Basu denies dilution in recent policy decisions

New Delhi: Amid the Prime Minister’s Office seeking clarifications from the Finance Ministry on tax matters, including retrospective amendments, Chief Economic Advisor Kaushik Basu today said there has been no dilution in any of the recent policy decisions.

“I don’t think that any policy step (of recent months) has been diluted,” he told reporters at a function here.

“The message we were giving actually for last couple of months, including during the time when Pranab Mukherjee was the Finance Minister, is the same message, that we want this industry to do well and we want to be as cooperative as possible,” he added.

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Yesterday, PMO had asked the Finance Ministry to clear the air on contentious tax proposals, including retrospective amendment of the I-T Act which required Vodafone to pay of Rs 20,000 crore in taxes and interest.

The PMO, meanwhile appears to have distanced itself from the General Anit-Avoidance Rules (GAAR) draft guidelines posted by the Finance Ministry yesterday saying that were not seen by Prime Minister Manmohan Singh and would be finalised only after his approval.

Retrospective amendments to tax laws and GAAR provisions introduced by the then Finance Minister Pranab Mukherjee through the Budget led to widespread criticism from both domestic as well as global investors.

GAAR implementation, which has been deferred by one year to April 2013, is aimed at checking tax evasion.

On the performance of the economy, he said it is expected to rebound from October.

He also said the government was working to remove “trust problems” with the industry.

“We are hopeful that economy is going to bounce back within 4-5 months. I mean its October. Before that I can’t realistically say that there will be an improvement, but October onwards,” he told reporters at the ‘Statistics Day 2012’ meet organised by the government.

He also said that inflation, which is hovering at over 7.5 percent, will start moderating from September onwards.

Basu further said, “We want to work hand in hand with the industry. There is element of trust problem between industry and government that has happened. Over the last several months we were trying to correct it and we will try to correct this as much as possible in the coming months.”

Basu further said that while economic growth will pick up any way, “if we can together a couple of reforms” things would speed up.

“We have been stressing that we will have to get a couple of reforms in place for which the big stumbling block has been getting all the political parties in the coalition together.

So that we have been working,” he added.

Without specifying about the reforms, Basu just said “these have been part of government agenda for the last 2-3 months”.

His comments come amid hectic activity to spur the economy following Prime Minister Manmohan Singh’s taking charge of the finance portfolio after Pranab Mukherjee resigned this week to contest presidential election.

PTI