The Hindu : Punjab must take bold steps: CII

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Friday, Feb 20, 2004

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Punjab must take bold steps: CII

By Our Staff Correspondent

CHANDIGARH, FEB 19. To radically improve the fiscal situation, the Punjab Government must brace itself for bold measures including full engagement in the debt swap programme with the Central Government, implementation of VAT, rationalisation of stamp duty, implement user charges and discontinue fiscal concessions and subsidies to attract investment.

This was recommended by the Confederation of Indian Industry (CII) in its Pre-Budget Memorandum for the year 2004-05 to the State Government. The memorandum was formally presented to the State Government's Principal Secretary (Industries & Commerce), S C Agrawal, and Secretary (Finance), Ravneet Kaur, at an interactive session at the headquarters of the CII (Northern Region) here this morning.

According to a CII communication, the memorandum expressed concern over the increasing debt burden, whose percentage of the Gross State Domestic Product (GSDP) had increased from 45.35 per cent in 2001-02 to 47.85 per cent in the last financial year.

In the 2002-03 revised estimates, nearly 23 per cent of revenue expenditure is being spent on interest payments. Capital receipts are being utilised to cover some part of revenue expenditure, leaving meagre resources for investment in other areas. Expenditure on economic services had decreased from 18.1 per cent in 1999-2000 to 15.6 percent in 2002-03, while the expenditure on social services had gone down from 26.6 to 24.4 per cent during the same period.

The memorandum conveyed that tax revenues rose by 19.2 per cent in 2002-03 in comparison to 22.4 per cent in 2000-01. Pointing towards the need for a greater attention on revenue mobilisation, CII proposed concrete and detailed planning to increase tax collections. In particular, the implementation of VAT from April 1, 2004 would be a significant taxation reform measure.

The memorandum sought that (Local Area Development Tax) LADT should be "VATable'' not only for raw materials, but also for all types of inputs including consumable items, packing materials, oil & lubricants, dyes and chemicals and capital goods and parts thereof. The LADT should not be applicable to those units, which are located outside the Octori limits.

Earlier Chairman of CII's Punjab State Council, S K Rai, in his remarks mentioned that through this Pre- Budget Memorandum, CII has emphasised on the development of various sectors like agriculture, infrastructure and urban sector industry, which would ensure a balanced growth of the State economy.

Mr. Agrawal, in his remarks informed the industry that the State Government had sent proposal for Central Government's approval regarding issuance of tradable bonds to industry in lieu of sanctioned subsidies. He also sought industry feedback on strengthening the single window scheme by the State Government.

On the issue regarding revival of Punjab State Electricity Board, Mrs Ravneet Kaur informed members that the State Government was in the process of appointing Ernst & Young as their consultants for financial restructuring of the Board.)

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