Mumbai:
Finance Minister Yashwant Sinha has ruled out any further
excise cuts in the next Union Budget,
reasoning that the industry does not pass the benefit
of the cut to the consumer.
Sinha was responding to a request made by the Federation of Chambers
of Commerce and Industry (Ficci) to cut excise duty in the next
Budget. He was delivering the inaugural address at the Ficci-organised
sixth international conference on Emerging Horizons in the Indian
Insurance industry.
Citing an example he said in the last Budget, he had reduced excise
duty on automobiles to 32 per cent from 40 per cent, but the industry
responded by hiking prices instead of cutting them. Will one person
here assure me that prices will be brought down in the wake of the
excise cut last year? He chided the industry saying that in such
situations the industry should not try and make a fast buck. Moreover
the government, too, fails to collect the targeted tax resources as
volumes fail to pick up due to higher prices.
Sinha also refused to float another amnesty scheme or a voluntary
disclosure scheme on the lines of Voluntary Disclosure of Income
Schemes 1997-98. Such schemes are the biggest disincentive to
honest taxpayers and Im not sure whether such schemes are
successful in generating the desired resources.
Sinha refuted the industrys suggestion that amnesty schemes
resulted in generating large resources, which in the present situation
could find their way into the housing and construction sectors.
Sinha refused to give in to the industrys suggestion
that the FDI limit in the insurance sector be raised beyond
the current 26 per cent. It is for the industry to perform
first and then ask for further concessions.
Sinha
referred to the insurance sector as the touchstone,
or the yardstick, for economic reforms in the country, and said the
success of the second-generation reforms in the country depends pretty
much on what India made of the insurance sector.
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