FM gung ho on 9% GDP growth

Crude oil prices are a big concern for govt

“We can and we shall (achieve nine per cent GDP growth),” Mukherjee said while replying to debate on General Budget in Lok Sabha. “...In the year which we are coming to an end (GDP) is 8.6 per cent. And therefore if I project that my GDP growth will be 9 per cent, the figure is credible”, he said.

Crude prices has become a big concern for the government as it is over $100 a barrel, mainly driven by political unrest in the Middle-East, first in Egypt and now in Libya. The pre-budget economic survey tabled in Parliament also projected the real GDP to grow by 9 per cent (+/-0.25) in 2011-12.

As per the CSO data, Indian economy is estimated to grow by 8.6 per cent in the current fiscal. Indian economy seems to have reverted to the high growth trajectory as can be seen by the 8.9 per cent growth registered in the first half of the current fiscal.

Helping hand

However, as per the latest CSO data, in the third quarter (October-December), the country’s Gross Domestic Product (GDP) grew at 8.2 per cent.

The Indian economy had grown at a rate above 9 per cent for three consecutive years, starting 2005-06, before the global financial meltdown brought it down to 6.8 per cent in 2008-09.

In order to help the industry tide over the impact of the global financial crisis, the government came up with three stimulus packages giving up about Rs 1.86 lakh crore in revenue. The stimulus packages, which included tax cuts and raising public expenditure, helped the Indian economy to recover fast. In the last fiscal, Indian economy registered a growth rate of 8 per cent.

Medical services tax

Meanwhile, under fire for proposal to tax ‘high-end’ medical services, Mukherjee said he is examining various suggestions and would respond later.

“Since the presentation of the budget 2011-12, I have received several suggestions and representations, including valuable feedback from members (MPs) on taxation proposals. These are under examination,” he said further stating that he would respond to the issues in his reply to the discussion on the Finance Bill 2011, later during this session.

Mukherjee is expected to reply during the discussion on Finance Bill in Lok Sabha on March 22. His proposal to impose 5 per cent service tax on services provided by centrally air-conditioned hospitals of 25 bed or more, evoked sharp reaction from the medical community with doctors describing the levy as “misery tax”.

Besides, Mukherjee’s proposal to levy Minimum Alternate Tax (MAT) on Special Economic Zone (SEZ) units and developers was criticised by the industry.

Finance ministry officials have also said the government has received a lot of representations on service tax on health care and is again looking at the proposal. Mukherjee’s direct tax proposals for 2011-12 are estimated to result in a revenue loss of Rs 11,500 crore, while the proposals relating to indirect taxes are likely to yield an additional revenue of Rs 11,300 crore.