'Clogging up of bills delaying reforms'

NEW DELHI NOV. 13. The Planning Commission Member, N.K. Singh, today said the clogging up of economic bills in Parliament was coming in the way of reforms and higher foreign investment inflows into the country.

Addressing a seminar organised by the Federation of Indian Chambers of Commerce and Industry (FICCI) here, Mr. Singh said the economy was likely to grow at a rate of 5.5 to 6 per cent this fiscal and the 8 per cent growth target of the Tenth Plan seemed achievable but would require deregulation of the economy and other reform measures, which would ensure the desired higher level of growth.

Mr. Singh, however, cautioned the Government about the slow pace of reforms mainly on account of the delay in the passage of important economic bills, including the Fiscal Responsibility Bill, the Convergence Bill and the Banking Companies Bill, aimed at diluting the Government stake in public sector banks to 33 per cent along with those aimed at deregulation of ports and the electricity sectors.

"Reforms seem to have run out of steam. There is a huge clogging up of legislative agenda. Important bills have been introduced in Parliament but are languishing for 12 to 18 months,'' he said.

Moreover, the Government was yet to take any decision on amending labour laws even after the second report of the Labour Commission had made some forward looking recommendations.

Mr. Singh blamed the slow pace of reforms as the main factor that was deterring higher inflow of foreign direct investment.

The Finance Secretary, S. Narayan, said the Government would provide a "safety net" to compensate the States for any revenue loss that might occur with the implementation of the value added tax system from April 1, 2003. "In case the States lose out (with the implementation of VAT), there will be a mechanism to compensate the loss of revenue, he added.

Singling out multiplicity of taxes as a major reason for the tax structure not being transparent, Dr. Narayan said that arbitrariness would get largely eliminated with the implementation of VAT all over the country. On incentives for investment, he said the tax system should be competitive and certainly not an incentive to investment as experience had shown that such incentives had not helped in boosting investment.

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