New Delhi, Feb. 24
THE Left parties on Thursday again pressed the Union Government to consider their proposals for the coming Budget, including an increase of Rs 50,000 crore in the Central Plan outlay to meet the commitments made in the Common Minimum Programme. There was reiteration of the demand to meet the increased expenditure through deficit financing and an increase in the tax:GDP ratio by around 1.5 per cent.
The occasion for the interaction was the Left-UPA coordination committee meeting here this morning at the Prime Minister's official residence. Emerging from the meeting, the CPI(M) politburo member Mr Sitaram Yechury told mediapersons that the Left parties had emphasised that "the thrust of the reforms must shift towards people's welfare rather than capitalist profit and this shift, hopefully, will be reflected in the Budget."
The Finance Minister, Mr P. Chidambaram, who also addressed the media, said the Government had greatly benefited from the discussions with the leaders of the Left parties on a 12-point note that was submitted a few weeks ago. Both leaders declined to go into details, citing "budgetary secrecy."
Among the proposals submitted by the Left parties is the suggestion to bring down defence spending and raise resources through taxation or by running a budget deficit. Other suggestions were for doing away with corporate tax exemptions, setting specific targets for realising tax arrears and recovery of banks and financial institutions NPAs and a review of the whole gamut of export incentives in view of the comfortable foreign exchange reserves. However, introduction of an ad valorem tax on all foreign exchange outflows has been suggested in order to help generate revenues and also to stabilise `hot money' outflows.
The Left parties also wanted the Budget to make provision for recapitalising cooperative banks and recommended the setting up of an agri-risk fund, which would negotiate the risk of banks lending to the agriculture sector.
The Left parties also emphasised that the salaried class should not be subjected to any additional income tax burden.