Industry leaders listen to P. Chidambaram in New Delhi on Monday. (PTI)
New Delhi, March 4: Finance minister P. Chidamabaram today said the UPA would announce more measures to ramp up growth, including sops for exporters, and that he himself would undertake a multi-nation tour next month to drum up foreign investment as the government seeks to batten down the hatches on a huge current account deficit.
Chidambaram, who was interacting with industry leaders at a post-budget function held here, said some of the growth measures would be unveiled in Parliament.
He added that fiscal deficit for 2012-13, pegged at 5.2 per cent of the gross doemstic product in his budget speech, might be actually lower.
“When the actual numbers come, it may be slightly better,” the minister said.
Chidambaram indicated that more announcements could be expected to step up growth, including possible changes in excise duties, but refused to spell them out.
The minister also said India would issue safe harbour rules — or provisions that would enable tax authorities under certain conditions to accept firms’ transfer pricing claims without further scrutiny — by next month.
Transfer pricing is the rate at which multinationals trade in goods and services with their arms across the world. Tax authorities often charge MNCs with intentionally reducing the value of goods and services exported out of India, to avoid paying tax here, while increasing the price of goods and services brought into the country from their home bases or from low tax bases.
The minister also indicated that the government would seek parliamentary approval for amending retrospective tax rules, after it reached an agreement with Vodafone over a long running tax dispute.
The finance minister will be travelling to Japan, Canada and the US to speak to investors, including FIIs, to drum up investment flows into India.
“The fiscal deficit is a matter of concern but the current account deficit (CAD) is a matter of greater concern,” he said.
Chidambaram today flagged increasing exports as a pill for his CAD troubles and said export sops were in the works. Analysts, however, believe that higher exports are a long-term solution for India’s lopsided trade balance and current account deficit; in the short run, the government would need to bring in foreign investment and NRI deposits.
The minister also plans to meet industrialists in Mumbai, Calcutta, NCR, Hyderabad, Bangalore and Chennai and attempt to find out what is holding back investment.
He said Sebi would be meeting FIIs to sort out any misgivings they may have. FIIs had reacted negatively to a proposed change in laws governing tax benefit claims while investing in India.