The Hindu Business Line : No extra burden on corporates: Chidambaram

`DIS-INFATIONARY': The Union Finance Minister, Mr P. Chidambaram, and the Finance Secretary, Mr Ashok Jha, at the post-Budget press conference in the Capital on Wednesday. — Kamal Narang

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New Delhi Feb 28 The Finance Minister, Mr P. Chidambaram, on Wednesday said that the Budget proposals has placed "no extra burden" on the corporate sector and that most of the fiscal measures adopted are "dis-inflationary" in nature.

Addressing a press conference after presenting the Union Budget for 2007-08, Mr Chidambaram also said that the economy was expected to grow by close to 9 per cent during the forthcoming fiscal.

"There is no sign of investment boom slowing down. If the current growth trend continues, I expect close to 9 per cent growth for 2007-08. Every effort would be made to ensure that investment activity does not peter out," Mr Chidambaram said.

The country's GDP is estimated to grow by 9.2 per cent in fiscal 2006-07.

Asked whether measures such as increase in dividend distribution tax (DDT) paid by companies and imposition of fringe benefit tax (FBT) on employee stock option plans (ESOPs) would hurt corporate sentiments, Mr Chidambaram replied in the negative.

"No extra burden has been put on corporate sector. We have done nothing to hurt the growth story of Indian industry and services. The growth story is intact," he said.

On the Budget announcement regarding use of "small part" of forex reserves for infrastructure, Mr Chidambaram said that in the initial year the amount used for the purpose would be about $5-6 billion.

"The country's forex reserves stand at $180 billion. The use of $5-6 billion out of the reserves for financing of infrastructure would be a major move forward," he said.

On the issue of reduction in ad-valorem component of excise duty on petrol and diesel from 8 to 6 per cent, Mr Chidambaram said that the duty cut would result in a revenue loss of Rs 2,700 crore to the exchequer.

He made it clear that this cut was not intended to bring about future price reduction in petrol and diesel.

"On February 15, when we cut the prices of petrol and diesel by Rs 2 and Re 1 respectively, I had agreed that revenue will share part of the burden. This cut in duties is for that," he said.

On the issue of inflation, he said that the Budget seeks to address supply side concerns by increasing production and productivity of farmers while adopting disinflationary measures in terms of cut in duties.

"The fiscal measures are indeed disinflationary. In the long-run, the best way to fight inflation is to increase supply," he said.

Asked whether the Budget estimates of Rs 1,30,220 crore for 2007-08 on the excise front was "ambitious", given that the Government has fallen short of the target once again, Mr Chidambaram admitted that excise duty continues to pose issues for the Government.

"That one tax (excise duty) is a troublesome tax. I am confident that we will meet next year's target as e-filing and e-payment of excise duty would be mandatory above a particular level," Mr Chidambaram said.

As against the Budget estimate of Rs 1,19,000 crore for 2006-07, the excise duty collections, according to revised estimates, has been pegged at Rs 1,17,266 crore. Even last year, the Government had fallen short of its target.