Falling crude prices, normal monsoon to help economy: Pranab

NEW DELHI, June 4:
Pinning hopes on declining global crude oil prices and normal monsoon, Finance Minister Pranab Mukherjee today said these positive factors would help in improving growth rate, which slipped to a nine-year low of 6.5 per cent last fiscal.
“A normal south west monsoon has been predicted for 2012-13 and there has been a rapid decline in international oil prices in recent weeks…All these factors should help in the recovery of domestic growth momentum,” he said said while highlighting “positives” of Indian economy at the annual conference of CBEC.
The interest rate cycle has been reversed by the RBI and mining sector growth has turned around. Further, there has been progress in fuel linkage for power projects and improvement in investment growth rate, he emphasised.
There were no “major adverse results” on corporate performance in the last quarter of 2011-12, he added.
The Finance Minister, however admitted, that Government does not have headroom for proactive fiscal policy.
“Like for most parts of the world, the second round of global uncertainty and the slowdown has come rather quickly on the heels of the previous one, with practically no headroom for running a proactive fiscal policy,” he said.
Indian economy registered healthy growth of 8.4 per cent in 2009-10 and 2010-11, but renewed global uncertainty, emanating mostly from Euro zone area affected domestic business sentiment in 2011-12.
A tight monetary policy directed at taming inflationary pressures in the economy also came in the way of consolidating economic recovery.
GDP growth in 2011-12 has slowed significantly to just 6.5 per cent and this has been “disappointing”, Mukherjee said.
Stressing that a strong indirect tax administration was fundamental to the development of a country’s economy, Mukherjee asked the officials of Central Board of Excise and Customs (CBEC) to ensure timely collection to taxes.
“The challenges before your department today are multi-faceted… The important task before you is to ensure timely collection of all legitimate tax dues, without, of course, unduly burdening the assessee,” he said.
He asked them to sharpen their audit skills and conduct scrutiny of assessees’ records to bring to the kitty any tax that might have escaped assessment and to detect frauds which are often intelligently planned and meticulously executed.
“While the need for trade facilitation and tax payers’ satisfaction cannot be over-emphasised, any mala fide and corrupt practice to evade payment of legitimate dues, needs to be handled as per established procedure of law,” he said.
Mukherjee expressed hope the CBEC would be able to meet the indirect tax collection target for 2012-13.
“They (CBEC) have done good job last year…I am confident that the department would leave no stone unturned in ensuring that the targets for the current year are not only met but handsomely exceeded, Mukherjee said.
With Government increasing rates of both excise and service tax by 2 per cent, he said “these changes are likely to help the Department in garnering additional tax revenue”.
Indirect tax collections (central excise, customs and service tax) target for 2012-13 is Rs 4,99,694 crore, up by about 27 per cent over the previous year.
Despite a slowdown in growth and the duty cuts effected on petroleum products in June 2011, the indirect tax collection of Rs 3,92,781 crore (excluding cess) was only marginally short of the target Rs 3,94,000 crore in 2011-12.
Mukherjee also said there is an urgent need to reverse the declining trend in tax-GDP ratio by augmenting tax collections. The ratio was nearly 12 per cent in 2007-08 but has dropped to around 10.5 per cent in 2011-12. (PTI)


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