Finance Minister Pranab Mukherjee, however admitted, that the Indian government does not have headroom for proactive fiscal policy
New Delhi: Pinning hopes on declining global crude oil prices and normal monsoon, Indian Finance Minister Pranab Mukherjee on Monday said these positive factors would help in improving growth rate, which slipped to a nine-year low of 6.5% last fiscal, reports PTI.
"A normal south west monsoon has been predicted for 2012-13 and there has been a rapid decline in international oil prices in recent weeks... All these factors should help in the recovery of domestic growth momentum," he said said while highlighting "positives" of Indian economy at the annual conference of Central Board of Excise and Customs (CBEC).
The interest rate cycle has been reversed by the Reserve Bank of India (RBI) and mining sector growth has turned around. Further, there has been progress in fuel linkage for power projects and improvement in investment growth rate, he emphasised.
There were no "major adverse results" on corporate performance in the last quarter of 2011-12, he added.
The Finance Minister, however admitted, that government does not have headroom for proactive fiscal policy.
"Like for most parts of the world, the second round of global uncertainty and the slowdown has come rather quickly on the heels of the previous one, with practically no headroom for running a proactive fiscal policy," he said.
Indian economy registered healthy growth of 8.4% in 2009-10 and 2010-11, but renewed global uncertainty, emanating mostly from Euro zone area affected domestic business sentiment in 2011-12.
A tight monetary policy directed at taming inflationary pressures in the economy also came in the way of consolidating economic recovery.
GDP growth in 2011-12 has slowed significantly to just 6.5% and this has been "disappointing", Mukherjee said.
Stressing that a strong indirect tax administration was fundamental to the development of a country's economy, Mukherjee asked the officials of CBEC to ensure timely collection to taxes.
"The challenges before your department today are multi-faceted... The important task before you is to ensure timely collection of all legitimate tax dues, without, of course, unduly burdening the assessee," he said.
He asked them to sharpen their audit skills and conduct scrutiny of assessees' records to bring to the kitty any tax that might have escaped assessment and to detect frauds which are often intelligently planned and meticulously executed.
"While the need for trade facilitation and tax payers' satisfaction cannot be over-emphasised, any mala fide and corrupt practice to evade payment of legitimate dues, needs to be handled as per established procedure of law," he said.
Mukherjee expressed hope the CBEC would be able to meet the indirect tax collection target for 2012-13.
"They (CBEC) have done good job last year... I am confident that the department would leave no stone unturned in ensuring that the targets for the current year are not only met but handsomely exceeded, Mukherjee said.
With government increasing rates of both excise and service tax by 2%, he said "these changes are likely to help the Department in garnering additional tax revenue".
Indirect tax collections (central excise, customs and service tax) target for 2012-13 is Rs4.99 lakh crore, up by about 27% over the previous year.
Despite a slowdown in growth and the duty cuts effected on petroleum products in June 2011, the indirect tax collection of Rs3.92 lakh crore (excluding cess) was only marginally short of the target Rs3.94 lakh crore in FY12.
Mukherjee also said there is an urgent need to reverse the declining trend in tax-GDP ratio by augmenting tax collections. The ratio was nearly 12% in 2007-08 but has dropped to around 10.5% in 2011-12.
Mukherjee told CBEC officials that there is a scope for improving tax administration by leveraging technology and facilitating a congenial public interface.
He further said that smuggling of fake Indian currency note (FICN), narcotics and psychotropic substances, illicit export of flora and fauna; antiques and other prohibited goods pose a grave threat to our economy. Commercial frauds perpetuated to evade payment of legitimate duty are another area of growing concern.
"To enable you to deal with these concerns effectively the initiatives taken to improve the infrastructural and technological capabilities at your command need to be rapidly implemented," he said.
On capacity building, he said this needs to be accorded a high priority so that "we are able to build a team of dedicated and motivated workforce to respond to the challenges confronting the department".
