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Economists differ on duty sops

January 09, 2004 08:46 IST

Leading economists in the country have taken divergent views on the excise and customs sops announced by the Centre in its Mini-Budget on Thursday.

Terming the measures as "positive development", ICRA chief economist Saumitra Chaudhury told PTI that it would help the domestic economy to integrate globally and curb inflation besides enhancing the merchandise trade, thereby easing pressure on rupee.

However, B B Bhattacharya of the Institute of Economic Growth wondered on the "special" necessity of bringing these measures on the eve of Budget and said it would add to the already soaring fiscal deficit.

But Chaudhury had a different view that these measures would not be any financial burden on the exchequer since the trade would increase and accordingly the revenues would also go up, hinting a kind of vote-on-account.

Indicating that political motivations might have prompted the Centre to cut the customs and excise duties, Bhattacharya said these measures would certainly benefit the middle class and cited the would be cheaper commodities like cellphones.

On the direct tax front, he said the salaried class and pensioners would benefit as they need not go through the cumbersome drill of filing Income-Tax returns.

"It is more of a feel good for the middle class," he said.

Upendra Das of Research and Information Systems said the move would create a feel good factor and result in containing inflation.

He said it would particularly benefit lower income group apart from boosting travel.

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