Pranab defends hike in tax rates

Says Centre is doing its best to spur development

Addressing reporters here on Friday, Mukherjee said, the distribution of money allocated for developmental activities by the Centre to states was not being properly utilised or channelled.

“The centre allots huge money for the states but at the end of the fiscal year, it is often noted that money is not used properly. Any finance minister would like to see the proper utilisation of money that he allots. There is no logic of saving money to reduce the fiscal deficit. To reduce the fiscal deficit, the taxes should be increased,” he added.

Fiscal policy
According to him, the central government has been doing its best to propel developmental schemes despite global inflationary trends. “A good financial policy aims at reducing the misuse of money flowing in an economy. However, there is no point in saving money for carrying out development activities. Otherwise, it affects the government rather than helping it,” he argued.

In such a scenario, increasing food prices have posed a challenge to Prime Minister Manmohan Singh and triggered public protests in the backdrop of highly insufficient rainfall. Hence, it is critical to monitor the progress in the agricultural front. Fuel price rises are expected to push up monthly price inflation by 0.9 percentage points, government officials have said, exacerbating headline inflation that stood at a surprisingly high 10.16 per cent in May.

Earlier, data showed the food price index rose 12.92 per cent in the year till June 19, lower than the previous week’’s annual rise of 16.90 per cent. The fuel price index climbed 12.90 per cent compared with last week’s annual rise of 13.18 per cent.
DH News Service