Dividends, capital markets issues to be addressed: Singh
Tuesday, 04 March 2003, 20:30 IST
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NEW DELHI: Finance Minister Jaswant Singh indicated Saturday issues relating to the capital markets and taxation of dividends could be readdressed. "If capital gains tax were lifted and all the gains in the hands of investors for the last four to five years were dumped in the Indian capital market, it would have further depressed the market," he asserted. He was addressing an interactive meeting organised by the Federation of Indian Chambers of Commerce and Industry (FICCI) a day after presenting the federal budget for 2003-04 to Parliament. Singh's remarks were perhaps a reaction to the lukewarm response from Indian capital markets to his budget proposals. Singh announced Friday equities bought after March 1 and sold after one year would be exempt from capital gains tax. The proposal, to be in force till the next budget, is expected to facilitate investment in equities. Stressing that as finance minister, he was responsible to small investors, Singh said the issues related to capital markets "can be readdressed when the war like situation resolves and circumstances become conducive". He held a series of events had "transpired at the same time" to increase the challenge of managing the country's economy. "I have on my hand a set of circumstances in the managing of the country's economy which are a challenge," "We have a drought that is unprecedented for the last many decades. There is a war-like situation in the Gulf. Hydrocarbons have crossed $35 dollars a barrel. A recalcitrant neighbour that continues to trouble... Terrorism continues to afflict.....That all of them should transpire at the same time is a challenge in the management of the country," maintained Singh. As for capital markets, Singh asserted they were not immune to global conditions and changes. "Indian capital markets are not independent of global circumstances and markets. What happens in global markets directly affects Indian markets." On the proposal to exempt recipients but tax corporates for distribution of dividends from April 1, Singh justified this by saying it was easier to collect tax at one source rather than from thousands of recipients. On the industry plea against continuation of a 12.5 percent dividend distribution tax on domestic companies, Singh said: "We will take up the issue". The budget-making excise, said Singh, is not just about revenues but understanding the political environment with the underlying philosophy of citizen's interest. The philosophy behind the 2003-04 budget is to "convert the liability of want (afflicting one-third of the population) into an asset of ability," he said. Underlying this is the thrust given in the budget to manufacturing, infrastructure, agriculture and research, Singh held. "Let it not be assumed that India will only convert its strength into service industry. We recognise the need to simultaneously address the manufacturing sector."
Source: IANS
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