The Hindu : National : Swamy flays tax hike in service sector

Online edition of India's National Newspaper
Saturday, Jul 10, 2004

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National

Swamy flays tax hike in service sector

By Our Special Correspondent

CHENNAI, JULY 9 . The Janata Party president, Subramanian Swamy, today criticised the Finance Minister, P. Chidambaram, for raising the taxes on the service sector, which was the "main engine of India's economic growth today."

Reacting to the budget, he said the Minister had failed to make any provision to promote the modernisation and globalisation of the sector, such as allowing foreign direct investment in retail and insurance. The budget did not have the much-needed boost for infrastructure investment. Also, there was no scope in the allocations to raise domestic investment to accelerate the growth rate. The budget had a huge primary deficit in the current account that was covered by cutting development outlay thus making for an equivalent capital account surplus, "which is a retrograde move." The Government had pre-empted bank financing of private investment by requiring that 50 per cent of the bank deposits be reserved for Government current expenditure. "Hence to call it `growth-oriented budget' is absurd," he said in a statement.

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