New Delhi, Jan. 5: The Kelkar recommendations on tax reforms and the ruling BJP’s preoccupation with a series of Assembly elections this year leading up to parliamentary polls in 2004 do not go hand in hand.
If there had been any doubts about this, BJP general secretary Rajnath Singh, who was entrusted by the party with the job of politically vetting the Kelkar recommendations, dropped enough hints to that effect today.
As Rajnath Singh, who is scrutinising the Kelkar recommendations through the BJP’s political prism, went ahead with his task today, party sources made it clear that the BJP would veto most of the politically “untenable” prescriptions for finance minister Jaswant Singh’s maiden budget.
“Economic rationale cannot always gell well with the political reality. With several big elections underway, the BJP cannot allow reform recommendations to spoil the political atmosphere for the party,” said a BJP leader associated with formulating the party’s economic policies.
Rajnath Singh will take a few more days before finalising his report on the recommendations which will be submitted to the finance minister as the party input for finalising the budget.
Party sources said Rajnath Singh will tell the finance minister that the party would not accept Kelkar’s recommendation for taxing agricultural income and proposals for withdrawing several concessions currently available to the salaried class.
“The proposals are anti-middle class and anti-farmer,” the sources said, adding that the BJP had paid heavily for annoying the middle class in last year’s municipal elections in Delhi.
However, the party will support implementation of such recommendations that will suit it politically. The sources said the BJP would ask the finance minister to hike the tax exemption limit from the existing Rs 50,000 to Rs 100,000. This was also in the party’s election manifesto, they pointed out. The party will ask Jaswant Singh to retain all existing tax incentives on small savings, though Kelkar has advocated a summary abolition.
The Rajnath Singh panel will also oppose any move to dabble with the present incentives on investments in housing, saying it would negate the very basis of the NDA government’s emphasis on housing.
Curiously, however, the BJP is unlikely to press the government to withdraw the special 5 per cent cess on petrol and diesel on the excuse that it will ground the Prime Minister’s ambitious road infrastructure development project.
Kelkar has proposed abolition of this cess and progressive reduction in the customs duty on crude and petroleum products.
Apart from the electoral considerations, the BJP’s politically expedient position is dictated by the vehement opposition of most of its NDA allies as well to Kelkar’s recommendations.