NEW DELHI (PIB) ---The Union Finance Minister, P. Chidambaram has said that uppermost in his mind is the duty to re-gain the confidence of all stakeholders. Assuring that inflation can be moderated in the medium term; he said that the Government will work with RBI in this regard. In a statement, the Finance Minister said that a path of financial consolidation will be unveiled shortly. He made it clear that the burden of fiscal correction must be shared, fairly and equitably, by different classes of stakeholders. The Finance Minister said that the poor must be protected and others must bear their fair share of the burden. He further said that wherever required, the corrective measures will be taken in bringing clarity in tax laws, to have a stable tax regime, a non-adversarial tax administration and a fair mechanism for dispute resolution.
In a press statement, issued by the PIB,the Minister said that,“I assumed the office of Finance Minister on Wednesday, August 1, 2012. It is a position of great honour, it is
Chidambram said that the price stability is an important objective. In fact, it is more important for the poor. There has been pressure on prices, and inflation - especially food inflation - is high. The causes are well known: some are beyond our control, such as prices of crude oil and imported commodities, but some others can be addressed by determined action. We will take steps to remove the constraints on the supply side. We will also use our stocks of foodgrain to moderate prices. Where necessary, we will enhance the import of items in short supply, he added.
Non-food inflation is already declining. We are confident that inflation can be moderated in the medium term. Fiscal policy and monetary policy must point to the same direction and must move in tandem. Government will work with the Reserve Bank of India to ensure that inflation is moderated in the medium term.
The key to restart the growth engine is to attract more investment, both from domestic investors and foreign investors. Since investment is an act of faith, we must remove any apprehension or distrust in the minds of investors. We will improve communication of our policies to potential investors. The aim will be to remove the perceived difficulties in “doing business in India”, including fears about undue regulatory burden or regulatory over-reach. Indian companies, especially public sector enterprises, which have large cash balances will be encouraged to restart investment. Proposals pending with the Foreign Investment Promotion Board will be processed and decisions taken expeditiously, he said.
Regarding tax administration in the country, the minister said that, clarity in tax laws, a stable tax regime, a non-adversarial tax administration, a fair mechanism for dispute resolution, and an independent judiciary will provide great assurance to investors. We will take corrective measures wherever necessary. We have recently appointed two Committees, one to examine GAAR legal provisions and guidelines and the other to review taxation of the IT sector and Development Centres. I have also directed a review of tax provisions that have a retrospective effect in order to find fair and reasonable solutions to pending as well as likely disputes between the Tax Departments and the Assessees concerned. With these measures, and some other measures that we hope to take in the short term, it is our intention to raise the level of investment to 38% of the GDP that was achieved in 2007-08.
The Finance Minister said that, a high level of savings is a pre-condition to a high level of investment. In 2007-08, savings touched 36% of GDP. It is now down to 32% of GDP. One of the reasons may be a perceived lack of attractive investment opportunities and instruments. Hence the attraction of gold, but gold is not a productive asset and the demand for gold worsens the current account deficit. Both the mutual fund industry and the insurance sector have turned sluggish. In the next few weeks, we will announce a number of decisions to attract more people to invest in mutual funds, insurance policies and other well-designed instruments.
Manufacturing and exports are two key drivers of the economy. Both have registered low or negative growth in recent months. It is imperative that we reverse this trend. Supply side constraints upon manufacturing and exports must be removed in double quick time. We intend to work with manufacturers and exporters and implement appropriate short term and medium term measures, he said.
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