The Hindu Business Line : Govt to ensure stable tax regime: Kalam <br>Growth rate pegged at 7-8 pc; FII, FDI to be encouraged

PUTTING his official seal on the broad policy framework for the United Progressive Alliance (UPA) Government, the President, Dr A.P.J. Abdul Kalam, today said that the Congress-led coalition would target an annual growth rate of 7-8 per cent backed by a massive step-up in investment in agriculture and infrastructure, even as the economic reforms would continue but with a "human face."

In his address to a joint sitting of both houses of Parliament, Dr Kalam said that the tax structure under the new Government would be "stable" and "citizen friendly" though major tax reforms would be unveiled on the way to expand the taxpayers' base and to improve compliance.

Binding the Government to a "high degree of fiscal and financial discipline," the President said that attempts would be made to eliminate the Centre's revenue deficit by 2009.

In a speech that mirrored the priorities set out by the UPA in its Common Minimum Programme (CMP), Dr Kalam said that a cess would be proposed on all central taxes to finance the commitment to universalise access to basic education.

Calling for "selectivity and strategic focus" on public sector units, the President said that privatisation would be considered on a case-by-case basis and that full managerial and commercial autonomy would be accorded to successful, profit-making companies that operate in a competitive environment. While chronic loss-making units would be sold off or closed, the President said "private industry would be inducted to turn around companies that have a potential for revival."

Stating that the capital market was reflection of the true fundamentals of the economy, the President said that the Government would remain "deeply committed" to its orderly development. While foreign institutional investors (FII) and foreign direct investment (FDI) would be encouraged, the Government would at the same time protect the interests of small investors by offering them new and safe avenues for investment.

"Public sector companies and nationalised banks will be encouraged to enter the capital market to raise resources and offer new investment avenues to retail investors," Dr Kalam said.

On the infrastructure front, he said public-private partnership would be encouraged in areas such as roads, ports, airports and railways. On the power front, the President said that private participation in generation and distribution would be encouraged along with a stepping up of public investment.

"Power sector reforms will be continued in such a way that all sections of society get quality power at affordable price," he said.

The President also stressed on reservation in private sector jobs, but only after dialogue with political parties and industry.

"The Government is sensitive to the issue of affirmative action including reservations in the private sector," he said.

Clearly hinting at the recent controversy over IIM fees, Dr Kalam said that the UPA Government "will ensure that all institutions of higher learning and professional education get back the autonomy that they enjoyed earlier."

He, however, said that poverty would not be a reason for such education being denied to anyone.

Dr Kalam said that the Government would enact a new Employment Guarantee Act with a view to providing employment for at least 100 days in a year to one able bodied person per rural family.

He also promised a "major promotional package" for the small-scale sector soon.