Govt divided over continuance of fiscal stimulus package

Govt divided over continuance of fiscal stimulus package
The Hindu Business Line, January 7, 2010, Page 18

Our Bureau, New Delhi

Opinion is divided in the Government over the continuance of the fiscal stimulus beyond March.

Top Finance Ministry officials seem to be in favour of a partial withdrawal while other ministries and the Planning Commission do not want excise cuts to be reversed.

Fresh indication of this divide came today when the Finance Secretary, Mr Ashok Chawla, said at a FICCI meeting that “too much of stimulus when the body is getting healthy is injurious to health”.

This remark has triggered speculation that the industry demand for continuation of fiscal stimulus till September may not find favour with the Government.

Meanwhile, Mr Chawla told reporters on the sidelines of the FICCI meeting that consultations on the new direct taxes code have been completed.

“The architecture will now be finalised by the Revenue Department. Once the Finance Minister and policymakers give the green signal, it will be sent to the law ministry for drafting of the bill,” Mr Chawla said.

Indications are that the bill for the new direct taxes code is unlikely to be introduced in Parliament in the first phase of the upcoming budget session.

The Finance Minister, Mr Pranab Mukherjee, had recently met the Prime Minister, Dr Manmohan Singh, on the issue of new direct taxes code. A presentation was made by the Finance Ministry on the proposals of the new direct taxes code, it is learnt.

Already India Inc has opposed certain proposals in the code like levy of minimum alternate tax on gross assets basis. There is also demand from certain quarters that the exempt-exempt-tax system should not be introduced for taxation of savings.