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|February 23, 2001||Feedback|
Reduce customs duty, cut farm subsidies, widen tax base: Survey
The Economic Survey 2000-01 tabled in Parliament by Finance Minister Yashwant Sinha on Friday, sets out a clear road map for the second generation economic reforms. It outlines a major policy shift involving, reduction in customs duty and cutting subsidies.
It calls for further reduction in customs duty to bring it to Asian levels with a view to pressuring industry and trade to increase efficiency and face competition, particularly from China.
It notes that the present customs duty rate is still the highest in the world.
Stressing the need for widening the tax base and raising tax-GDP ratio which has been falling over the years, the Survey suggests bringing services into the tax net and later integrating it with the Central Value Added Tax (CENVAT). Modernising the tax system is necessary to plug evasion.
It notes that the tax rates remain saddled with numerous exemptions, which affect efficiency of tax administration. Direct taxes, which have been lowered to internationally comparable levels are beset with exemptions, allowances, deductions and incentives to achieve a variety of social and economic objectives.
Calling for disbandment of the retention price system in fertiliser as it is ''one of the most anachronistic,'' it notes that anything between 50 to 75 per cent of the fertiliser subsidy goes to the producers.