Industry & Economy
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Budget
Economists for lowering customs duties
Our Bureau
New Delhi
,
Jan. 12
ECONOMISTS have urged the Finance Minister, Mr P. Chidambaram, to reduce the peak rate of customs duty from the existing 20 per cent to 5 per cent over a four-year period.
In their deliberations with Mr Chidambaram, as part of the latter's pre-Budget consultation exercise here on Wednesday, they also suggested that capital account convertibility be `considered' in the current context, where the country's foreign exchange (forex) reserves have crossed $130 billion.
The other proposals that were discussed at the meeting included the use of forex reserves as a `comfort' mechanism for financing infrastructure projects, which, it was felt, could trigger off positive multiplier effects. The economists added that in the recently announced National Rural Employment Guarantee Act, the wage rate payable to beneficiaries should be set below the minimum wage rate, so that there is no distortion in the labour market.
Besides these, the economists also proposed the reduction of personal income tax rates and the removal of exemptions, a single uniform value-added tax rate, the integration of Central value-added tax with service tax and a change in tax treatment for voluntary contributors to the Employees Provident Fund.
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