Chidambaram: Action time
New Delhi, Sept. 22: The government will take more steps to push reforms, boost investor sentiment and provide stable tax laws, finance minister P. Chidambaram said today, while expressing satisfaction over the positive response of stock markets to the recent policy initiatives.
“We are committed to undertaking a range of actions, small and large, that ensures that we are able to support our economic growth with a stable environment,” he said at a conference called Economic Growth and Changes of Corporate Environment in Asia.
The assertion came a day after the finance ministry cut withholding tax on overseas borrowings to 5 per cent from 20 per cent and approved the Rajiv Gandhi Equity Savings Scheme to attract first time investors to stock markets.
Stock markets cheered the announcement, with the BSE benchmark Sensex closing 404 points higher at 18752.83 yesterday.
“I am happy to note that the recent decisions taken by government have been widely welcomed, especially by the markets and by important stake-holders in the market,” he said.
Underlining the need for clarity in tax laws, Chidambaram said lack of clarity in laws can create a great degree of instability in the environment which is not good for economic growth.
“And one of the most important contributor to stable environment is clarity in law, especially tax laws, fairness in tax administration, and a non-adversarial approach to tax administration and collection of taxes and above all a fair and quick dispute resolution mechanism,” he said.
The minister asked lawyers to “strongly endorse the steps the government has taken to provide an environment of stability that will help corporate houses make their contribution to economic growth”.
Chidambaram said the Companies Bill introduced recently in Parliament seeks to address the issue of good corporate governance, investor protection and corporate social responsibility.
He said good economic and financial practices, transparency and accountability in corporate dealings are a pre-requisite for a vibrant corporate culture.
Equally important, Chidambaram said, were the issues related to corporate social responsibility that provide opportunity for the corporate sector to contribute to economic growth on a wider scale.
“We as the government in India are committed to providing an environment where corporate houses among other players are able to contribute to economic growth,” Chidambaram said.
Prime Minister Manmohan Singh also favoured building a climate that would attract investments and establish fair and effective regulatory institutions and legal processes.
He said the government was bracing to meet international standards in corporate laws and would soon bring before Parliament the new Companies Bill.
“We must build a climate that attracts investment and encourages and rewards innovation, and establish fair and effective regulatory institutions and also legal processes. Above all, we have the responsibility to ensure probity, transparency and accountability in processes of governance,” he said.