The Hindu : Front Page : Manmohan hints at tax, labour reforms

Online edition of India's National Newspaper
Sunday, Dec 25, 2005

Front Page

Front Page

Manmohan hints at tax, labour reforms

Special Correspondent

"We are on the threshold of the Asian Century"

NEW DELHI: Prime Minister Manmohan Singh on Saturday nudged India Inc. to adopt a forward-looking approach in preparing for global competition and leverage opportunities for targeting a 25-35 per cent share of manufacturing sector in national income as he promised a new surge in investment, improvement in tax administration and labour reforms for grater flexibility.

He was speaking at the 78th Annual General Meeting of the Federation of Indian Chambers of Commerce and Industry here.

"We will continue to do whatever is needed to remove the constraints of domestic enterprise. We are in exciting times. We are on the threshold of the Asian Century. We will work with you and walk with you in this journey of creativity and enterprise," Dr. Singh said.

With "very positive" business confidence being reposed in the economy, he said the decade ahead must be turned into one of investment to convert the nation into a first rate agricultural, industrial and service economy.

The Prime Minister said the Government would be mindful of the interests of domestic industry even as the economy integrated with global business. And while encouraging enterprise and creativity and reforming the public sector, modifications would be made in the labour policies, if required, through consensus generated by stakeholders, he said.

Social welfare legislation must go hand in hand with labour market flexibility, he said. "This will help increase employment while taking care of employees' concerns."

Referring to concerns voiced by outgoing FICCI chief O. S. Kanwar about tax laws and tax system, he said the country had moved towards lower tariffs, uniform tax rates and easier procedures. Over the next year tax administration would be improved, making interface with the tax system as pleasant, smooth, problem-free and conducive to easy tax compliance.

Expressing satisfaction over the progress of the VAT system, Dr. Singh said revenues had been buoyant setting at rest worries about its feasibility.

"We need to move towards greater rationalisation of VAT and CENVAT rates, and most importantly, towards a common goods and services tax. This would enable, in the final analysis, India into becoming a genuine common market, a dream of the founding fathers of our Republic", he said, hoping that it would happen in the next 3-4 years.

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