“The stimulus packages have helped the process of recovery significantly. But in view of need to initiate fiscal consolidation some correction was needed and that has been done. But we will not disturb the growth process till a robust recovery is in place,” he said while addressing the 82nd AGM of Fedaration of Indian Chamber of Commerce and Industries (Ficci).
On Friday, he partially rolled back cut in excise duty and increased tax on petroleum products. Investments, private and government, have been the key growth driver in the past and will continue to be for at least another 10 years, he said urging the industry to respond to the challenge.
Bullish on growth
While asserting that the budget contains several measures to boost and sustain the growth momentum he was confident that the economy would soon break enter the double-digit growth rate.
Highlighting that the fundamentals of the Indian economy remained strong and the positive aspects of the recent performance far outweighed the negatives he said “we need to pursue the factors underpinning the recent spurt in growth to quickly regain the momentum that slipped in the past year.” Turning to the sensitive issue of inflation, he said one of the major concerns for the economy was the certain persistence in the momentum of food prices, which has been in double digits for several months now, he said.
“A significant part of this inflation can be explained by supply side bottlenecks in some of the essential commodities, precipitated by the delayed and sub-normal south-west monsoons,” he added.
He also hinted that the other concern for the economy related to export performance. There are some concerns about sustaining the bounce-back seen in exports in November-December 2009 due to uncertainties about the recovery in the developed economies, he cautioned. Suggesting measures to help rapid growth of export, Mukherjee urged the need to diversify export markets.
Revised Tax Code
Later at the customary post-Budgetary interaction with trade and industry he indicated that the government would soon come out with a revised draft on Direct Tax Code (DTC), which seeks to replace the archaic Income Tax Act, 1961.“We are going through feedbacks received from various stake holders. A revised DTC will be released for seeking comments and suggestions. Then we will form the necessary legislations.” he said.
The government is likely to introduce the legislation for DTC in the Winter session of Parliament.
Mukherjee also pointed out that the GST (Goods and Sservices Tax) has taken more time because there are more actors –– not only me but 28 state governments also.”
“But we have built up a good rapport with the Empowered Committee of State Finance Ministers, which is looking into GST. We are trying to create an atmosphere, where divergence of opinions have reduced and convergence of opinions is expanding.” he said.
“Through that process, I do believe it is possible to arrive at a consensus which will help us to introduce the GST tax also. If we synchronise these, to my mind this will be the greatest tax reform in contemporary period,” Mukherjee said.