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India sees turnaround of economy this year
Publication Date : 12-06-2012
Putting up a brave front amid a depressing economic scene, the Union finance minister Pranab Mukherjee said the Indian government is taking steps to put economy back on the high growth path.
He also sought to dispel fears that the GDP may slip below 6.5 per cent and maintained that 2012-13 would be the turnaround year for the economy.
“We are taking all necessary steps to ensure that we come back to the path of the targeted GDP (gross domestic product) growth. Of course it will take some time... but from this year we expect to make a turnaround,” Mukherjee told a conference of top officials of the income tax department here. After the 2008 economic crisis, the GDP growth slipped to 6.7 per cent in 2008-09, but bounced back to 8.4 per cent in the following two financial years, he said.
Focusing on the plus side of the economy, Mukherjee said interest rate cycle has been reversed and there is growth in the mining sector, turnaround in investment growth rate and there are predictions of normal monsoon, besides decline in crude oil prices. “All these factors should help in recovery of domestic growth momentum,” he said.
On direct tax collection target of 5.70 lakh crore for the current fiscal, Mukherjee said it was achievable. “I do feel this target is moderate and can be achieved,” he said while asking the tax officials to work “relentlessly” to improve tax collection. (one crore is equivalent to 10,000,000)
In 2011-12, direct collection at 4.95 lakh crore was marginally down from the revised target of 5.05 lakh crore. Mukherjee said while renewed growth momentum will help improve direct collection, there are several challenges before the I-T department.
He expressed concern over the decline in tax-GDP ratio and asked the officials to reverse the trend. The tax-GDP ratio has dropped to 10.5 per cent in 2011-12, from 12 per cent in 2007-08.
Mukherjee said the Direct Tax Code (DTC) Bill will be introduced in Parliament in the forthcoming monsoon session and would be effected from next fiscal. “I am hoping that DTC will be effective from April 1, 2013,” he said, adding that the time has come for the I-T department to prepare itself for the transition from the Income Tax Act, 1961 to the new direct tax regime.
The department has been striving to check the menace of black money and tax evasion, which eat into the vitals of the economy and pose threats to national security through linkages to money-laundering and terrorism, he said. He said the government has commissioned a study on unaccounted income and wealth and it is likely to be completed in September. Also, a report of a committee on strengthening of existing laws relating to black money is being examined by the government.
“I hope that these two studies will help in identifying the gaps in present legislative and administrative framework and shall help us in checking the menace of black money through an effective policy response,” Mukherjee said.
He also said introduction of the Benami Transactions (Prohibition) Act, 2011, currently being scrutinised by a parliamentary standing committee, will further help in “our resolve to reduce the menace of black money”.