New Delhi, May 21: The finance ministry wants the newly elected Narendra Modi government to continue with the high duties on gold, change tax structures to encourage domestic manufacture of electronics and cut environmental red tape to revive coal mining.
Besides, North Block officials want the new government to streamline the food logistics chain from farm to consumers by improving distribution and allowing Indian multi-brand retailers to directly buy from farmers.
It has also sought steps to tackle a poor monsoon.
The ministry has identified delayed steps to check food inflation and import of goods that could be locally manufactured as areas that need to be corrected, said officials preparing a note on the state of the economy that will be presented to the new Prime Minister.
The government had increased the gold import duty to 10 per cent in a bid to reduce the current account deficit. The move, ministry mandarins pointed out, succeeded in bringing down the deficit to $32 billion in 2013-14 from $88 billion in 2012-13.
Their argument is that the high duty should continue for some time and be relaxed only when improvements in the global economy allow India to earn more from exports.
India’s exports grew marginally by 4 per cent at $312 billion, while its import bill was higher by 8 per cent at $451 billion in 2013-14.
Gold jewellery exporters have been clamouring for concessions as they claim high duties are hurting exports and are being circumvent by increased smuggling of the yellow metal.
The export of gems and jewellery, one of India’s big-ticket export items, fell 11 per cent in 2013-14 to $34.79 billion after having grown at an average of 15 per cent over the last 5 years.
North Block is also in favour of a quick resolution of tax disputes, including the controversy over transfer pricing involving Indian and foreign companies, though it did not suggest the withdrawal of retrospective legislations as sought by industry.
It also sought implementation of the direct tax code (DTC) at the earliest to boost both compliance as well as collections. DTC seeks to revise tax slabs and at the same time do away with multiple tax sops.
Last year, the parliamentary standing committee on finance, headed by former BJP finance minister Yashwant Sinha, had proposed that DTC be revised and the income tax exemption limit raised to up to Rs 3 lakh per annum. Income should be taxed at the rate of 10 per cent in the Rs 3-10 lakh slab; 20 per cent in the Rs 10-20 lakh slab and 30 per cent for annual income beyond Rs 20 lakh, the panel suggested.
Mining red tape
Infrastructure ministries, including coal, mines and power, have also prepared power-point presentations that have a common demand — cut environmental red tape and speed up forest clearances to unlock the mining sector.
A go and no-go policy adopted by the environment ministry under Jairam Ramesh had stalled mining licence grants as well as renewals, while time consuming multiple clearances and legal activism by green groups delayed mining further.
Besides seeking faster environmental clearances for coal mines, the power ministry has raised the issue of shortfall in gas-based power generation because of “reduced production from KG-D6 fields” of Reliance. Lack of milestone-based timelines for environment clearances also led to delays in setting up hydel power projects, the power ministry said.
Senior government officers today reviewed the price situation and discussed proposals to kick start the investment cycle to accelerate growth.
The meeting of secretaries of various ministries, called by cabinet secretary Ajit Seth, also took stock of the foodgrain situation and government’s preparedness to deal with any possible failure in monsoon.
“This is a regular meeting, which happens periodically on prices. It is a regular thing, nothing new. Every one month it happens. We just gave our inputs,” finance secretary Arvind Mayaram said.