The Hindu Business Line : Chidambaram to hold pre-Budget talks from today

The Finance Minister, Mr P. Chidambaram, will kick off on Friday the customary pre-budget interactions with various interest groups of the economy. On Friday, Mr Chidambaram will meet representatives of the farm sector and also the trade unions.

The Finance Minister is likely to meet representatives of apex industry associations on January 9 next year. Mr Chidambaram's pre-budget parley with agriculturists comes at a time when agricultural growth remains subdued. Agricultural growth averaged 2.6 per cent in the last eight quarters.

Impact on GDP

The Finance Ministry has, in its recent Mid-Term Review of the economy for 2006-07, maintained that the negative impact of a subdued agricultural performance on overall GDP is not pronounced. It, however, noted that this was significant in terms of the sharing of fruits of growth with more than half of the population who directly or indirectly depend on the sector for earning a livelihood.

The Mid-Term Review has pointed out that continued growth of agriculture,

horticulture, aquaculture, floriculture, forestry, dairying and agro-processing would not be possible without significant investment in these sub-sectors of the rural economy. On an overall basis, the pre-Budget consultations are being undertaken at a time when the growth momentum in the economy is quite robust and there are signs of industrial resurgence— particularly in manufacturing.

Indications are that the issue of tax exemptions and concessions will figure prominently in the pre-budget consultations this year. Tax expenditure in 2006-07 is estimated at Rs 1,00,147 crore. The Government has, from time to time, stressed the need for removal of a plethora of tax exemptions and concessions in the context of mobilising more revenues.

The Finance Ministry has already commissioned an independent study on the cost-benefits of various tax exemptions, both on the direct and indirect tax side.