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“We’ll maintain batting average”

— Photo: Kamal Narang

Explaining the budget: Finance Minister P. Chidambaram addressing the post-budget press conference in New Delhi on Friday.

NEW DELHI: In a stout defence of his budget proposals for the new fiscal, Finance Minister P. Chidambaram on Friday said the package as a whole would stimulate investment and thereby higher economic growth.

Referring to the credit facilities for farmers, Mr. Chidambaram, in his post-budget comments here, said: “Credit is only one element of the story in the farm sector. I provided more credit. Budget can only address credit side ... the farm sector has not done too badly this year.”

On the other exemptions and relief provided to various sections, he said: “This budget will stimulate investment and growth and that growth will create wealth ... the economy is growing by eight per cent, people have become more tax compliant and they are willing to pay taxes.” This led to buoyancy in the government’s revenues, he said.

Later, at the customary press conference, Mr. Chidambaram noted that the tax exemptions would leave more money in the pockets of consumers and thus stimulate industrial growth within three-four months.

The government would maintain “batting [an] average of 8.8 per cent GDP growth for this fiscal.”

Alongside, while the economy would benefit in both cases — “if he [taxpayer] saves or buys consumer goods,” the corporate sector would also benefit from the hike in demand for consumer goods such as cars, two-wheelers and other industrial items. He refuted the suggestion that the corporates felt ignored. “What else they need? ... We have not imposed any burden on them.” On the contrary, they would stand to benefit from the changes in the dividend distribution tax, the fringe benefit tax, TDS on corporate bonds and also outsourcing of research and development.

As for the stock market, Mr. Chidambaram said the hike in short-term capital gains tax from 10 to 15 per cent would not affect investors who made investments for more than a year. In fact, it would prompt others to hold on to their investments for longer periods, thereby bringing about market stability.

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