Processing .....please wait.. 
The article has been forwarded.... 
Jaswant Singh for cutting subsidies, taxing more services
Thursday, 07 November 2002, 20:30 IST
NEW DELHI: Even as India's economic reforms falter, Finance Minister Jaswant Singh Thursday envisaged sweeping tax reforms that aim at slashing subsidies and taxing more services.
Essentially, what he aims to do is to correlate the contributions of various sectors of the economy with the taxes they pay - in economic terms, the tax to GDP ratio.
"I absolutely have to improve the tax GDP ratio, but can't do it through expropriation and, therefore, I have to move into a far more modern tax system," Singh told the Business Standard newspaper in his first extensive interview after assuming office in July.
Thus, while the agricultural sector contributes 25 percent of the GDP, it is outside the tax net. Similarly, a host of services are still not being taxed.
Admitting that the slashing of subsidies and bringing rich farmers and farm income of non-agriculturists under the tax net was a "political minefield", Singh asserted: "I have to reduce the purely political element and convince others about the benefits of such measures for the economy."
The interview coincides with the beginning of the exercise for drawing up the federal budget for fiscal 2003-04 that will be presented on February 28.
To make the process more transparent, the finance ministry has posted on its Web site reports of expert panels on reforms in indirect and direct taxes to elicit the views of citizens.
Singh held that to improve revenue generation, "I can't depend on taxes only on (the) manufacturing (sector). Therefore, service tax (in more sectors) has to come in."
As a first step, Singh has already discussed the issue with the states in a bid to bring down their huge fiscal deficit.
The finance ministry has already moved an amendment to article 269 of the constitution for consideration in the next session of Parliament beginning November 18 to enable the states directly tax services.
Stating that "gross national contentment is my aim", Singh has proposed the possible elimination of a cascading effect of taxes and for taxes that are self-enforcing.
"In the case of direct taxes, we need to look at an alignment between what we do on corporate tax and personal tax rates," Singh maintained.
Singh also broke his silence on the privatization of public sector companies, which has gone off-track due to opposition within the ruling federal coalition.
"Disinvestments are a part of the reforms program. It must continue. I am confident the current debate is not within the National Democratic Alliance (alone). It is a debate within Indian politics."
At the same time, he admitted that India's target of netting 
120 billion through disinvestments this fiscal was unachievable.
"The target of 120 billion would have been difficult to fulfill even otherwise," he maintained.
On stepping up investment in infrastructure, Singh clarified that money would not be a constraint for projects that achieve their physical targets.
Singh also defended India's target of eight percent economic growth in the next five years as against the current 5-5.5 percent growth.
"I don't see how it is overreaching. China has demonstrated that growth," he maintained.
Source: IANS
120 billion through disinvestments this fiscal was unachievable.
"The target of 120 billion would have been difficult to fulfill even otherwise," he maintained.
On stepping up investment in infrastructure, Singh clarified that money would not be a constraint for projects that achieve their physical targets.
Singh also defended India's target of eight percent economic growth in the next five years as against the current 5-5.5 percent growth.
"I don't see how it is overreaching. China has demonstrated that growth," he maintained.
Source: IANS