Chidambaram indicates softer tax rates

Jan 4, 2007, 18:00 GMT

New Delhi, Jan 4 (IANS) Busy preparing the union budget 2007-08, Finance Minister P. Chidambaram Thursday indicated moderation in tax rates next fiscal following improvement in tax collection.

In a wide-ranging interview to NDTV, telecast Thursday night, the finance minister also hoped of a dramatic improvement in the country's financial sector climate if the Left parties support the government on key issues of reforms, particularly involving the Banking Bill and the Pension Bill.

Hinting a cut at the tax rates, the finance minister said: 'If tax compliance improves, there is scope for moderation... I concede that tax collection has improved among corporates as far as corporation tax is concerned but I can't say the same about excise duties.'

Talking about fiscal and revenue deficit targets of the budget, Chidamaram said he would try to 'reach the budget targets of fiscal deficit and revenue deficit'.

'But to expect that I'll do much better than the budget targets is unrealistic.'

Expressing satisfaction at the achievement of a growth rate of nine percent, the finance minister said it 'was not an accident but the result of the government's coherent policy'.

He said: 'Nine percent is not an accident. Nine percent is the result of pursuit of a coherent policy, namely promote investments, improve the climate for investment, help in whatever way you can to improve productivity, improve the trade intensity of India's GDP, and make more sectors of the economy open to competition... There's no reason why we cannot maintain this over the next few years.'

On the issue of pursuing key reform, the minister said: 'When I took on this job I was aware that we are in a coalition I was aware that the Left has particular point of view. I am still hopeful that we can get over the last hurdle in terms of the Pension Bill.'

'The Banking Bill is stuck at a clause, we have to negotiate that. The Insurance Bill will be introduced towards the end of the budget session. Even if we can take one step at a time, and get my Pension Bill through, and get over the last hurdle in the Banking Bill, you will find that in 2007-'08 there is a dramatic improvement in the climate of the financial sector.'

Touching upon the controversy involving the acquisition of farmland for setting up special economy zones (SEZ), Chiambaram said generally barren or wasteland should be acquired for setting up SEZs.

'Some farmland could be acquired for industry. But I think the correct approach is to use non-farmlands. There's a lot of wasteland, there's a lot of non-fertile land.

'But I agree that taking farmlands is unavoidable sometimes, for instance in Punjab, whatever land you take for any non-agricultural purpose is farmland. But that does not apply when you go to a state like Madhya Pradesh or Rajasthan or even Bengal. One should come to terms with this issue. I think that has been announced by the government of India is that double crop farmlands should not be taken. As far as possible farmlands should be spared.'

Talking about the Singur controversy, he said: 'It's not about my wish. It has happened. The land has been taken. Then the commerce ministry calibrated its policy and sent out an advisory to the state governments. So I think the advisory must be applied in the future. For now, what has happened has happened.'

© 2007 Indo-Asian News Service