Finance minister P Chidambaram on Thursday said that the argument for taxing the very rich "a little more" should be considered, fuelling speculations about steps he may take in the budget to boost tax inflows and narrow a widening fiscal gap.
"I believe in stable tax rates. However, I
must concede that there is an argument, underline the word argument, that when the economy requires, when the government requires more resources the very rich should willingly pay a little more," Chidambaram told CNBC TV18 in an interview.
"That is not to say that tax rate should not be stable. I think we should have stability in tax rates but we should consider the argument whether the very rich should be asked to pay a little more on some occasions," he added.
However, he hastened to add, "but that is not a view I am expressing. That is simply an argument that I have heard and I am repeating."
The finance minister said tax rates that were announced in 1997 (in the Budget he had presented then), have remained and have survived four governments and four finance ministers.
Several experts including C Rangarajan, chairman, Prime Minister's Economic Advisory Council, have underlined the need for imposing higher rates of taxes on the super rich.
On the budget to be presented next month, he said it is not drawn up keeping an election in mind. "The election is 14 months away from the budget. The budget will be a responsible budget."
Referring to the issues concerning a falling rupee, Chidambaram said there was a need to address underlying causes like fiscal deficit, inflation and exports as they influence the strength of a currency.
"And we must find a way to shrink the current account deficit and that can only happen when exports improved dramatically", he said in another interview to Bloomberg TV.
The government, he added, has been taking steps to promote exports and moderate demand of gold with a view to deal with the problem of rising current account deficit (CAD). On the threat of downgrade of India's sovereign rating by global agencies, Chidambaram said the situation has considerably improved in last four-five months and there was no case for downgrade.
The economic fundamentals of India are quite strong, the minister said, adding "it is just that we may have stumbled a bit, the perception of India may have taken a turn for the worst. But once you pick yourself up and keep moving forward and correct the perceptions, much of the concerns about downgrade would melt away."
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