Budget 2013-14 will bring more people under the income tax net and keep fiscal deficit within 5.3 per cent of GDP, said finance minister P Chidambaram to international investors in Hong Kong.
The message, finance ministry officials hoped will also convince the global rating agencies to not only maintain India’s investment status but also to push it up soon.
The minister also said India has buried the “ghost” of GAAR the general anti-avoidance rules in tax policies that had led to a short term flight of capital from the country.
Chidambaram asserted that there is no threat of a rating downgrade in view of key economic decisions like allowing FDI in multi-brand retail and hiking of fuel prices including diesel.
“I must get more and more people into tax net, even if they pay small amount of taxes. More and more people must pay tax,” he told reporters after addressing an investors conference. According to him the fiscal deficit will be contained within the targeted 5.3 per cent of the GDP this fiscal and trimmed to 4.8 per cent in the next.
Growth which is likely to end this fiscal with a 5.7 per cent rate is expected to climb to 6-7 per cent in the next fiscal, he said.
The investors meeting ‘India for Investment’, which was closed to the media was hosted by Citibank and BNP Paribas. After the meeting a note issued by Citibank said the finance minister had told investors that his tax regime would be stable.
Also in a reference to the budget the minister said the governments’ policy “will and should be biased towards the poor, (yet) the Budget will offer a lot”.
The minister is slated to meet investors in a similar meet in Singapore on Wednesday.
About GAAR the minister told PTI in an interview: “There is universal acknowledgment we have handled it fairly effectively and buried the ghost.
He also said the concerns of the investors about the rating downgrade has been assuaged. “I think the steps we have taken assured everybody that there will not be a rating down grade. They were concerned about our ability to stay the course after we announced the decisions. They are happy we stayed the course after announcing the plan to allow FDI in multi-brand retail.”
On Monday, the Foreign Investment Promotion Board approved the plan of Ikea to set up single brand retail stores in the