The Hindu : Sinha justifies rollback of tax proposals

Online edition of India's National Newspaper
Sunday, Apr 28, 2002

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Sinha justifies rollback of tax proposals

By Our Special Correspondent

LUCKNOW APRIL 27. The Union Finance Minister, Yashwant Sinha, today justified the withdrawal certain tax proposals, saying there was nothing unusual. Such measures had been announced by Finance Ministers in the past in response to demands made by the public.

Mr. Sinha, who was here to participate in a programme organised by the Small Industries Development Bank of India (SIDBI), told presspersons that the withdrawals announced by him amounted only to Rs. 2,850 crores, merely 0.12 per cent of the budget proposals. The loss suffered by the exchequer on this account could be made good by cutting down expenditure and better fiscal management.

When it was pointed out that the budget was hard on the middle classes as indicated by his income tax (IT) proposals, Mr Sinha said it was not proper to have unnecessary focus on the plight of the middle classes. There was too much talk of the problems faced by them but no attention was being paid to the plight of the farmers, the working classes and those living in rural areas. His attempt was to bring more and more people under the IT net. Now, in a population of more than 100 crores, only 2.5 crores were paying IT. The figure was only 1.15 crores four years ago. His attempt would be to raise the number of IT assesses to five crores within the next two years.

The Minister justified the decrease in the bank interest rates on the ground that the rate of inflation had been reduced to 1.5 per cent. The system everywhere was to link interest rates with the inflation rate.

And to integrate itself with the world economy, India would have to follow international norms. In fact, the interest rates had now come down everywhere in the world.

He accepted that it was difficult to bring the non-salaried classes into the tax net. While the salaried class could be easily taxed, people earning money through other sources could not be taxed that easily.

The Centre could not bring the agriculture sector into the tax net. "Only the State Governments have the power to tax agriculture," he said.

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