The issues related to human resource development should be given priority, and necessary steps to promote an administration with a humane face earnestly pursued, he said.
"You all at the senior level cannot remain insensitive to the genuine concerns of your workforce, be it the legitimate demand for a timely promotion or holding of DPCs or timely sanction of annual increments, or payment of retirement benefits," Mukherjee said.
The CBEC has constituted four 'Breakaway Groups' for in depth examination of some of the current issues that need the immediate attention of the department.
In an open letter, veteran Kameshwar Pandey, questions if the senior veterans who were outspoken on TV channels and other media, really understood the background of ‘controversies’ linked with former Chief of Army Gen VK Singh
To concur and side with newspapers, magazines and television channels, whose own credibility is dubious and questionable, is rather unfortunate. A large part of the mainstream media is known to have shady allegiance or some sort of backstage arrangement with political parties and vested interest groups. And concordantly, more often than not, it seems the so called experts and panellists who are called for interviews and opinions are nothing but pawns of either the government or someone powerful.
What is even more unfortunate is the fact that some of our own senior veterans have defaulted and turned over to the dark side. Knowing all along that their actions are against the very oath that they took when they first donned the uniform—to protect and serve the nation and its people.
I am not sure what honour and prestige of the institution is being talked about. What institution and what prestige? The masses of this country neither trust their government nor any other government agency. Judges, prime ministers, ministers, the Central Bureau of Investigation (CBI), the police and the list is endless. And so is the list of their infamous track records.
In these deteriorating times, Gen VK Singh is a true hero. He has shown all of us the true colours of the present government including its administrative officers, ministers, judges and even the prime minister. He has displayed the confidence and the courage to bring out the true state of affairs of this weakening administration, its corrupt departments and failing systems. And that deserves respect and admiration from the military community as well as from the citizens of this great nation.
If these so-called leaders, whom we are supposed to follow, are so apathetic to our emotions then it is indeed unfortunate for the country. In these changing times, we will have to adjust the sails according to the winds. None of our actions or policies should reflect that we are siding with this corrupt administration. In the name of honour, dignity and code of conduct, if we are indirectly helping those who are destroying the country, we are killing our own reputation as the military being last bastion and the protectors of the sovereignty of the country.
It is a well known fact amongst military ranks that the privileges of the military have been continuously going down ever since we gained independence. The current state of affairs is so pathetic that Junior Commissioned Officers (JCOs) and ORs are meted out a treatment no more than that of labourers. The recruits that now join the military are well-educated and can think for themselves. They can understand the difference between serving the country and serving corrupt politicians who do not respect their generals, let alone respect them.
If future service chiefs are to deserve the respect of the forces they command, they have to show similar courage as shown by Gen VK Singh. If at all the future service chiefs get engulfed in controversies—it should be for the welfare of the men and women serving the military or for the nation itself and not for their personal gains. If the service chiefs do not fight for the dignity, respect and welfare of the men and women serving the military, a time may come when they will have no control on such a large force and that can be truly dangerous.
And some gentlemen who think Gen VK Singh is guilty of letting the army down are sadly mistaken. What is most important for all of us right now is our unity and awareness. Awareness is an absolute requirement for true freedom. The great martyrs like Shaheed Bhagat Singh, Chandra Shekhar Azad and Subhash Chandra Bose are screaming right in our faces urging us to join this second battle for freedom and justice. To not weaken this movement with undue and unwarranted negative remarks.
What Gen VK Singh started—a fight against the cancer that is eating the army from the inside—was supposed to be followed through by the next chief but looking at the current scenario that may or may not be the case. The former army chief had the courage to point out what is right and what is not and that did not go down well with the government. With him gone, we have little hope unless the military community gears up to cast out the bad fish which are rotting the whole pond.
Gen VK Singh Sir! Hats Off To You!
This time the enemy is our own and that is why the battle is twice as hard.
