Economy has turned around: Pranab

"Perhaps, we can most humbly claim that there is a turnaround ... 7.2 per cent is not my pipe-dream, but it is reality.... The situation of uncertainty is no longer relevant," Finance Minister Pranab Mukherjee said replying to a debate in Lok Sabha on the Union Budget 2010-11.

He pointed out that khariff (summer) production was estimated to fall short by 15-18 million tonnes, but the industrial growth was into double digits for the last five consecutive months and more than 15 per cent in the consecutive two months.

The Finance Minister said the Budget proposals raising excise duty by two per cent will have some impact on inflation as it is not detachable from the overall economy.
He said the excise duty were reduced from the peak 14 per cent to 8 per cent in tranches last year to give industry a six per cent concessions as part of stimulus measures.

Likewise, five per cent customs duty on crude oil was cut to nil in June 2008 when the global rates peaked to over 127 dollars a barrel as a prelude to the stimulus package to the industry. Mukherjee said he has merely restored the duty upon recovery in the economy.

"That time, I cut excise duty to give a relief," he said while debunking charges that "aam admi" was ignored in the Budget.

"I did not opt for any shortsighted or short-term policy ... tax reforms are urgently required," he said while asking the Opposition whether the need of tax reforms was not felt by them.

On the proposed Goods and Service Tax, Mukherjee said he wanted the rates to be reduced, but base to be broadened with limited exemptions so that taxes on both goods and services remain at the same level."We have conveyed to the states to bridge the existing gap so that 28 states can arrive at consensus on excise and service tax," he said emphasising that there is need for revolutionary changes in indirect tax structure.