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`Don't put Gujarat burden on tax payers'

Our Bureau

KOLKATA, Feb. 21

THE Federation of Indian Chambers of Commerce and Industries (FICCI) has urged the Union Finance Minister, Mr Yashwant Sinha, not to use the Budget as the ``only engine'' to mop up resources for rebuilding the earthquake-hit parts of Gujarat.

It feels there are many grey areas in the economy to be looked into through liberal fiscal policies for expediting development and implementation of the economic reform process.

In his maiden press conference here on Wednesday as the President of FICCI, Mr Chirayu R. Amin, said: ``The Gujarat disaster is an event and it will take time to rebuild the affected areas. Different ways and means have to be found out to accomplish the task.''

It would, therefore, be unwise to put the entire burden on the direct and indirect tax-payers.

FICCI has already prepared a Rs 25,000-crore rebuilding scheme for Gujarat indicating ways to raise the funds. Its members have firmed up plans entailing an investment of about Rs 70 crore.

Similarly, the Bill Gates Foundation has promised to provide $1 billion to develop social infrastructure in the affected areas. Pepsi has offered to invest about $5 million.

It is of the view that efforts must be made to tap resources from domestic and international agencies, private investors, domestic FIs and housing development finance organisations.

Mobilisation of resources through the budget could be considered to part-finance the rebuilding programmes. In this context, he pointed out that the Centre has already imposed two per cent additional surcharge on income and corporate tax.

He contended that reforms should begin where it had been most neglected and the Government should start by putting its house in order. Downsizing of the Government and restructuring of Government finances as recommended by the Githakrishnan Committee and Fourth Pay Commission should be completed without further delay.

FICCI is of the view that the important issues to be addressed are disinvestment within a time-frame and with transparency and utilisation of disinvestment funds to reduce debt and interest burden.

He urged the Centre to enact and implement the proposed Fiscal Responsibility Bill as early as possible. It is also important to raise the highest and middle personal tax bracket significantly. He cited the example of China where the highest personal tax level is Rs 30 lakh, as against India's Rs 1.5 lakh.

Mr Amin, who was accompanied by Mr R.S. Lodha, Senior Vice-President of FICCI, said the main ``mantra'' of the Budget should be to invest and all fiscal measures be directed towards boosting the sluggish capital market. The chamber, therefore, urged the Finance Minister to re-introduce schemes for encouraging investments.

In the current context of industrial slackness, FICCI feels that tax rates should not be raised. The current effective rate of 39.5 per cent and 35.1 per cent for corporate and personal income taxes respectively, is among the highest, when judged by the rates prevalent in many countries.

Ideally, corporate taxes should be stabilised at 30 per cent for some time to come, according to Mr Amin and Mr Lodha.

Pic.: Mr Chirayu R. Amin, FICCI President, flanked by Mr Amit Mitra, Secretary-General, and Mr R.S. Lodha, Senior Vice-President, at a press meet in Kolkata on Wednesday.

Picture by Parth Sanyal