Drought or not, Pranab sees 6% GDP growth

NEW DELHI: The economy will grow by more than 6% and there is no need to press the panic button despite a fear of drought and the decline in the sowing of the kharif crop such as rice, finance minister Pranab Mukherjee said on Tuesday.

He said a contingency plan is in place to cope with the situation. The met department on Monday forecast the monsoon season will bring only 87% of the rains. The 6%-plus growth is in line with RBI���s projection for the current fiscal. ���There���s no point in pressing the panic button.

This country managed the century���s worst drought in 1987. We transported drinking water through railways. We organised fodder for the cattle. This country has the experience of handling the situation,��� he said at the annual conference of chief commissioners and directors general of Income Tax. The 1987-drought had affected over 6,500 villages and 1.4 million hectares of land, with rainfall deficit estimated at over 19%.






Of the 604 districts that India has, 161 districts were declared drought-hit as per the government records quoted by the finance minister.....���The monsoon situation is still erratic...161 districts have been declared drought-prone.��� Because of deficient rainfall, the kharif crop sowing would be down by 20%, he said.

The government has already stepped up efforts to buy more sugar, banned the export of wheat and restricted rice shipments. ���Fortunately, Punjab and Haryana have extensively used the ground water. In Bihar and certain other states, there are shortfalls,��� Mr Mukherjee said. He was also confident about surpassing the direct tax collections target of Rs 3.7 lakh crore for 2009-10. Incidentally, the internal target of the Central Board of Direct Taxes for the current fiscal has been raised to Rs 4 lakh crore.

���Given the likely impact on government finances due to an unanticipated drought, I will like to suggest a further upward revision in the direct tax collection target to Rs 4,00,000 crore,��� he said.

The finance minister emphasised that tax laws should be simple, stable and robust. ���Tax rates should remain moderate and multiplicity of taxes, tax exemptions and deductions should be gradually phased out to improve tax compliance,��� he said. The government is taking a major step forward in direct tax reforms by formulating a new Direct Taxes Code, to be put in the public domain on Wednesday.