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PM for import tariff cut, re-look at tax exemptions
January, 08th 2007

Ahead of the budget, Prime Minister Manmohan Singh today laid down his government's economic priorities that include a re-look at tax exemptions, policy for rehabilitation of displaced farmers, focus on power sector and further cut in import tariff.

Concerned over the "irrational exuberance" at the stock exchanges, he indicated that the government's priority was to ensure stability of the booming capital markets.

He hinted at steps to control inflation and maintain fiscal discipline, while ensuring that the rate of investment is sustained for maintaining growth rates.

"Our tax regime should be liberal but equitable... In the long run our tax regime should not have too many... Exemptions which make tax administration an unnecessarily complex exercise vulnerable to misuse," Singh said at the annual general meeting of FICCI.

He said the country would now move toward a common general sales tax (GST) and better harmonisation of value added tax (VAT).

The government would finalise a new rehabilitation policy in three months to deal with issues arising out of land acquisition for industrial use, Singh said.

"There was no reason why spread of industrialisation should be a contentious process... Issues such as land acquisition and displacement of people and their rehabilitation should be transparently addressed," he said, adding the proposed policy would be more progressive, humane and conducive to the long-term welfare of all stakeholders.

As India gradually integrates into the global financial system, the government would move into a less restrictive foreign exchange regime. "The recommendations of Tarapore Committee are a step in this direction, mixing caution with optimism," Singh said.

 
 
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