Manmohan Singh says reducing deficit essential to deal with inflation; government has not succeeded in finding a permanent cure for black money; will persevere with state governments to implement GST
New Delhi: Prime Minister Manmohan Singh has said that the Union Budget presented in Parliament today, aimed to consolidate the fiscal deficit and moderate taxes and that it would meet the challenges of economic growth in the country.
On the controversial black money issue and the lack of any amnesty scheme to try and bring this money back to the country, Dr Singh said there have been such schemes in the past that have yielded little success. "I don't think they have succeeded in providing a permanent cure for black money. We need a systems reform in a holistic manner to deal with this menace," he said.
Congratulating the finance minister for doing a "commendable" job, Dr Singh said, "You cannot please all the people. The finance minister has done as good a job as possible." The statement was in response to a query as to why there was no increase in the income tax exemption limit for women, PTI reports.
"This is the Budget which meets all the challenges of our economy and polity in the next fiscal year... This is a Budget that matches the challenges our economy faces-sustained growth, inclusive growth, equitable growth and a determined effort to curb inflationary expectations," the prime minister said in an interview to Doordarshan.
Dr Singh also noted that "quite a lot" has been done to encourage foreign direct investment (FDI).
The prime minister said that there was a need to maintain a high growth rate for which adequate provisions have been made in the areas of infrastructure, social and agricultural sectors.
"It is certainly necessary to curb inflationary expectations for which it is very essential that there should be a path of fiscal consolidation and the finance minister has done a commendable job by planning to reduce the fiscal deficit and revenue deficit," Dr Singh said. What Mr Mukherjee has done by way of social sector spending, encouraging investment in agriculture, tax concessions, "I think this budget matches the challenges that our economy faces," he said.
The prime minister also said that Mr Mukherjee has "walked on both legs" by keeping the taxes moderate through a simplified system.
Dr Singh also appreciated the increase in the tax exemption limit, saying that this would benefit all tax payers.
He noted that the budget signals a "reforms-oriented" outlook and that the finance minister has promised to come out with legislation for insurance and pension fund. "If these promises are converted into solid acts of Parliament, this will provide a boost to the capital market as well as corporate sentiments".
Singh said the Direct Tax Code would become a reality by 1st April next year. As far as the other promises were concerned, much depends upon "what we can push through Parliament", he said.
"There is no lack of effort on part of the government. Although there are some difficulties with regard to GST as some states are not on board, I am confident that we will persevere and we will succeed," Dr Singh said. He remarked that the moderation on taxes on balance was a good thing to play with and "if you are moving towards a GST, I think it is also necessary to have that end-product in mind. The finance minister has thought it through."
On the peak rates of both customs and excise duties being kept at 10%, he said, "We cannot be too certain that everything would work their arithmetic the way we want it to work. We must have ample scope to contribute to fiscal consolidation."
On social sector spending, he said these programmes required a boost in terms of delivery services and the problem has to be faced head-on.
Asked whether it was an 'easy' budget, Dr Singh said that considering the international situation and what was happening in the international financial system, maintaining high growth was "something for which the finance minister and the government deserve congratulations.
Also, MFs to be permitted to accept funds from foreign investors; proposal to raise FII limit in corporate bonds and to be allowed to invest in unlisted bonds too
New Delhi: Discussions are underway to further liberalise the Foreign Direct Investment (FDI) policy, finance minister Pranab Mukherjee announced today.
Presenting the Union Budget 2011-12, Mr Mukherjee said all prior regulations and guidelines have been consolidated into one comprehensive document in order to make the FDI policy more user-friendly. This is reviewed every six months and the last review was released in September last year, reports PTi
Besides, the finance minister said, mutual funds registered with the Security and Exchange Board of India (SEBI) would be permitted to accept subscriptions from foreign investors to meet the KYC requirements for equity schemes.
This would liberalise the portfolio investment route and enable Indian mutual funds to have direct access to foreign investors in Indian equity market, which had hitherto been restricted to foreign institutional investors (FIIs), sub-accounts registered with SEBI and NRIs.
It has also been proposed to raise the FII limit for investment in corporate bonds to enhance the flow of funds to the infrastructure sector. Mr Mukherjee said that the limit for investment in corporate bonds, with residual maturity of over five years, issued by companies in the infrastructure sector, is being raised by $20 billion to $25 billion.
This would raise the total limit available to FIIs for investment in corporate bonds to $40 billion.
Since most of the infrastructure companies are organised in the form of special purpose vehicles, FIIs would also be permitted to invest in unlisted bonds with a minimum lock-in period of three years. However, the FIIs would be allowed to trade among themselves during the lock-in period.
Here are some more announcements made by the finance minister during the presentation of the Union Budget in Parliament today.