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HindustanTimes Sun,28 Dec 2014

Chat PN Vijay
PTI
March 01, 2003
First Published: 18:35 IST(27/2/2003)
Last Updated: 12:59 IST(1/3/2003)

vinita: What do you think of this year's budget?
PNVijay: This is an excellent budget. It will provide impetus to growth and also provide considerable incentives to the middle class.

laughingbuddha: With so many sops who do you think will foot the bill?
PNVijay: There are not that many sops as you think. The total revenue that is being given away in the form of reliefs is around Rs. 2,900 crores. The additional tax that will be collected is about Rs. 3,200 crores. So, there is no reason for anybody to foot any bill.

res4nkg: How do you think it will affect the stock market?
PNVijay: The stock market has got a bonanza from this budget. Tax on dividends has been totally removed in the hands of investors. Long-term capital gains, i.e., on shares kept for more than one year, is totally tax-free. So, this is really excellent for the capital market. However, there are many factors that influence stock markets. And budget proposals are only one of them.

ramesh: Why were Kelkar committee recommendations ignored in this budget?
PN_Vijay: That is not true. Kelkar Report had three segments - Reform in tax administration, Direct Taxes and Indirect Taxes.

sunita: What kind of suggestions had you personally made for the budget and which ones have been implemented?
PN_Vijay: Most of the recommendations on tax reform and indirect taxes have been accepted. The Rajnath Singh Committee, of which I was a member, had made certain suggestions to the Government. Apart from this, based on representations received from various bodies, we had given some suggestions to the Finance Minister (FM). I am happy to say that practically all our suggestions have been implemented.

smita: Is Prime Minister's target of 8% growth achievable by this budget?
PN_Vijay: Why not? If China and Thailand can do it, so can India. I expect agriculture to grow at 3-4%, industry at 8% (up from 6.1%) and services at 10% (up from 8%). This will give us a growth rate of slightly over 8% in 2003-04.

ray_of_light: There have been many TV reports of traders protesting against introduction of Value Added Taxation (VAT). Can you please throw some light on the whole issue? What difference will VAT make to traders?
PN_Vijay: VAT is a modern concept which has been accepted by more than 120 countries. Today, there are several local taxes and this leads to confusion for the customers and harrassment of the traders. Once things are explained properly to them, they will be happy at the switch over. One thing is certain - unscruplous traders cannot charge sales tax from the customers and keep it in their pocket any more.

res4nkg: Which sector has maximum benefit?
PN_Vijay: Maybe some of them are finding this source of revenue gone! I should say that infrastructure, followed by textiles and tourism got maximum goodies.

kajal: Why has there been an increase in service tax?
PN_Vijay: While manufacturing sector pays excise duty of around 16%, the service sector is paying only 5%. Further, many services are not taxed at all. So, it is but fair that gradually excise duties should be brought down and service tax increased.

sunita: Why have recorded audio cassettes been fully exempt from excise duty?
PN_Vijay: Remember, 50% of the GDP is from services. With the spread of education, audio cassettes is now just like tooth paste. It is good that the FM has removed all taxes. The younger generation should be delighted.

sangeeta: Why are Indian budgets always deficit based? Can't we have a surplus in any budget?
PN_Vijay: Most countries in the world have deficit budgets.

suresh: How can the FM plan a second green revolution by increasing the prices of fertilizers?
PN_Vijay: In a developing country like India, Government has many social commitments and this leads to deficits. In the first Green Revelution,we acheived food security by increasing production of rice and wheat. In the second Revolution, we will make India a global power in fruits, vegetables and flowers. What agriculture needs today is value-addition, where the benefits are far higher than increase in input costs.

cool_kadir44: How can we achieve a higher growth rate?
PN_Vijay: This budget should spur industrial growth, which should also help the service sector which depends on industry. All this should lead to greater GDP growth.

khalid_mirza: Which all shares will see a rally?
PN_Vijay: I see a rally in shares connected with textiles and tourism and also in bank stocks due to interest rate cut. IT sector will witness buying because of continuence of Sections 10A and 10B.

walli: What do you think of the budgetary consessions to pharma and biotech companies?
PN_Vijay: Excellent! Biotech is not brought on par with IT for all tax reliefs. Sorry, biotech is NOW on par with IT.

randhawa: What is the fiscal deficit situation currently and how is it affected by the budget?
PN_Vijay: The budget envisages the same level of fiscal deficit at around 5.5 - 5.6%. I personally believe it will be less, since experience has shown that whenever industrial growth picks up, there is tax buoyancy.

quizzer: Around 24% of the budget out-go is for payment for the interest, how much does the government owe and to who all?
PN_Vijay: The total debt stock of the Government is in excess of Rs. 2,50,000 crores. Most of this interest is paid to banks, PFs, insurance companies which hold government securities.

sonia: The budget seems to be received quite well by everyone. On what ground have other political parties critisized the budget?
PN_Vijay: I suppose it is the dharma of the opposition parties to oppose!

nisha: What is the role of the Parliamentary Standing Committee (PSC) in budget approval?
PN_Vijay: Frankly, it would be good if economic issues are discussed without political hang-ups for the larger good of the country. PSC's role is not much. In the case of the Union Budget, the government keeps getting feedback and incorporates suggestions that is in agreement with.

jasmine: What will be the role of the Serious Frauds Office (SFO)? Will it help in countering the various stock market scandals?
PN_Vijay: That's the whole intention. Right now, there is no focussed attention on big economic crimes. The SFO will address this.

ishita: Why isn't the budget process made more transparent and with consensus of other political parties?
PN_Vijay: Good question! At least you will agree that this year it has been much more transparent!

reena: What changes are implemented in the Dividend Tax structure?
PN_Vijay: From now on, investors will not pay any income tax on their dividend income. Companies paying dividend will have to pay a tax up to 12.5%.

uppal: What are the debt swap schemes with states?
PN_Vijay: Simply put, the centre will allow pre-payment of high-cost loans which is has given to the states. The centre will then give lower cost loans. The loss for the centre is Rs. 81,000 crores.


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