The Finance Minister, Mr Pranab Mukherjee, today said that tax reforms are a central agenda for the coming year (2010-11) and promised to bring about dramatic changes in administration besides ushering in transparency and simplicity in the tax regime.
This will help increase the tax-GDP ratio and widen the tax base, Mr Mukherjee said while addressing the national council of Confederation of Indian Industry (CII) here on Wednesday.
In the monsoon session of Parliament later this year, the Government is expected to introduce the much awaited new Direct Taxes Code, which will replace the existing income tax law.
I am confident that the Government will be in a position to implement the Direct Taxes Code from April 1, 2011, Mr Mukherjee said.
The Finance Minister also made it clear that the proposed apex-level Financial Stability and Development Council (FSDC) will not in any manner dilute the existing regulatory functions of organisations like the Reserve Bank of India and the Securities and Exchange Board of India (SEBI).
This (FSDC) will be an over-viewing body having inputs from various sectors and not a regulatory one, he said.
The objective is to ensure that the country is not taken by surprise or unprepared in facing challenges like the financial crisis of 2008-09 which fundamentally changed the structure of banking and financial markets the world over, Mr Mukherjee said.
He urged India Inc to move with optimism and not shy away from making more investments in the Indian economy.
I appreciate that uncertainty in growth will influence decision making and prospective investors will be shy to invest. But there is no reason to believe that we will not return to the high growth trajectory (seen before the global financial meltdown), Mr Mukherjee said.
He expressed confidence that the GDP will pick up again in the fourth quarter even as the growth rate had slipped in the third quarter to 6 per cent.
This is based on optimism regarding the performance of the industrial sector, led by encouraging manufacturing sector growth. Secondly, the Rabi crop will provide succour to the economy and help maintain part of the buoyant demand in the rural economy. Third, the recovery in the global economy will be a positive contributing factor. The challenge before us is to quickly revert to high growth path of 9 per cent and then find the means to cross the double digit growth barrier, Mr Mukherjee said.
The Finance Minister expressed confidence that the Indian economy will be able to achieve 8-8.5 per cent growth in 2010-11 and pointed out that the budget was predicated on that assumption.
On the changes in petroleum duties, Mr Mukherjee noted that these were not new duties that were being imposed through the Budget, but reintroduction of the duty structure that existed prior to June 2008.
On his expectation from India Inc in the upcoming financial year, Mr Mukherjee advised Corporate India to focus attention on the construction sector, especially the construction of roads, and also on the power generation front.