The Hindu : Tamil Nadu News : Willingness to switch over to VAT `a good sign'

Online edition of India's National Newspaper
Monday, Nov 08, 2004

Tamil Nadu

Tamil Nadu

Willingness to switch over to VAT `a good sign'

By Our Special Correspondent

CHENNAI, NOV. 7. The willingness shown by the States to switch over to the value added tax (VAT) system is a "good sign," according to Raja J. Chelliah, Chairman of the Madras School of Economics.

Participating in the Chamber Day of the 59-year-old Hindustan Chamber of Commerce here on Friday, he said the introduction of VAT at the State level would help a common market emerge in the nation.

Dr. Chelliah said the transformation of the economy in the past five years helped the country withstand one of the worst droughts in recent times without allowing inflation or foodgrain shortage, in contrast to the drought of 1987-88. At worst, some State governments failed to rush relief to those whose land was affected by the drought.

Balance of payments

Another achievement was the vast improvement in the external sector, with a comfortable balance of payments. In contrast, 19 of the 20 years before 1991 (viz., the year of introduction of economic reform) had been marked by problems of foreign exchange reserves. This strengthened India's self-reliance in both political and economic terms and the country was in a position to pursue its policies without depending on foreign aid as it did before 1991. "There is no Aid India Consortium now," he said. Also, India had emerged as a knowledge economy and was in a position to supply technical labour either directly or through the Internet to the world.

The Deputy Chairman of the Rajya Sabha, K. Rahman Khan, a chartered accountant, said there was still "huge tax evasion" despite the simplification of the tax system. It was the duty of the chambers of commerce to educate their members on the need for tax compliance in the national interest and the importance of protecting the environment.

The chamber honoured Dr. Chelliah and S. Vidyaakar, founder of Udhavum Karangal, devoted to care of the destitute and the elderly. The former Secretary (Environment and Forests) to the Union Government, N.R. Krishnan, highlighted the problem of disposal of waste, generated by the information technology (IT) industry in the form of mercury and cadmium.

The chamber president, Mahendra Parmar, welcomed the gathering.

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