"चले थे साथ मिलकर, चलेंगे साथ मिलकर , तुम्हें रुकना पड़ेगा ,हमारी आवाज़ सुनकर"
(DISCLAIMER: The views expressed in the letter are the author’s personal views and has nothing to do with the general stance of any or all the organizations he represents)
According to the industry body, stalling of the growth process and policy inactions hurt the common people the most and what we lose in the process are valuable jobs and sources for generating income
Terming the economic situation as ‘grave’, industry body Federation of Indian Chambers of Commerce and Industry (FICCI) on Monday asked the Union government to go in for bold steps like allowing foreign direct investment (FDI) in multi-brand retail, cut interest rates and halt funding of welfare activities to revive growth, reports PTI.
“India is in the midst of a grave economic crisis. The combination of low growth, high inflation, high fiscal deficit and the highest ever trade account deficit has raised a lot of concern,” FICCI president RV Kanoria told reporters in the capital.
Suggesting a 12-point agenda, Mr Kanoria said during the time of low growth and global uncertainties, all the political parties should strengthen the hands of the policy makers.
“There has to be a clear recognition on the part of ruling and opposition parties that we are in crisis situation and all parties need to stand united and strengthen the hands of policy makers to take bold decisions and act pro-actively and decisively,” he added.
He said that reasons like excessive monetary tightening, delays and uncertainty over key economic legislations, projects delays on account of factors including stalled environmental clearances have pulled down the country’s economic growth.
India’s GDP (gross domestic product) growth has slumped to 6.5% in 2011-12, the lowest in the last nine years.
The chamber has suggested that the timely implementation of Goods and Services Tax (GST) would be a major landmark reform that could alter the dynamics of Indian industry and exports. “It would add 2% to our GDP. Tax administration and tax collection will also go up,” he said.
Besides, he asked for immediate easing of monetary policy and lowering interest rates by two percentage points and CRR by one percentage point. Cash Reserve Ratio (CRR) is the portion of deposits which banks are required to keep with the RBI.
“It is acknowledged that inflation in India is largely a supply side problem. To deal with such a problem using monetary tools may not be the right approach,” Mr Kanoria said.
He also asked to revisit the Land Acquisition Bill, as the bill restricts the use of irrigated multi-cropped land for infrastructure development.
He recommended providing fiscal stimulus for investments across sectors.
“The government must ensure that these proposals (allowing FDI in multi-brand retail and allowing foreign airlines to take stake in domestic carriers) reach their logical conclusion as both these measures would enhance overall growth in the economy,” the Ficci president added.
Mr Kanoria also asked the government to decontrol the prices of diesel and other oil products and “the government can also consider imposing a higher duty on imported diesel cars”.
Mr Kanoria said that repatriation of black money immediately could help in mitigating the balance of payment situation.
“The White Paper brought out by the government on the issue alludes to a scheme whereby some governments between themselves have entered into special administrative agreements for revenue sharing,” he said.
The government should urgently hold discussions on this subject and arrive at a methodology in a time bound manner to enter into similar agreements, he added.
Further, he said the government should “eschew the temptations of a premature welfare state and announce an immediate moratorium on any additional expenses on doles”.
The sums already allocated for welfare schemes should be distributed in an efficient manner as envisaged under the 'direct transfer of subsidies' programme linked to the Aadhaar platform, he said.
Mr Kanoria urged the RBI to cut repo rate by one percentage point in the forthcoming monetary policy review.
On Land Acquisition Bill, he said if the conditions in the Bill come into force “we will find it extremely difficult to achieve the targets that we have set for ourselves for investments in infrastructure and manufacturing. The consequent impact on job creation will be devastating”.
Besides, he said the slowdown in growth in investments is deeper in case of the private sector and this trend must be reversed.
“We urge the government to look at measures such as providing accelerated depreciation and scrapping MAT for infrastructure projects as all of these would give a fillip to investment activity,” he added.
Here is the 12-points agenda by FICCI for stimulating Indian economy's growth...