Following a disappointing economic growth of nine-year low of 6.5% in FY12, there have been concerns that India's expansion rate this fiscal may slip further
New Delhi: Dismissing concerns that India's growth rate may drop below 6.5%, Finance Minister Pranab Mukherjee on Monday said 2012-13 would be the turnaround year for the economy, reports PTI.
Addressing a conference of top officials of the Income Tax (I-T) Department, he said steps are being taken to put India back on path of high economic growth.
"We are taking all necessary steps to ensure that we come back to the path of the targeted GDP growth. Of course it will take some time...but from this year we expect to make a turn around," Mukherjee said.
In the Budget 2012-13, the government had pegged 2012-13 GDP growth at 7.6% (plus, minus 0.25%).
Following a "disappointing" economic growth of nine-year low of 6.5% in 2011-12, there have been concerns that India's expansion rate this fiscal may slip further.
Mukherjee said that after the 2008 economic crisis, the GDP growth slipped to 6.7% in 2008-09, but bounced back to 8.4% in the following two financial years.
Highlighting the positives in the economy, Mukherjee said interest rate cycle has been reversed and there is growth in mining sector, turnaround in investment growth rate and there are predictions of normal monsoon, besides decline in crude oil prices.
"All these factors should help in recovery of domestic growth momentum," he added.
On direct tax collection target of Rs5.70 lakh crore ($103 billion) for the current fiscal, he said it was achievable. "I do feel this target is moderate and can be achieved," he said while asking the tax officials to work "relentlessly" to improve tax collection.
In 2011-12, the direct collection at Rs4.95 lakh crore was marginally down from the revised target of Rs5.05 lakh crore.
Mukherjee said that while renewed growth momentum will help improve direct collection, there are several challenges before the I-T Department.
He expressed concern over decline in tax-GDP ratio and asked the officials to reverse the trend. The tax-GDP ratio has dropped to 10.5% in 2011-12, from 12% in 2007-08.
Mukherjee said the Direct Tax Code (DTC) Bill will be introduced in Parliament in the forthcoming Monsoon Session and would be affected from next fiscal.
"I am hoping that DTC will be effective from 1 April 2013," he said, adding that the time has come for the I-T Department to prepare itself for the transition from the Income Tax Act, 1961 to the new direct tax regime.
The Finance Minister further said the department has been striving to check the menace of black money and tax evasion, which eat into the vitals of the economy and pose threats to national security through linkages to money-laundering and terrorism.
He said the government has commissioned a study on unaccounted income and wealth and it is likely to be completed in September.
Also, a report of a committee on strengthening of existing laws relating to black money is being examined by the government.
"I hope that these two studies will help in identifying the gaps in present legislative and administrative framework and shall help us in checking the menace of black money through an effective policy response," Mukherjee added.
He also said introduction on the Benami Transactions (Prohibition) Act, 2011, currently being scrutinised by a Parliamentary Standing Committee, will further help in "our resolve to reduce the menace of black money".
Amid undeclared assets held by Indians abroad being a matter of "intense debate recently", Mukherjee said that to encourage and facilitate real time exchange of information on cross-border transactions with other jurisdictions, India has set up 8 more Income Tax Overseas Units (ITOUs).
After a comprehensive review of the existing network, steps are being taken to augment the reach of the ITOUs in more jurisdictions, he added.
Enlarged network of ITOUs, with an enabling legislative framework in the form of Double Taxation Avoidance Agreement (DTAA) and Tax Information Exchange Agreement (TIEAS), will help in receiving valuable information in future, he said.
On promoting voluntary compliance of tax laws and role of children, Mukherjee said there was a need to educate them on the importance of taxes for the nation building process.
He said the I-T Department has partnered with NCERT to introduce information in this regard in school textbooks.
He, however, expressed concern over rising litigation with tax payers and amount locked up in appeals before CIT (A), ITAT and different courts.
A whopping over Rs4.36 lakh crore was locked in about 2.59 lakh cases as on December 31, 2011.
The main reason for pendency of cases before CIT (A), he said, appears to be slower disposal rate vis-a-vis the pace of cases being filed. On an average, it takes about one and half years to dispose of a case.
"The Department needs to ensure that after proposed cadre restructuring sufficient manpower is deployed to reduce the time taken for disposal of appeals and that it is not more than six months" he added.
Mukherjee said he has been directing the I-T Department to reduce all avoidable litigation with the taxpayers as well as with employees.
"I have also asked CBDT to ensure that no charge sheets are filed on the last date of retirement," Mukherjee said.
