Roll back protectionist tariffs to avoid disaster: Chidambaram
Former finance minister P Chidambaram has made out a strong case in the Lok Sabha for a
rollback of some of the protectionist tariffs and savage excise duties proposed in the Union Budget to avoid an economic collapse.
Taking part in the Budget debate, he feared that some of the taxation and fiscal proposals of Finance Minister Yashwant Sinha
could lead to double-digit inflation and a smaller growth rate of the economy.
Chidambaram warned that the economic sanctions could jeopardise the World Bank and other multilateral finaces with serious consequences for the private sector and developmental
projecs in the states.
To salvage the situation, he wanted the finance minister to urgently send strong signals for attracting foreign investments.
He felt that the Budget had nothing to attract such investments.
Chidambaram pointed out that investment, rather than spending, was the key to economic growth and wanted measures to prop up more domestic and foreign capital.
He said the special duties proposed to
protect the domestic industry was unnecessary as the value of rupee had already depreciated more than 11 per cent when the new government
took over.
The latest erosion in rupee value and the special duty in the Budget would provide the Indian manufacturers almost 40 to 45 per
cent price protection cover.
This, Chidambaram pointed out, could make Indian industry sluggish and rely solely on domestic selling.
He said even Confederation of Indian Industry has now realised the catch and sought withdrawal of this protectionist
cover.
He found the finance minister's move for a Rs 90 billion resource mobilisation through ''savage taxation'' unprecedented in the last
10 years.
He warned that the government's move to allow a free fall of the
rupee value against dollar could trigger a repayment crisis. He
wanted the finance minister to specify the extent of the rupee
depreciation the government would permit.
Chidambaram forecast hard times ahead for the economy
and asked the finance minister not to miss great opportunites to
turn poor India to a prosperous one. He said the Indian economy
was ''fundamentally strong but structurally weak'' and sought
supportive measures from the finance minister.
He had a word of praise for the finance minister for
continuing several of the pervious government schemes. New programmes
like the one for watershed development deserved
congratulation from all sections of Parliament, he added.
UNI
Budget '98
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