Duty on cotton textiles & articles reduced from 4% to nil

24 Feb '09

5 min read

Following are the extracts from the reply of Finance Minister, Shri Pranab Mukhejee on Interim Budget 2009-10, in Lok Sabha, here:

“My friends from the other side have raised a number of issues. They have blamed the UPA Government for failure on the economic front, on the performance of the public sector, on employment generation, inflation, on fiscal deficit, plight of farmers, FDI and inadequacies of our regulatory framework. They have also pointed towards the “lost opportunities” in my Interim Budget speech.

Let me turn to some figures that tell their own story. A look at the comparative annual average figures between the two periods shows:

The GDP growth rate which was 5.8 per cent during 1999-2004 rose to 8.6 per cent during the 2004-2009.

The fiscal deficit and revenue deficit that stood at 5.5 per cent and 4.0 per cent respectively during 1999-2004 declined to 4.1 per cent and 2.5 per cent during 2004-09.

The Tax to GDP ratio went up from 8.8 per cent during 1999-2004 to 11.1 per cent during 2004-09, while the Savings to GDP ratio which was 25.6 per cent in 1999-2004 shot up to 34.8 per cent during 2004-08.

Similarly, Investment to GDP ratio at 25.2 per cent during 1999-2004 went upto 35.9 per cent during 2004-08.

The Government's policy on disinvestment does not envisage any outright or strategic sale of a Central Public Sector Enterprise (CPSE). The focus of the policy is to enable unlisted and profitable CPSEs to raise capital through Initial Public Offerings (IPOs) with the Government offering a minority shareholding for divestiture. The intent is to ensure that Government equity remains above 51% and Government retains management control. However, because of the adverse market conditions during the year 2008-09, there has not been a single IPO and nor has there been any disinvestment.

The UPA Government is making all possible efforts to turnaround the loss making Central PSE's like Indian Telephone Industries (ITI) through the infusion of funds and superior techno-managerial practices.

It is important to recognize that the Union Budget statement is just one of the instruments for addressing economic policy concerns. Indeed, right from the day when the financial crisis erupted in the middle of September 2008, the Government has been alert and responsive to the fast changing developments. Government has undertaken the required administrative and fiscal measures in tandem with the monetary policy initiatives of the RBI by announcing two stimulus packages on December 7, 2008 and January 2, 2009.

A number of Tax and other fiscal measures have been undertaken. These include:

• An across the board cut in CENVAT by 4 percentage points benefitting all sectors;
• Reduction of the rate of duty on cotton textiles and textile articles from 4% to Nil.
• Provision of additional funds of Rs.1100 crore to ensure full refund of Terminal Excise duty/CST.

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