The Hindu Business Line : Jaswant traces taxation glitches to economic ills

FORMER Union Finance Minister, Mr Jaswant Singh, has said that taxation glitches have contributed to discards in certain sections of the economy which made people wary on taking profits `today itself' and not wanting to invest for the future.

In the same breath, he also cautioned the domestic industry remaining too content with the earnings made out of low-end of technology leaving their full potential of enterprise untapped.

Addressing a joint meeting of members of the Southern India Engineering Manufacturers Association (SIEMA) and Institute of Company Secretaries of India here on Thursday, Mr Jaswant Singh cited instances involving at least two or three sectors as illustrations to his above arguments - plantation, cotton textile and the small industries.

"Plantation industry began milking the sector without investing for the future forcing the BJP Government to institute a Rs 500-crore price stabilisation fund, while taxation benefits made the SSIs to remain perpetually as SSIs.

"In the case of cotton textiles, the cotton yarn exports, mainly to China, has denied the opportunity to add value to the country's textile sector as in effect we only export the raw material to China," he said.

He agreed to the suggestion from one of the SIEMA members that the severe raw material price fluctuation witnessed in the manufacturing industries was due to the aberration in the taxation policy related to the customs and excise duties which need to be addressed.

However, Mr Singh admitted that investment in certain areas of strategic interests sensitive to larger sections of citizens needs to be carefully looked.

"Investment in countries such as the US in areas like media or television companies by other than natural US born citizens is not possible. Similarly in India, sectors such as agriculture can't be just treated as mere agriculture. It is a way of life and granting FDI in agri land, hence, will be totally incorrect," Mr Singh added