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Rangarajan calls for moderate indirect taxes
January, 18th 2008
Calling for a moderation in indirect taxes levied on the consumer durables sector, C Rangarajan, chairman of the Prime Ministers Economic Advisory Council (EAC), said the move would provide a boost to the ailing manufacturing sector.
 
Speaking to the media after a pre-Budget consultation with Finance Minister P Chidambaram today, Rangarajan said: There are some areas of concern like the manufacturing sector. Some adjustment in indirect taxes on consumer durables is possible to give a push to the manufacturing sector.
 
Industrial production in November 2007 declined to 5.3 per cent against 15.8 per cent in the same month in 2006, the lowest since October 2006, when it stood at 4.51 per cent and the lowest in calendar 2007.
 
During the same month, consumer durables production dipped 4.1 per cent against the 10.1 per cent growth rate recorded a year ago.
 
Consumer non-durables production also declined to 2.1 per cent in November from a growth rate of 14.8 per cent during the same month the previous year.
 
Rangarajan also said there is a possibility of increasing public expenditure in fiscal 2008-09, which begins from April 1.
 
When asked if he had recommended a cut in direct tax rates also, Rangarajan said: I think (direct) tax rates should be kept as they are. However, some adjustments in income-tax slabs could be possible.
 
Rangarajan also discussed the likely trends in the economy with Chidambaram. The overall view is that the economy would grow at 8.5 per cent in 2008-09, he said.
 
The Centre for Monitoring Indian Economy (CMIE) has forecast 9.1 per cent GDP growth rate in 2008-09.
 
 
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