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Sunday, Mar 10, 2002

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Dividend tax stays: Sinha

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NEW DELHI, March 9

AFTER having acted tough against the attempts of corporates to pay interim dividends before March 31, the Government has made it clear that there will not be any relaxation of the law on this front.

Speaking on the sidelines of a conference on globalisation here on Saturday, the Finance Minister, Mr Yashwant Sinha, said the Government is firm on the stand it has taken regarding interim dividend. There will not be any relaxation, he added.

Coming down heavily on corporates for trying to circumvent the law to avoid dividend tax, Mr Sinha said, "Again they have come out in very poor light after they declared such huge dividends. What is the meaning of this? Maybe, after this they will not declare any dividend in the next four years."

He said the 26 per cent cap would be retained in the insurance sector. The Government is looking at finalising FII investment limits in other sectors such as telecom.

Mr Sinha said the Government would follow a cautious approach on capital account convertibility. "India has followed a cautious approach as far as capital account convertibility is concerned. We will continue this policy,'' he added.

While expressing concern over the mounting fiscal deficit, he said that the strength of the economy was on the strong macro-economic fundamentals.

"A large fiscal deficit has the problem in spilling over to the external sector and creating a balance of payments crisis.

"The largest import bill is in the petroleum products and increase in prices of petroleum products has the potential of disturbing the external balance,'' Mr Sinha said.

The Minister said that countries like Brazil and Argentina had good forex reserves but still ran into a crisis.

"While poverty elimination would be our main goal, we must manage our affairs and also learn to make sacrifices. Those who do not learn to make sacrifices will be heading towards the door of IMF,'' he said.

Unlike Pakistan, Sri Lanka and Bangladesh, India was in a commanding position, as it no longer takes loans from the IMF.

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