Financial Daily from THE HINDU group of publications
Tuesday, Dec 10, 2002

Port Info

Group Sites

Industry & Economy - Taxation

Rising tariffs are pushing up cost of capital: Kelkar

Our Bureau

Dr Vijay Kelkar, Advisor to the Finance Minister, with Mr Suketu Shah, Chairman, CII, at a national conference on `Strengthening of Capital Markets' in Mumbai on Monday.

MUMBAI, Dec. 9

MAKING a pitch for his report on reforms in taxation, Dr Vijay Kelkar, Advisor to Union Finance Minister, today recounted the rationale behind the many changes proposed in the current tax structure.

To an audience comprising mutual fund managers, investment bankers and the odd financial analyst in a CII-organised conference on `Strengthening of capital markets', Dr Kelkar said one of the main reasons for the cost of capital being high was rising tariffs, especially import duties. "We are in a unique situation where the current account is a surplus and at the same time, investments are declining. Cost of capital and business has gone up due to high tariffs and with high transaction costs, sectors such as textile industry have been affected," he said.

The economy could save Rs 5,000 crore annually through reforming systems and reduction in transaction costs, he said.

On direct taxes, Dr Kelkar said that the incentives increased interest rates. "What is micro rational has become macro irrational. One must understand that exemption Raj would be beneficial to certain `lobbies' only," he said.

Reiterating the need for transparency in the tax system, Dr Kelkar said with transparency, the compliance rate would be far higher culminating in increased revenue generation.

The task force would work on the feedback from the industry in the next few days and present revised reports to the Union Finance Ministry.

Send this article to Friends by E-Mail
Comment on this article to

Stories in this Section
`Speed, transparency vital for arbitration'

Sweeping oversight?
Environment status report for AP
DEPB credit to be granted on f.o.b. value
Indirect tax liability — 100% foreign arms can seek advance ruling
Hotel sector revenue sharply down: Survey
No time-frame set for BPCL, HPCL sell-off
HPCL, BPCL call striking LPG transporters for talks
Power crisis likely to worsen in Kerala
Rising tariffs are pushing up cost of capital: Kelkar
India, UAE hold talks on action against Anees
It's quality vs quantity at business schools
Karnataka: More allocation for education mooted
Tractor cos to arrest decline by stopping advance selling
Stagnant consumption worries fertiliser industry
Minister for industry, varsities synergy
Geo-tech meet begins in Hyderabad today
Maritime institute not part of SCI bid offer
Funds for Kannadigas planned
Water wash
Kerala Govt seeks Rs 1,035-cr drought relief
Kerala tops tourism growth rate worldwide
Festival to package Chennai for tourists

The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | Home |

Copyright 2002, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line