Economic Advisory Council asks govt to set feasible targets

NEW DELHI: The high-powered think tank appointed by the PM, the Economic Advisory Council (EAC), is expected to recommend measures to widen the tax net and examine the impact of a shift from the ad valorem duty structure to specific duties for taxation in the petroleum sector.

It is also likely to suggest measures to curb the existing price ‘volatility’.

The reconstituted EAC, which had its first meeting today, has advised the government to set feasible targets and will meet the FM before the budget is finalised. Council chairman C Rangarajan said the body discussed the price situation, taxation, the employment guarantee scheme and external sector developments.

“The council discussed all relevant issues of taxation,� he said. The panel discussed both tax reforms at the Centre and VAT at the state level, set to be introduced from April 1, ’05.
Characterising the price situation as volatile, the council took up the efficacy of the anti-inflationary measures and the efficiency of indices to measure inflation.

The EAC was set up by Manmohan Singh on December 29 to carry forward his reforms agenda. Its mandate is to advise the PM on economic developments, monitor trends on a regular basis and suggest suitable policy response.

Mr Rangarajan said the panel would come up with a monthly report to be submitted to the PM. He said the EAC today discussed developments in the external sector besides ways to strengthen the implementation of the National Employment Guarantee Scheme. But the use of forex reserves for financing infrastructure development, did not figure in today’s meeting.

Mr Rangarajan ruled out the possibility of the overlapping of functions with that of the MoF and Planning Commission. He said the council’s role is only to advise and keep in touch with concerned ministries. The EAC includes former director of DSE Suresh Tendulkar, vice chancellor of JNU GK Chadda, NIPFP director Govinda Rao and Icra chief economist Saumitra Chaudhuri.