NEW DELHI: The United Progressive Alliance’s chief crisis manager Pranab Mukherjee made a compassionate plea to all political parties and states to urgently bite the bullet on fuel subsidies and urged the Opposition to help with the passage of some crucial economic laws.
He also tinkered with the indirect tax rates to cheer some sectors, including commercial vehicles, solar energy, polyester fibre, yarn from waste and certain parts of footwear, even as he expressed hope that the Goods and Services Tax could be rolled out next fiscal.
Winding up the debate on the Finance Bill, 2012 in Lok Sabha, Mukherjee also promised the House a white paper on black money in the ongoing session of Parliament itself, though he declined to reveal the names of tax evaders.
“…the government is awaiting the reports about the estimate of black money stashed abroad, which are being prepared by three independent groups,” he said on Tuesday.
In a moving speech that lasted for more than an hour, FM said the changes in indirect taxes, including rollback of excise duty on jewellery, will cost the government 600 crore.
Mukherjee warned that when the global economy recovers, crude could climb to $150 a barrel and will make things very difficult for the economy.
“If the prices go up to $150 per barrel, it is not merely my imaginary fear, what will be the effect?” he said, urging all stakeholders to help work out a solution in which everyone takes a haircut. “Partly, it will be passed on to the consumers, partly, it will be absorbed by the States and partly by the Union Government,” he said.
Rising crude imports and high gold purchases are largely the reason the current account deficit that has risen to 4% of GDP.
The inability to pass on higher prices to the consumer has pushed up subsidies and landed oil firms in trouble. Under-recoveries of oil companies are pegged at 1.39 lakh crore in the last financial year.
Finance minister also cautioned that the high fiscal deficit, 5.9% in 2011-12 and budgeted 5.1% in the current fiscal, will be a major hurdle in putting the economy back on the path to higher GDP growth.
“I do believe that if we can see just the three fiscal legislations passed, two major tax reforms passed, the entire atmosphere will be changed,” he said, seeking support from the Opposition benches.
“… I cannot get those legislations passed, I cannot have the Constitution Amendment passed where two-third majority of both the Houses and ratification by 50% states are required, I cannot have that,” he said.
Finance minister said he was ready to discuss the issue of Central Sales Tax compensation with states, but sought assurance of progress on GST.