By IANS,
New Delhi : Finance Minister P. Chidambaram Tuesday announced several measures to calm prices, imposing export duties on steel, cement and basmati rice and lowering tariff on some raw materials, even as he extended the fiscal sops for software firms by a year more.
Delivering the concluding speech on the Finance Bill, 2008 – which was later passed by the Lok Sabha – the finance minister made import of pig iron, mild steel products and semi finished products duty free against the current tariff of five percent.
He also imposed an export duty of Rs.8,000 per tonne on basmati rice, scrapped import duties on zinc and metallurgical coal and levied a 12 percent duty on cement costing Rs.250 per bag and higher.
“Despite the fiscal steps taken by us, some sectors like steel continued to exhibit sharp increase in prices. It contributed 21.3 percent to the overall inflation,” he said.
He also announced that the software technology parks scheme of 1999 that gave tax holiday on profits earned from exports by Indian information technology firms was being extended by a year. It was scheduled to expire March 31 next year.
The finance minister’s steps came against the backdrop of India’s central bank Tuesday hiking the cash reserve ratio – the minimum liquidity banks have to maintain – by a further 25 basis points to 8.25 percent from May 24.
The move is aimed at contracting money supply to tame price rise, that has pushed India’s annual rate of inflation to 40-month highs of 7.33 percent for the week ended April 12.
Earlier Tuesday, Prime Minister Manmohan Singh had blamed the diversion of food grain for producing fuel and high crude oil prices globally for rising inflation in India, and hoped a normal monsoon would salvage the situation.
“The world economy has not done enough to address the challenge of price rise,” the prime minister told the national conference and annual session of the Confederation of Indian Industry (CII) here.
“The diversion of land from food crops to biofuels, and the increasing use of available food grain and vegetable oil for the production of biofuels, have contributed to the rise in food prices,” he said.
“A measure of sobriety in corporate lifestyles and compensation can also help cut costs and maintain the price level. This is what I mean by the tightening of belts. It helps your firms, it helps the consumer.”
In his speech, Chidambaram sought to allay fears over food shortage and said food production in the country had touch record levels and that 13.4 million tonnes of wheat and 22.9 million tonnes of paddy had already been procured by the government this year.
“Procurement will exceed the target.”
Speaking about the overall revenue situation, he said India’s tax collections had gone up impressively despite cuts in excise and income tax rates. Along with the expansion of taxpayer base, there had also been an upswing in compliance, he said.
“Due to this, far more money has been given to the states. More money will be allocated in the final supplementary than was budgeted.”
When opposition members and the Left parties demanded more money for health and education, the finance minister said: “If you ask whether the expenditure on health will reach six percent – the answer is yes. Has it reached? No.”
The finance minister maintained that the subsidy on foodgrains, fertilisers and fuel should continue but the entire burden could not be thrust on the budget. “Subsidies are rising but that decision has to be taken collectively.”