Wednesday, Feb 02, 2005
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By Our Special Correspondent
Left party leaders, D. Raja, A. B. Bardhan, Devarajan, Prakash Karat and Debabrata Biswas addressing the media after calling on the Finance Minister, P. Chidambaram, on a pre-budget meeting at North Block in New Delhi on Tuesday.
NEW DELHI, FEB.1. The Left parties today asked the Union Government to withdraw the tax exemptions for the corporate sector as a measure to mobilise resources and suggested a hike of Rs. 50,000 crores in the budget so that commitments made in the Common Minimum Programme (CMP) could be implemented. In a pre-budget meeting with the Union Finance Minister, P. Chidambaram here, leaders of the Left parties said the hike was necessary as the allocation of Rs. 10,000 crores for employment generation, agriculture, education and health in last year's interim budget was ``inadequate.'' The parties suggested stepping up of public investment in agriculture for rural infrastructure and irrigation, phased increase in public spending on education and health in order to meet the targeted 6 per cent and 2 to 3 per cent of the Gross Domestic Product respectively in the next five years. Of the increased allocation, Rs. 20,000 crores was to support the National Rural Employment Guarantee Programme, and an additional allocation of Rs. 8000 crores each for education and health. They also suggested that the Defence outlay, which saw a hike of Rs. 12,000 crores last year, be brought down and disagreed with the move to set up a fund from disinvestment proceeds to make investments in the social sector. As a measure to augment resources, the parties said increased expenditure could be mobilised through deficit financing since there was ``significant unutilised capacity'' existent in various sectors of economy. The Government had ``tied its hands'' in running a budget-deficit economy by sticking to the Fiscal Responsibility and Budget Management Act ``which has institutionalised conservatism in fiscal policy making in the country by imposing unwarranted constraints on the capacity of the Central Government to run a budget deficit even when idle resources exist in the economy,'' the Left parties said in a 12-point note submitted to the Government. They pointed out that gross tax revenue of 9.21 per cent of the GDP in 2003-04, was low and suggested an increase of tax-GDP ratio by around 1.5 per cent which would be sufficient to meet the additional development expenditure. Further on tax, they said besides doing away with corporate tax exemptions, a specific target should be fixed for realisation of tax arrears and recovery of non-performing assets of banks, review the whole gamut of export incentives/duty drawback in view of the comfortable foreign exchange position and introduce ad valorem tax on all foreign exchange outflows which would not only generate revenue but also help stabilise `hot' money flows in to the country's economy. Other suggestions included introducing a system of variable tariffs to protect crops such as cotton, soya, sugarcane and groundnuts that experience wide fluctuation, revising custom and excise duties whereever imbalances exist and put domestic manufacturers in a disadvantageous position, restructuring custom and excise duties of petroleum products and bringing down the eligibility limit for mega power projects to 250 megawatts. The parties reiterated that profit-making public sector undertakings must not be privatised as per the CMP commitment. The meeting was attended by the Communist Party of India (Marxist) Polit Bureau member, Prakash Karat, its Rajya Sabha MP, Dipankar Mukherjee, CPI general secretary, A.B. Bardhan and the party's secretary D. Raja, All India Forward Bloc general secretary, Debabrata Biswas and its secretary G. Devarajan and Revolutionary Socialist Party Central Committee member, Abani Roy.
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