green revolution, from Rs 400 crore to Rs 1000 crore.

He said that no country can feed 121 crore people. “We have to feed our own. We have to prduce enough. We have to procure enough. We have to ensure that the PDS (public distribution system) works. We can not achieve this through mere words.”

Touching upon the Vodafone tax issue, he asserted that India was not a tax haven, and it was not a no-tax country either. He said that there was no intent of vindictiveness in the proposed to amend the income tax law, and assured that no case older than six years will be reopened.

He said that he would not be able to bring in the Goods and Services Tax (GST) system without the help of the opposition parties and that of the states. He said he hoped to evolve a comprmise which would allow the states a window to impose the sales tax. But he said that according to 32 per cent of the Rs 41,000 crore indirect taxes he had raised in this budget would go to the states.

Mukherjee accepted that MNREGA was not an asset creating activity and that it is a demand-driven income scheme. But he reminded that through MNREGA the government was able to fulfil the minimum wages act. He reiterated that subsidies will be reduced to two per cent of the GDP. “We cannot indulge in profligacy,” he asserted. He assured that the national food security act was important and it will be implemented.

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