It is for the management of Air India to decide for how long can they keep striking pilots on their payroll when they are not working, the government says
New Delhi: With Air India considering further crackdown on the striking pilots, the government on Monday said it is for airlines management to decide for how long to keep them on their payroll when they are not working, reports PTI.
It "is for the Air India management to take action now. These pilots have not come to work for more than 30 days....It is an illegal strike. They have defied the High Court," Civil Aviation Minister Ajit Singh said.
"We have requested them again and again to come back to work. So, it is for the management to decide for how long can they keep them on their payroll when they are not working. And they have no intention of coming back," he told reporters.
Around 400 Air India pilots owing allegiance to Indian Pilots Guild (IPG) have been on strike since 7th May and the services of 101 pilots have already been terminated.
Sources in the state-owned airline have said "tough action" would be taken against the remaining 300-odd pilots and have given indications that they could be sacked.
Earlier, on Wednesday Singh had said that for him, the strike was over and he did not see any point in the striking pilots coming back.
He has said that the decision to withdraw the stir lay with the pilots "as I had already said that the strike is already over from our side."
"If management has to take any action, they will take as per the labour law," he said.
Earlier, the minister had said alternative plans were being made to ensure that operations of the state-run carrier were normalised within two-three months so that the revival plan could be put in place.
Observing that there were about 500 expat pilots in the country, he said the management was in touch with them.
There are about 60-odd expat pilots, trained on wide-bodied aircraft like Boeing 777s or Airbus A-300s, whose contracts with Jet Airways have ended or are about to expire.
Kingfisher Airlines is also facing trouble and the government is hoping that there would be sufficient trained pilots looking for job prospects elsewhere.
Maintaining that the strike by the pilots was illegal, Singh slammed the agitators for resorting to strike during the peak season without any notice.
South Africa allowed a 161% increase in airport charges that was outdone by the Indian regulator which allowed a 346% increase in Delhi, making it among the world's most expensive airports
Beijing: India on Monday came under sharp attack for the recent hike in charges at Delhi airport and major delays in building new airports and strengthening infrastructure, with airlines' body the International Air Transport Association (IATA) saying this was "clearly unacceptable" and the government should encourage the aviation sector for overall economic growth, reports PTI.
Observing that the Airports Economic Regulatory Authority of India (AERA), allowed a whopping 346% hike in Delhi airport charges, IATA director general and chief executive Tony Tyler said "this is clearly unacceptable".
"The Delhi International Airport Ltd (DIAL) has to pay 46% of its revenue to the government... This is neither in the interest of the airlines nor of the airport".
Addressing the annual general meeting of the IATA in Beijing, Tyler said he would be holding discussions with Indian authorities on this issue soon, expressing hope that "there might be some common ground" which could be found to protect airlines' and consumers' interests.
"Governments often miss the mark with economic regulation of infrastructure supplies... The (airport) regulator in South Africa allowed a 161% increase in airport charges...This was outdone by the Indian regulator which allowed a 346% increase in Delhi, making it among the world's most expensive airports," he said.
Both the Indian and the South African airport regulators "failed to protect the public interest", though they followed the prescribed guidelines to allow the massive hike in airport charges and user development fees for passengers.
On aviation infrastructure in India and other parts of the world, Tyler lamented that "Mumbai's much-needed new airport (at Navi Mumbai) will not open as scheduled in 2014 construction has not even started."
"Airlines need infrastructure to grow. Just like taxes and regulation, some governments understand and reap the benefits. Others don't and the economy suffers the consequences," the IATA chief said.
He said the governments must build regulations that support jobs and economic growth by keeping the cost of connectivity reasonable.
Releasing the global industry outlook, Tyler said the global airline profits were expected to be $3 billion this year, significantly down from $7.9 billion in 2011 and $15.8 billion in 2010.
The major challenges were high jet fuel prices and economic uncertainty, particularly in Europe that was affecting Asia-Pacific region.
"This will be the second year of declining returns since airline profits peaked in 2010," he said, adding that the projected industry profit of $3 billion industry would yield a net profit margin of "just 0.5%".
Compared with the previous forecast in March, North American and Latin American carriers are expected to see improved prospects. The outlook for African carriers is unchanged.
But the outlook for European, Asia-Pacific and Middle Eastern carriers has been downgraded, with European losses now expected to be $1.1 billion, which is nearly double the previously forecast $600 million loss, the report said.
Asia-Pacific airlines are expected to make the largest contribution to industry profits of estimated $2 billion, which is less than half the $4.9 billion profit that the region delivered in 2011.
The slowdown in the Indian and Chinese economies was a factor in the slow growth environment, the IATA report said.