Finance Minister Pranab Mukherjee on Tuesday said the government was in no position to concede the Opposition demand for a rollback in the hike in customs duties on crude and excise duties on petrol and diesel and hoped to bring the Direct Tax Code before Parliament in the monsoon session.
“Sorry it is not possible, the situation is very difficult…hope for better days to meet your request,'' Mr. Mukherjee said, replying to a discussion on the Finance Bill, which was considered and returned by the Rajya Sabha marking completion of the budget exercise.
The Finance Minister said the Centre could have increased the prices through the Administered Price Mechanism and retained revenues but decided to include it in the Budget and share it with the States.
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He said accepting the recommendations of the 13th Finance Commission without any changes meant an outgo of Rs. 9,000 crore, for which provision had been made in the budget.
As for the indirect taxes, he said the matter would have to be discussed with the States and promised to provide compensation at the initial stage for loss in revenues after States switch over to the Goods and Service Tax.
On the issue of bringing back money stashed away in safe havens, the Finance Minister said he was negotiating arrangements with Switzerland, Bermuda and Bahamas while discussions were on with 75 other countries. At present, India had Double Taxation Avoidance Treaty with 78 countries.
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Defending his approach of fiscal conservation against theories of development versus deficits, Mr. Mukherjee said he did not want any repeat of a situation when the Finance Minister had to wait on his counterparts of other countries just for a “few million dollars'' or having to mortgage the country's gold to tide over a difficult situation.
While emphasising he was not blaming the then Finance Minister, Mr. Mukherjee said, in order to send a signal that the country had adequate foreign exchange reserves, he asked the Reserve Bank of India to buy 200 tonnes of gold when the International Monetary Fund decided to sell it. “We could buy gold because of fiscal prudence and management.''
Countering criticism that growth in GDP meant nothing for the poor and the hungry, he said, it translated into loan waiver for farmers, Rs. 26,000 crore scholarships and NREGA.
However, being sensitive to the plight of the poor, who suffer more on account of food inflation, the government decided to provide them with food grains at subsidised prices but said the responsibility of running a public distribution system had to be with the State Governments.