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Jaswant flip-flop on textile levy

New Delhi, April 23: After urea, it’s now the turn of textiles. Finance minister Jaswant Singh today announced what tantamounts to a roll back on another budget decision.

A decision to bring the entire powerloom and hand-processed yarn and fabric sectors into the Cenvat net was virtually rolled back today with Singh telling an all-party meeting that manufacturers of excisable goods need not register themselves with tax authorities. He is also exempting traders and dealers of yarns and textile fabrics from this necessity. Saree traders and powerloom owners had been up in arms against the move as registration meant compulsory payment of central excise tax on their business.

Several powerlooms had gone on strike while saree traders had been lobbying furiously against the move. The political battle on their behalf was, however, mostly being fought by the ruling BJP itself and hence Singh’s announcement today was really an attempt to pacify his own party MPs, many of whom had bitterly complained against him to Prime Minister Atal Bihari Vajpayee at party meetings earlier this week.

By letting traders and loom owners off the hook, Singh seems to be saying pay if you can or wish to. This is something that his party — the BJP — will be very happy with as it has been facing the ire of the petty trader lobby, its long-time support base in north India. With elections imminent in Delhi, Rajasthan, and Madhya Pradesh, this move is likely to help BJP win with its old, loyal support base.

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