Chidambaram vows helping hand to growth laggards

NEW DELHI: After announcing a slew of measures in the Budget to boost the manufacturing sector, finance minister P Chidambaram on Monday said the government was prepared to intervene further in sectors in which growth was flagging. In the case of two-wheelers, a segment which has sought further reduction in excise duty, he promised to keep a close watch and ���respond appropriately���.

Addressing industry leaders, the FM emphasised the ���basic philosophy��� of the Budget will stay. He said the government was ready to revisit the Budget proposals if anything had crept in inadvertently.

���We are not infallible. There is always scope for correcting something which has come in inadvertently. But there is no case for revisiting the philosophy of the Budget,��� Mr Chidambaram said at a post-Budget interactive session with industry chambers here.

He said the focus on agriculture was deliberate and the loan waiver provided to farmers was very much warranted as it was necessary to boost farm production to ensure the country does not have to rely on imported foodgrain.

���One of the reasons why inflation is still a threat is food prices in India. After a long gap, India has become a marginal importer of foodgrain, which is a dangerous omen. Because we are dependent on import, we are subject to world prices. No country with as large a population as India can be dependent on foodgrain imports,��� he said.

���Taking all this into consideration, we came to the conclusion that farmers��� distress calls for an unorthodox response. The response was the farm loan waiver,��� the FM said. He added that it was not the first time a government was waiving farm loans.

Mr Chidambaram said inter and intra-regional differences were widening and more farmers had slipped out of the credit system.

Refuting the charge that he had ignored the corporate sector, he said, ���I have not forgotten the corporate sector. Despite the advice by my chief economic advisor and the suggestion in the Economic Survey, we accepted your demand to retain the peak Customs duty rate.��� He said excise cuts and relief given in personal income-tax would help spur demand for consumer goods and benefit the industry.

Two-wheeler manufacturers including Bajaj Auto and Hero Honda used the platform to urge the finance minister to cut excise duty further to enable them to compete with small car makers. Responding to demand from the industry for encouragement of two-wheeler exports, the minister said the government refunds excise duty on exports and would expedite reimbursements.

On amending the law to provide income-tax exemption only to genuine charitable organisations, the finance minister said those entities providing service in relation to any trade, commerce or business would not be exempted as it was not Parliament���s intention. The intention was to provide tax sops to charitable institutions and not to entities carrying out commercial activities like Gujarat Maritime Board or port trusts as has been held by courts.