The Hindu Business Line : Funding of social, infrastructure sectors

Left party leaders Mr Prakash Karat, Mr D. Raja and Mr A.B. Bardhan, coming out after placing a Budget wish-list with the Finance Minister, Mr P. Chidambaram, in the Capital on Tuesday. — Kamal Narang

New Delhi , Feb. 1

MAKING out a case for deficit financing for increased expenditure on social and infrastructure sectors, the Left parties today urged the Finance Minister, Mr P. Chidambaram, to reintroduce the earlier structure of capital gains tax and to generate additional revenue by levying new corporation taxes and Customs duties while at the same time doing away with corporate tax exemptions.

Placing a wish list for the forthcoming Budget during a two-hour-long meeting, the Left parties urged the Finance Minster not to proceed with the proposal to increase FDI in private banks to 74 per cent.

Mr Chidambaram was also asked to put on hold the divestment of shares in profit-making public sector undertakings, including the proposed equity sell-off in BHEL.

The parties said that the Government should not "unilaterally proceed" with mergers in the nationalised banks and that before doing so, the trade unions must be taken into confidence regarding the plans.

"The Government should honour the commitment made in the common minimum programme (CMP) that profit-making PSUs will not be privatised. Keeping this in view, there should be no divestment of shares in PSUs such as BHEL," they said in a 12-point wish list handed over to Mr Chidambaram.

Speaking to Business Line after the meeting, senior CPI leader Mr D. Raja said that the Finance Minister gave the Left leaders a patient hearing and promised that the Government would look into their demands.

Apart from Mr Raja, senior left leaders who attended the meeting included the CPI General Secretary, Mr A.B. Bardhan; CPI (M) Polit Bureau member Mr Prakash Karat; the Forward Bloc General Secretary, Mr Debabrata Biswas, and RSP leader Mr Abani Roy.

On capital gains tax, the Left has said that the need to restore long-term capital gains tax was because of the recent "tribulations arising out of speculative activities in the stock market".

"Long-term capital gains tax should be to be reintroduced given the fact that the turnover tax (securities transaction tax) introduced in the last Budget was eventually diluted."

It has also been suggested that an ad valorem tax on all foreign exchange outflows be introduced "which would not only generate revenue but also stabilise `hot' money flows into our economy and provide some protection against capital flight."

On Customs and excise, the parties said: "Duties should be revised wherever such imbalances exist which put domestic manufacturers in a disadvantageous position."

On expenditure for social and infrastructure sector, they suggested that there should be an increase of Rs 50,000 crore in the Central plan outlay in the Budget in order to meet CMP commitments.

"The resources required for the increased expenditure can be mobilised through deficit financing in view of the significant unutilised capacity existent in various sectors of the economy."

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