Abstract:
In this paper we will discuss the pre-budget talks between the Finance Minister, Mr P. Chidambaram, and the Economic Advisory Council Chief. Several proposals had been given to the Finance Minister. We will highlight on that as well.
The pre- budget discussion between Finance Minister of India, Mr P. Chidambaram, the Civil Aviation Minister Praful and the Chairman of the Economic Advisory Council to Prime Minister, C Rangarajan,
took place on the 16th January 2008.
After the meeting, it is learnt that Mr Rangarajan asked for an indirect tax moderation and Mr Patel requested the Finance Minister to reduce the Aviation Turbine Fuel taxes.
According to Rangarajan, the economy will grow at a rate of 8.5% in this year, but he also suggested that the government ought to take several initiatives to moderate the taxes so that the demand for consumer durables can be fulfilled.
The discussions mainly focussed on public investment, that is, if or not the public investment could be raised through some changes in the indirect taxes on consumption goods, to accelerate the economic growth.
Mr Patel further opined that the Finance Minister should enlist the Aviation Turbine Fuel in the category of declared goods. Moreover, he wanted a waiver on the service taxes for business class.
He argued that through these changes, the airlines will be able to reduce the airfares and provide some extra benefits to the passengers. However, presently the Aviation Turbine Fuel tax lies between 8% to 38%.