PMEAC for hike in duties; return to fiscal discipline
Projecting over eight per cent economic growth next fiscal, the Prime Minister's economic panel on Friday pitched for raising duties in the Union Budget 2010-11 as part of the roll back of stimulus measures.business Updated: Feb 19, 2010 15:58 IST
Projecting over eight per cent economic growth next fiscal, the Prime Minister's economic panel on Friday pitched for raising duties in the Union Budget 2010-11 as part of the roll back of stimulus measures.
"Partially, we need to roll back (stimulus) and if you partially roll back.... there is one possibility that you
unify both the rates (excise and service tax) at 10 per cent (and also raise both rates) to 12 per cent," Prime Minister's
Economic Advisory Council member Govinda Rao said here, but clarified it was not a suggestion to the Finance Minister.
He was speaking after release of the Economic Review by PMEAC chairman C Rangarajan.
Expressing concern over rising fiscal deficit, which is estimated at 6.8 per cent this fiscal, the panel said it was
crucial to cut down on spending to bring in fiscal discipline.
"There is a case for adjustment of duties...adjustments are possible both on the revenue and expenditure side in order
to bring down fiscal deficit," Rangarajan told reporters.
As part of the stimulus given to the industry to combat the global financial crisis in late 2008, the government had
reduced the excise duty from 14 per cent to 8 per cent and service tax from 12 per cent to 10 per cent.
This pushed fiscal deficit up to 6.2 per cent in FY'09 and it is expected to touch 6.8 per cent of GDP in FY'10.
The PMEAC said growth in FY'10 would beat 7.2 per cent and exceed 8 per cent next fiscal, and 9 per cent in the year
after that. On inflation, the PMEAC suggested import of 3-4 million tonnes of sugar to meet domestic shortfall next